Saturday, October 21, 2006

Indian Banks: As shareholders we cheer, but as your customers we cry!

Sucheta Dalal has an eye-opener on the way banks treat their customers in India. Here's an excerpt:

Sharad Jain, an HDFC Bank account holder was happy to learn that he had pre-qualified for a Gold Credit card, but his application was rejected on processing. After persistent efforts he was shocked to discover that some bank had entered his name on the ‘defaulters’ / negative list. Jain says that he has several credit cards and has never defaulted on any account, and in fact enjoys an excellent credit rating.

Jain is outraged, because his credibility and reputation are at stake. Having your name on a negative list ends any chance of getting a new credit card and leads to constant fear about transactions being rejected by merchant establishments. In trying to help him, we discovered how the Reserve Bank of India (RBI) had rushed to pass legislation that protects banks, without bothering to ensure adequate consumer protection measures at the same time.

A few years ago, RBI allowed the creation of the Credit Information Bureau of India Ltd (CIBIL), which is a databank of individual credit histories. Banks can subscribe to CIBIL’s services to check the credit history of prospective customers and weed out habitual defaulters or trouble makers. But the law that enabled the setting up of CIBIL deliberately did not provide any recourse to customers victimised by banks. I say deliberately, because such recourse was already available in the US and CIBIL has a tie-up with the best global name in this business.

RBI later tried to make amends through the Credit Information Act, which has already been passed by Parliament. However, unless rules and regulations under the Act are framed and notified (they will again need approval from Parliament), the passing of the Act is meaningless to consumers.

Jain has been told that his only recourse is a Consumer Court — not even the Banking Ombudsman. Or, he can persuade his bank to informally help him discover which bank reported him as a defaulter and then have the entry corrected. He tried that, but HDFC Bank, which had pre-qualified him for a gold card refuses to help. Jain is not the only sufferer. A few months ago, the HR chief of a multinational company discovered that the bank, whose credit card he still uses regularly, had wrongly reported him as a defaulter.

Ironically, even the RBI does not seem to be able to resolve this complaint by accessing the CIBIL database. Banking sources tell us that people whose combination of name and surname are common will be more prone to suffer from such mistakes. If this is obvious, why was consumer interest not a part of the statute that protects banks?

The same ‘damn the customer’ attitude extends to other aspects of banking today. The RBI set up a committee to examine the rationality of bank charges because it realised how the dice was loaded against ordinary customers. But barely six weeks after the committee submitted its report one continues to discover new ways in which customers suffer due to mistakes made by banks.

The entire article can be read here.

I've had bad experiences with one such bank - Andhra Bank. They have one of the most dismal customer response service. My debit card got stuck in an ATM machine thrice over a period of three months and each time the bank took over a months time to reverse the amount that was debited from my account. Yes, my card got stuck in the ATM machine and I did not get any cash out of it and yet it was debited from my a/c. While it is fine till here, I mean this can happen. But, when you ask the branch manager about the reversal the usual answer was "Sir, this is a PSU. Do not expect us to reverse your debit transaction so quickly. It will take atleast 15 days to reverse the same. Please come after two weeks to check the status." The two weeks got extended to over a month the first time around and a little less than a month in the remaining two instances.

Another bad experience with the same bank was of non-availability of Andhra Bank's owned ATM machines. In early days, we were allowed free withdrawals from some of the other banks such as SBI & associates and IDBI bank. But a few months ago, the bank said it will charge us for any transaction from a non-Andhra Bank ATM machine. This to us was insane. From where our office was located: a). there was no Andhra Bank ATM machine, and b). the immediately accessible ATM machine was located in Bandra (30 mins from my office), Borivali (again 30 mins from office) and Ghatkopar (some 30 odd mins again). So in effect the bank was saying I will give you ATM service but in two ways, either you use my non-existent ATM network and do your transactions for free or alternatively use other banks ATM and pay a charge. If the bank had a ATM network as strong as ICICI's or UTI's then one would have accepted Andhra Bank's logic. But when you have a mere 3-4 ATMs between Borivali and Bandra, there is a problem. Ofcourse, the bank had no problem at all. Because, it does not care. It derives most of its biz from Andhra Pradesh and not from I am sure it is ok with it. And, ofcourse, we too did a "Good bye Andhra Bank".


Baalachandran Narayan said...

My application was rejected. Credit Sudhaar was my choice. Initially they were slow. But their counsellors were able to handle all my queries. I will give Credit Sudhaar a positive review.

Anonymous said...

I had no idea my credit was bad. The guys at Credit Sudhaar analysed my report. The process took some time but my credit was restored, enhanced and protected. I have no reason for complaints.