Financial Daily from THE HINDU group of publications
Sunday, May 08, 2005
Financial Daily from THE HINDU group of publications Sunday, May 08, 2005 |
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Money & Banking
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Trends `Doorstep banking needs proper risk tool' Our Bureau
Mumbai , May 7 BY allowing banks to go to people's doors to collect money, Reserve Bank of India has made life easier for many banks. Several foreign banks and new generation private banks are offering doorstep banking, including cash collection, despite the RBI ban. Now, banks can offer the service legally. Banks used to offer doorstep banking until 1983, when RBI banned it following malpractices. From April, RBI again allowed banks to conduct doorstep banking. Banks can offer the service to government departments and institutions. For individuals, permission of the bank board and RBI is necessary. According to Mr K. Cherian Varghese, Chairman and Managing Director, Union Bank of India, the most important thing is to have proper risk management in place. "When you send people for cash transactions, you need checks and practices. Banks should ensure that the reconciliation of the cash that is collected is done properly," he said.
Mr Amresh Acharya, Head-Liabilities Product Management, HDFC Bank, said, "Unofficially it was already happening because it is a genuine customer need. Now, it will happen with the approval of the bank boards. So there will an adequate system and process in place. This will take care of any malpractice." Mr Varghese said the move will help banks to extend their services. "The move has removed another restriction for banking services. We used to do it earlier with specific permission for institutions such as LIC and Railways. Now, it is more flexible," he said. According to Mr Acharya, customers will not mind paying the extra charge for the service. "Petrol pumps or gas agencies, which receive a lot of cash, are forced to keep cash at night or take it to the bank to deposit. Now, banks can offer security vans to collect the cash. The cash is insured and customers are willing to pay for it," he added. For banks, the benefit is customer loyalty, he added. Another senior official from a private bank said that this helps customers and banks will be driven to do it. He added, "This is one of the ways customer service is changing. Ten years ago ATM, mobile banking and Internet banking did not exist. Traditionally, all transactions were done only in the bank premises. Just as that has changed, this move too is another change."
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