Customer service comes into focus

The Reserve Bank of India (RBI) will monitor the nature, scope and cost of services rendered by commercial banks to check if common people are being denied banking services.

"Although there has been expansion, greater competition and diversification of ownership of banks leading to both enhanced efficiency and systemic resilience in the banking sector, there are legitimate concerns in regard to the banking practices that tend to exclude rather than attract vast sections of population, in particular pensioners, self-employed and those employed in the unorganised sector," said RBI in its 2004-05 Annual Report.

RBI will implement policies to encourage banks, which provide extensive services while disincentivising those, which are not responsive to the banking needs of the community, including the underprivileged.

The central bank said it will assess whether there is any denial - implicit or explicit - of basic banking services to the common person. Liberalisation and enhanced competition accord immense benefits, but experience has shown that consumers' interests are not necessarily accorded full protection and their grievances are not properly attended to.

RBI has received several representations regarding recent trends of levying unreasonably high service/user charges and enhancement of user charges without proper and prior intimation.

These issues have to be addressed keeping in view the merits of transparency, the need for avoidance of excessive charges and infirmity in contracts between vastly unequal parties.

Based on the recommendations of the Committee on Procedures and Performance Audit on Public Services, RBI took efforts to facilitate improvements in customer service in banks. All public sector and private sector banks and select foreign banks have been advised to constitute customer service committees.