The Hindu Business Line : A code for better customer services

The voluntary `code of bank's commitment for individual customers' laid down by the Banking Codes and Standards Board of India, provides an institutional framework to address some of the long-pending grievances and issues that have dogged customers in their dealings with banks.

The code tells a customer what he can expect — in rather elaborate detail. But it is also quite ambitious in its aims. The gap between principle and practice has always been wide.

The code promises to correct mistakes in the statements of account promptly and cancel any bank charges wrongly debited. It also promises to automatically register the name of its customers under `Do not call service'. The code also commits the bank to not sharing information about customers even with group companies for marketing purposes. This begs the question: Would such a commitment not strike at the very root of `bancassurance' business model? After all, banks claim that they can provide all services based on their database and awareness of their customer needs and financial situation.

Info on rates, charges

The code promises that banks will inform you about changes in interest rate and other charges in case you exceed the limits for free transactions or withdrawals. It remains to be seen if banks will be able to individually alert their customers about such changes.

Given the technology that is available, it would seem possible. After all many private banks, today use the SMS facility on the mobile to alert you about any debits to your account. Sending you an SMS or an e-mail or a post card to inform you about changes in rates or other charges should not pose too much of a logistical problem. Banks should perhaps not take refuge under the earlier practice of hanging a notice at some nondescript corner in the branch premises informing every one of changes and deem it as `constructive notice'.

In places, the code shows unexpected and extremely fine sensitivity to customer feelings — always rare in formal documents and more so in a code such as this. For instance, in a section dealing with collection of dues, it says, "During visits to your workplace for dues collection, decency and decorum would be maintained." It adds, "Inappropriate occasions such as bereavement in the family or such other calamitous occasions would be avoided for making calls and visits to collect dues."

In a section dealing with loan guarantors, the code promises to tell the guarantor about his actual liability, the circumstances under which the bank will approach the guarantor, whether the bank has recourse to other money of the guarantor in the bank, in case he doesn't pay up the liability, and the time and circumstances in which his liability is discharged.

If this were actually practised, it would certainly be a positive step forward. As happens more often than not, the guarantor just signs the papers for his family members or close friends or associates because the banks need a guarantor. He is seldom made aware of his actual liability. No attempt is made to enquire from him if he will actually settle the dues in the event of default. No doubt the paper he signs commits him to such a course. But many, while signing, are under the impression that this is a mere formality — not an awareness of how actually they would be responsible!

Finally, if one can carp a bit about what is otherwise an extremely well drafted code, there is just a bit of ambiguity too. For instance, under the section on `closing of account', the code says, `Under normal circumstances, we will not close your account without giving you at least 30 days notice. Examples of circumstances which are not `normal' include improper conduct of account, etc.'

What is improper conduct? That has not been defined. A number of private banks have in the past earned notoriety for closing down accounts of customers whom they consider unprofitable.

It would help if customers get a clear preview of what is in store, if they do not make themselves `profitable' to their banks!