Customer Grievances Redressal through Ombudsman

Banking Ombudsman Scheme

I have been reading and teaching on the topic of Customer Satisfaction, Service and Grievances Redressal, etc only half heartedly.  Rarely people across the counter have 'empathy' for the customer and volunteer to understand their needs, let alone solve the problems or offer suggestions politely.  Two major committees on Customer Service in Banks were headed by Chairman of State Bank of India - viz., Shri R K Talwar, the doyen of commercial banking in India and much later Shri MN Goiporia.  Several recommendations given by these two committees were accepted / implemented but there remains a standing complaint that Bankers do not understand and serve the customers.  It could be from depositors or borrowers besides the third category of service seekers like issue of a DD., sending / receiving of a remittance, issue of an LC or Guarantee, transfer of an account or funds, settlement of accounts of a deceased in favour of the legal heirs, etc.

All said and done, Ombudsman is a typically borrowed scheme or facility from British and earlier it was for insurance claims and later extended to bank accounts too.  A detailed reading of the annual report on Ombudsman 2011 by the RBI gives us a comprehensive picture of the changes that have been effected in the post reforms era as also with the introduction of technology.  Consumer Protection Act and Right to Information Act have certainly made a change in customer service.  Today, banking or any other system can not take its customer for granted.  A critical reading of the report explains the transformation in the banking system towards extending better customer service.

ATMs in Indian Banking Scene.....

I am not too sure as to how these ATMs entered the Indian banking scene in early eighties!  May be one of the Foreign Banks like Citi Bank might have introduced the facility.  At a time the Indian banking was still in its primitive style without automation or mechanisation, ATMs or Credit Cards were not well known let alone the bankers were also not inclined to offer them by investing heavily as also against stiff opposition from the Trade Unions.  Thanks to reforms and transformation in the most important service industry, in the last two decades we witnessed many changes and advancements in the technology era.

With all the cry for taking banking services to the grass roots level against all odds, in the name of Financial Inclusion or Rural Development, there has been a tremendous increase in the bank branches per se and with an equal number of ATMs all over.  If I have to guess, the figures could be around 85,000 each and a long way to go too.  But the PSBs have taken the lead of offering ATM services in god-foresaken places including mountain tops or national highways and waterways.  Biometric ATMs were introduced in rural areas and for illiterate customers.  As regards security for ATMs, we keep hearing that there are some guarded and some not exposing to all sorts of risks and mis-use.  We can't help it because after all it costs for the banks.  And now, I read from the latest issue of IIBF Vision (Nov 2011) that these ATMs are 'Brown labelled' and "White-labelled"!  

"Brown label ATMS": The news is that 5,000 brown label ATMs are on the anvil.  Hughes Communications  India, a broad-band satellite service provider will set up these ATMs in the country.  The ATM hardware  as well as lease under the ownership of the service provider, while connectivity and cash handling & management is the responsibility of the sponsor bank.  This model has two primary benefits viz., banks will not have to lock their funds in a fast depreciating asset since the capital investment would be undertaken by the ATM vendor.  Also, since the vendor gets a fee for every transaction from the bank whose ATM card is being used, there is an incentive to ensure efficiency in terms of usage.

"While label ATMS" : Hoping to cut transactions costs for banks, the Financial Ministry has asked RBI to allow common ATMs that will be owned and managed by non-banking entities.  Called while-label ATMs, these money dispensers are proposed to be located in non-traditional areas and would levy some usage-fee on the customers.  Globally, such ATMs are operated by Euronext, Clear Card and Ezee ATM.  Currently, banks allow customers of other banks five free transactions of cash withdrawal at their ATMs per month but end up paying around Rs. 3,000 crore a year to settle inter-bank transaction costs.  Setting up a while label ATM may also increase the quantum of withdrawal from an ATM.  As of now, banks fix a cash limit at ATM based on the usage.

ATM's stolen : Any Time Money?

Another ATM Stolen in Bangalore

Theft of Bangalore ATM

What an interesting news?  This is the third time an ATM which is not guarded has been stolen with cash.  About a month ago, I read in news papers about a theft of an SBI ATM in Udupi with Rs. 14 lacs cash, which was later found empty about 30 kms away in Kundapur.  On that day, it was heavy rain that fecilitated the thieves.  Now the above news item says in Bangalore an ATM of SB Patiala was stolen with Rs. 10 lacs cash.  Earlier, about three months ago, an ATM was stolen in Anekal, about 35 kms away from Bangalore.

We know about bank robberies before during day time.  There is no record of how these thefts were being tackled.  Some times, the sincere Branch Managers and Staff or Customers used to dare such robberers and risk their lives too.  Now this development of stealing ATMs seems to have become an easy money.  It is time that our Law & Order system and Police to keep an alert of these public money and properties well secured.  While we used to feel very happy over the computerisation that has revolutionised the customer service in Railways, Roadways and in Banks through Internet Banking and Core Banking Solutions, some perverted techies found out way of cheating people through Phishing, Pharming, Trojan and Hacking.

Where are we heading?  With technological advancements, in the twenti-first century, thefts and crimes are not a dignified or intelligent development.  It is retrograde movement that something drastic should be thought of.  Else, all the fruits of reforms and research go waste with perverted individuals resorting to such crimes.

Customer Service in Banks

Customer Service Committee - 3

It was Raj Kumar Talwar, the tallest of bankers India ever had, Chairman of SBI, who headed the first Committee on Customer Service in the seventies.  The report and recommendations were implemented by the Government and RBI effectively for over a decade and half.  Followed was another Chairman of SBI, Mr MN Goiporia again headed a Committee on Customer Service in early nineties, when the wave of Economic Reforms and Banking Sector Reforms were ushered in by the Government headed by late Shri PV Narasimha Rao as Prime Minister and ably supported by Dr Manmohan Singh as Finance Minister.

Much water has flown since then.   Banking industry underwent radical changes in terms of interst rates deregulation, Balance Sheet management, NPA management, ALM and Risk Management, Computerisation, Prudential Norms, Branch Licensing Policy, Manpower Management, level playing field between public, private and foreign banks and consolidation of the industry at a large scale.

Committee on Reforms were headed twice by Shri M Narasimham (former Governor of RBI and currently Chairman of ASCI in Hyderabad) in 1992 and 1997 followed by Dr Raghuram Rajan, a former Professor in Chicago University and currently Advisor to the Prime Minister of India.  Several other Committees have also have gone into important aspects of banking and finance during the last two decades to bring the Indian Banking industry to global standards.  A new legislation called Consumer Protection Act was also enacted and amended during this period.  Besides, the mechanism of Ombudsman is now functioning for Banking, Insurance and Microfinance institutions all over the country.  Also, a Banking Code and Standards Board of India has been established over fifteen years back to ensure high standards in the banking industry.

The present announcement of a third Committee on Customer Service headed by former Chairman of SEBI, Shri M Damodaran is a welcome development.  The slogans "Customer is King" or "Customer is always right" can not be merely on paper.  They should always be translated into reality.  Long live Customer Service in the Indian Banking!

Faceless Banking!

Faceless Banking

Yet another term in Banking, but not entirely new.  Eversince the banking industry has taken to technology in a big way to modernise its services and extend more efficient services, computerisation has come in a handy way.  At least in the last three decades, several Committees have gone into this aspect (like Rangarajan Committee, Padmanabhan Committee, etc) it was rather a very slow transition from manual to computerised environment for back and front office operations.  The amount of time and money invested to bring in this facility, was stupendous.  The Trade Unions in the banking system opposed mechanisation and computerisation fearing reduction in employment and career growth opportunities to its membership.  Besides, the older generation staff and executives were motivated to undergo a series of trainings in order to equip themselves to handle the new environment. 

Introduction of ATMs, Networking, Core Banking Solutions, Online Banking, remittance / payment facilities like RTGS, NEFT, etc., fecilitation of Debit and Credit Cards, have all totally transformed the customer service domain.  The Indian Banking system is today in a position to compete with the Foreign Banks in all spheres.  Yes, the Governor's caution may be with some observation and concern that the customers should not be distanced from the fundamental principle of rendering the best service be in through technology or otherwise; be it in rural or metro cities.