With account-number portability now within the realms of possibility, the Reserve Bank of India on Tuesday cautioned banks that if they misuse the autonomy granted to them in fixing minimum average balance or for charging for premium services , aggrieved customers could silently migrate their account to another bank in the near future.
“While banks have been granted autonomy…it should not be used as an excuse to deny service or to drive away common man,” said SS Mundra, Deputy Governor, RBI.
Speaking at the annual Banking Codes and Standards Board of India conference, Mundra observed that with technological advancements in the field of payment systems, such as Unified Payments Interface (UPI), coupled with massive enrolments under Aadhaar and their linkage to individual bank accounts, account-number portability has come within the realms of possibility.
Alluding to recent instances of some banks upping monthly average balance requirement and increasing service charges, the Deputy Governor said: “As such, the prospect of an aggrieved customer silently moving her account to another bank in the near future has become very real.”
According to Mundra, the RBI will extensively focus on mis-selling of third-party products, especially insurance and mutual funds, instances of violation of KYC (know-your-customer) guidelines, imposition of usurious service charges during the current year’s supervisory cycle.
In this regard, he mentioned that the RBI has specifically established a department for examining the instances of regulatory violations with a view to taking enforcement actions, including imposing penalties, issuing warnings and making public disclosure on the errant banks.
Limiting customer liabilityMundra said based on feedback received from stakeholders on the draft circular on ‘Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’, final guidelines are expected to be issued shortly.
In view of the impending guidelines, it would be prudent on part of the banks to internally tighten their IT security systems and operating procedures so that (customer) grievances are minimised, he added.
The Deputy Governor elaborated that “with greater thrust on digital banking, especially in the wake of withdrawal of legal tender status of specified bank notes and consequent increase in complaints relating to unauthorised/fraudulent transactions, a need for a comprehensive policy to limit the liability of customers cannot be over-emphasised.”
Mundra explained that technology is being increasingly used in delivery of banking services in recent years.
However, it has also brought in associated risks of security as is evident in few high-profile cyber incidents in the recent past.
“There have been several incidents of theft of personal information, fraudulent use of ATMs, net banking frauds, ATM/debit card incidents, or cases of unauthorised access to bank servers. Hence, there is an immediate need to plug all the gaps and vulnerabilities in tech-enabled service delivery,” he said.