The Hindu Business Line : RBI takes note of small depositors!

FOR Indian banks an ordinary depositor is an unwanted small change. One has spent time behind counters of the Government banks with the staff on the other side of the glass partition busy chatting or sipping tea. One confesses to nervy sweating walking into a bank or a Government office as it is hard to get the well-dressed, tired, male or female, unionised clerk, to perform the designated job.

Some bank branches display boards listing the time to be taken for clearing a cheque or a draft. As usual there is another rule for high-worth individuals (the rich) with their deposits fetching 7 per cent or more return while an ordinary depositor has to wait with folded hands for 5 per cent. One thought private sector banks are better. They are not. To cut costs private banks dump 10 different jobs on one lone individual with no job being done.

One never thought the RBI in its Annual Policy Statement, 2005-06, will script the sad tale of the ordinary depositor and minor inequities. It is interesting to read and should be stuck up at every bank branch.

The Policy devotes 4 pages on "Interests of the depositors," starting with a citation of Section 5(ca) of the Banking Regulation Act, 1949 where banking policy has been defined as "any policy which is specified from time-to-time by the RBI in the interest of the banking system or in the interest of monetary stability or sound economic growth, having due regard to the interests of the depositors, the volume of deposits and other resources of the bank and the need for equitable allocation and the efficient use of these deposits and resources."

The Policy quotes a report of the Committee on Procedures and Performance Audit on Public Services which submits: "The bank's offerings are generally opaque - what is not charged is mentioned but what is charged is not mentioned - high hidden costs appear rampant and unjustified, thus banks enjoy undue enrichment. If a small customer goes to a bank and has a technical problem, anecdotal evidence suggests that he runs into enormous difficulties. The Committee notes with some sadness that there is substance in the widespread impression among the small depositor community that one needs to know someone higher-up for getting his/her job done. Intense depositor loyalty is the only plank on which the Indian bank systems is surviving. The banks have to understand that depositors are at the end of the tether and banks providing poor customer service will be punished by switching loyalty."

Switching loyalty does not arise as all banks heartily dislike ordinary depositors. The RBI talks of getting several representations on bank-ripping of depositors. Some of the complaints are: charges for balance enquiry; cheque status verification, signature verification, address confirmation, photograph verification, punitive service charges for non-maintenance of minimum balance in savings accounts, transaction charges for reorder of cheque book and for cash transactions at the branch beyond a stipulated number, and diversion of customers to usage of ATMs including payment for cash transactions."

There is some consolation in the fact that depositors in the West are also bank-ripped. The RBI proposes to set up an independent Banking Codes and Standards Board of India based (what else) on the UK model promising a fair treatment to ordinary depositors.

One hopes the Board does not become another bureaucratic adjunct. To be fair the RBI cannot do much. For a start, bankers (above the level of AGMs up to the Chairman) should occasionally visit a bank branch and spend about 30 minutes. That may bring an immediate change as bank trade unions do not believe in telling its members to serve the depositors.

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RBI takes note of small depositors!