The Finance Minister has now asked politicians, particularly Amar Singh, to complain to the Banking Ombudsman about foreign banks who refuse to give loans and credit cards to politicians, lawyers and the police. The suggestion is amusing only because the Reserve Bank of India (RBI) itself is working hard to ensure that the complaints get resolved well before they are escalated to the Ombudsman’s office which is already choked with so many complaints that will take at least three years to resolve.
It is much too early to say how effectively RBI’s policy will work, but it has already made an excellent start with monitoring Citibank's Fly-for-Sure scheme, where over 35,000 people had apparently qualified for a free ticket by spending a specified amount on their credit card.
The bank was probably overwhelmed by the response and may have dumped its promised gift but for RBI's class action initiative. As reported by us earlier, the RBI put the onus on Citibank to ensure that every complaint was resolved. The impact was dramatic. Scores of card holders received their free ticket, but we are still receiving the occasional email from card holders suggesting that 100 per cent compliance is still not achieved.
Similarly, RBI responded to complaints about the opaqueness of service charges by asking banks to post key charges on the home page of their website. Only four banks had complied with this order at the end of May and RBI had to crack the whip again to ensure compliance.
In another case, the RBI responded to an HSBC card holder's grievance with a systemic solution. On hearing how the Bank's call centre seemed unable to resolve a genuine grievance (where an award of Rs 101 was credited and reversed from a card holder's account and then sought to be recovered from him along with penal interest), the RBI quickly ordered all banks to post a complaint form on the home page of their website. It also proposes to provide links to these pages (complaint and service charges) from its own website. Hopefully, this will signal that the regulator plans to monitor compliance very closely.
The decision on No-call-directories is another move in the same direction but with limited compliance. While several banks have responded well and ensured that a link to the “No call” registration is on their home page, not every bank has done so. We found the link to Citibank’s No-call registration only after calling the bank. Then too, we discovered that it could be accessed only after clicking on to the pages for specific product categories such as credit cards, personal loans or car finance. This is impossible for a non-Citibank customer to find. More importantly, it is unfair to ask non-bank customers to go through this tortuous process. This is another area where RBI can provide a links to every bank’s No-call-directory from its own website. Or better still; work at creating a single unified directory for all banks.
Another important effort by the RBI is to ensure that the bank's own grievance redressal machinery acts as the first point of resolution and only the more difficult complaints are escalated to the BO. A few months ago, in response to a query, RBI Deputy Governor Usha Thorat told us, “We are sensitising the banks to strengthen their customer grievance redressal machinery”. Several banks are indeed very sensitive to customer issues, but the industry in general has a long way to go.
The biggest problem, as I see it, is the rapid launch of new marketing strategies that foreign and private banks are constantly evolving to hook customers. Often the schemes are ill-conceived, not transparent enough and staff at the call-centres is not trained to deal effectively with customer queries. This leads to wrong billing, harassment and angry complaints to the Ombudsman. When customers are finally able to get the attention of top management at these banks, the problem is instantly resolved and an apology proffered. This is hardly an appropriate solution.
The RBI must work at creating a level playing field between bankers and their customers. When banks make a mistake -- and this is frequent -- the redressal process is agonising. I have helped resolve a complaint where a youngster was nearly driven to suicide on account of the bank’s intimidation tactics. I also know cases where customers have preferred to pay false or incorrect charges levied by the bank and close their account rather than waste time and energy in fighting the system. Even in cases where banks have tendered profuse apologies, there is never any mention of interest payment on wrong debits.
Yet, banks themselves ruthlessly debit customer accounts to recover their charges; interest and penalties and the interest clock never stops ticking until repayment is completed to their satisfaction. The RBI must ensure that banks are at least forced to pay interest and some penalty when they admit to wrong debits.
Another RBI action that can go a long way in reducing customer complaints would be to issue a blanket ban on seeking what are ‘negative consents’ from customers. Often, banks offer services or facilities (such as Citibank Suraksha) for a fee that is debited without the customer’s overt consent. The customer is expected to read the fine print in the bank statement, figure out that it is a paid service and call the bank to cancel it -- or the charge is debited. Or, banks unilaterally convert card payments into interest-free “Equated Monthly Instalments” but do not mention the 3 per cent service charge, or offer add-on cards to existing card holders without mentioning a Rs 250 charge if the card is not used for six months. These dubious practices are rampant in the industry. A simple 'fatwa' from the RBI against seeking negative consents or imposing hidden charges will end a great deal of harassment and reduce customer complaints.
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