You are on page 1of 8

22 September 2014

Dr Raghuram Rajan
Governor,
Reserve Bank of India
ort, !umbai
Sub: Comments sought by RBI on the Draft Charter of Customer Rights.
Ref: RBI Press Release : 201!201"#$% &ate& 22n& 'ugust(201.
Dear Dr Rajan,
"e invite #our kind referen$e to the press re%ease dated 22
nd
&ugust, 2014 issued b# Reserve Bank of
India 'RBI( on the subje$t of )Draft *harter of *ustomer Rights+ inviting $omments from the pub%i$ for
the $onsideration of RBI, -his memorandum is, therefore, submitted to #ou in response to the above
press re%ease .ith a vie. to apprise #ou of our vie.s
'bout )oneylife *oun&ation:
&s #ou ma# be a.are !one#%ife oundation is a not/for/profit organi0ation dedi$ated to the $ause of
spreading finan$ia% %itera$# in our $ountr#, &s a part of our obje$tive, .e engage in advo$a$# and take
up issues .ith regu%ators to smoothen the impa$t of their po%i$ies on the pub%i$ at %arge and savers and
investors in parti$u%ar, -his memorandum is, therefore, submitted on beha%f of our organisation, .hi$h
has a membership of over 10,100 spread a$ross the %ength and the breadth of our $ountr#,
Draft Charter of Customer Rights +ro+ose& by RBI:
In our vie., the draft *harter of *ustomer Rights does not serve the purpose of meeting aspirations of
%arge bod# bank $ustomers, .ho are at the re$eiving end of never ending prob%ems fa$ed in their da# to
da# dea%ings .ith banks in our $ountr#, -hrough the medium of this $harter, the RBI has proposed to
give freedom to banks to de$ide on issues $on$erning standards of $ustomer servi$e, $ompensation et$,
suggesting on%# the broad $ontours of the $harter, .hi$h a$$ording to us are on%# a set of pious
motherhood statements that appear good on%# in paper, "e fee% that the entire $harter is meaning%ess
un%ess it is ba$ked b# $odified basi$ standards to be $omp%ied .ith, and a tra$king s#stem $oup%ed .ith
stringent pena%ties for non/$omp%ian$e,
-he draft $harter does not ame%iorate the harassment fa$ed b# the pub%i$ .ho deserve a mu$h better
dea%, more so .hen a %arge majorit# of our peop%e are finan$ia%%# not %iterate and near%# 223 of our
popu%ation are tota%%# i%%iterate, 4ou .i%% appre$iate that under the 5radhanmantri 6an/Dhan 4ojana, so
aggressive%# propagated no. b# the pub%i$ se$tor banks, the peop%e entering porta%s of banks to open
their bank a$$ounts are those having a %o. %itera$# rate .ith ver# %imited kno.%edge of banking ru%es
and regu%ations, It is preposterous, therefore, to e7pe$t su$h peop%e to understand the meaning and
reasoning behind this $harter and benefit from su$h nob%e obje$tives enshrined in the $harter as
proposed b# RBI, 8nder these $ir$umstan$es, giving tota% freedom to ea$h bank to devise its o.n
standards of servi$e and provide for $ompensation for its o.n fai%ures is asking for a tota% $haos in the
banking s#stem in our $ountr#,
9o.ever good are the intentions of RBI, .hat is most important from the $onsumers: point of vie. is
that the $onsumer prote$tion shou%d not be mere passive statements, but it shou%d be an a$tive $ode for
mandator# $omp%ian$e $oup%ed .ith preventive and punitive measures to ensure that the guide%ines are
imp%emented both in %etter and spirit, -he *ode of Banks: *ommitment to *ustomers 'the *ode(
introdu$ed b# the Banking *odes and Standards Board of India 'the Board( a fe. #ears ba$k has been a
tota% fai%ure be$ause it .as on%# %ong on promise but ver# mu$h short on performan$e as it had no teeth
to bite in $ase of non/$omp%ian$e, ;ven the $ommitments $ontained in this $ode .ere vague and there
.as no me$hanism b# .hi$h the promises made in the $ode $ou%d be enfor$ed either b# the $ustomers or
b# the Board, It has virtua%%# disappeared from the banking s$ene, $ausing $onsiderab%e %oss of fa$e to
RBI, -he *harter no. proposed shou%d not be a repetition of past mistakes, but shou%d serve as ground
ru%es for up%ifting the <ua%it# of $ustomer servi$e in banks to the %eve% of ensuring $omp%ete $ustomer
satisfa$tion .ith no $ause for $omp%aints to the e7tent possib%e,
,o- to ma.e Charter of Customer Rights meaningful/
Banking institutions are the %ife %ines of the nation and an integra% part of the %ife of our peop%e,
-herefore, there is a need to have robust, transparent, unambiguous and eas# to understand $onsumer
prote$tion guide%ines, .hi$h $an on%# he%p in giving a boost to finan$ia% in$%usion, In order to ensure that
the $onsumers are treated fair%#, e<uitab%# and in a non/dis$riminate manner, the fo%%o.ing $ardina%
prin$ip%es shou%d form the $orner stone of the *harter of *ustomer Rights,
1, -he draft *harter states the rights and responsibi%ities of $ustomers in vague and abstra$t terms,
It re<uires mu$h more $%arit# both in its $ontents and in its imp%ementation, -he *harter,
therefore, shou%d %ist out standards of servi$e in $r#sta% $%ear terms and appropriate time norms
for their $omp%ian$e app%i$ab%e for a%% banks in their da# to da# dea%ing .ith a%% $ustomers, -hese
ru%es shou%d spe%% out .hat servi$es are avai%ab%e to $ustomers as a matter of right and free of a%%
$harges, and .hat servi$es are avai%ab%e for a fee, &nd this fee shou%d be $apped at a reasonab%e
%eve% to ensure that there is no e7p%oitation of $ustomers .ho are .eak, he%p%ess and ignorant of
banking terms and $onditions, -his .i%% he%p to stream%ine the servi$e %eve%s at a%% banks and
e%iminate most of the $omp%aints that are $aused b# the indifferen$e of banks to meet the needs
of bank $ustomers,
2, In order to make the *harter .orkab%e and effe$tive, it shou%d pres$ribe appropriate pena%ties for
ma%/imp%ementation or non/imp%ementation of the basi$ guide%ines %aid do.n in the $harter,
Besides it shou%d provide for reasonab%e $ompensation to $ustomers .ho suffer be$ause of the
%a7it# or neg%igen$e on the part of the banks, .ho b%atant%# vio%ate the spirit of the $harter,
thereb# giving a sense of justi$e and fair/p%a# to the aggrieved $ustomers,
Moneylife Foundation 305, 3rd Floor, Hind Service Industries Premises, Off. Veer Savarkar Marg, Shivaji Park,
Dadar (W), Mumbai 400028. Tel: 022-49205000 (Board) Fax: 022-49205022
1, &s is .e%% kno.n, a number of state governments in our $ountr# have ena$ted %a.s, .hi$h are
$a%%ed as )Right to Servi$e &$ts+ to ensure that de%iver# of servi$e b# government servants is
provided in a time/bound manner, -hese ena$tments provide for $ompensation to pub%i$ if the#
fai% to get their re<uirements $omp%eted .ithin the time/frame stipu%ated in the a$ts, -here is a
need for a simi%ar s#stem to be introdu$ed in a%% $ommer$ia% banks as these institutions have
%argest impa$t on the ever#da# %ife of peop%e of our $ountr#,
4, -he *harter shou%d a%so provide for a $ertain time frame for reso%ving issues and pres$ribe
$onditions under .hi$h individua% $omp%aints gets $onverted into $%ass/a$tion suits providing for
re$tifi$ation .ithout needing ever# individua% to fi%e a $omp%aint, It is unreasonab%e and unfair to
e7pe$t ever# sing%e $ustomer to fi%e separate $omp%aint for the same issue, -his .ou%d not on%#
he%p those .ho do not understand the nuan$es of making a $omp%aint but a%so $onsiderab%#
redu$e the burden of redressing individua% $omp%aints, .hi$h .i%% e%evate the entire pro$ess of
$omp%aints redressa% me$hanism to a ne. %eve% of $ustomer $onvenien$e and fair/p%a#,
2, Dr Deepa%i 5ant 6oshi, ;7e$utive Dire$tor of RBI .hi%e speaking on the o$$asion of !R 5ai
!emoria% &.ard fun$tion %ast .eek spoke about the need for an )ingrained suitabi%it# $%ause in
produ$ts+ that .ou%d put the onus of the suitabi%it# of the produ$t on the banker, instead of the
$ustomer, -his .ou%d natura%%# mean that it .as high time that the finan$ia% servi$es and banking
institutions move from the ma7im of *aveat ;mptor 'Bu#er Be.are( to *aveat =enditor 'Se%%er
Be.are( she added, "hi%e it is an e7$e%%ent idea to put this do$trine in to pra$ti$e, the most
important part of imp%ementing these prin$ip%es is to set stringent norms to be fo%%o.ed b# the
se%%er institutions and make the se%%er a$$ountab%e through inbui%t pena%ties for mis/se%%ing, and
$ompensating the $ustomer not on%# for the finan$ia% %oss, but a%so for the agon# and anguish
$aused, "e fee% that this re<uires to be proper%# $odified in the *harter .ithout an# ambiguit# to
make it effe$tive and purposefu%,
0hy is it ne1essary to intro&u1e +enalties 2 1om+ensation for non!1om+lian1e/
-here are a number of instan$es .here $ustomers do not get satisfa$tor# servi$e from banks and
majorit# of them si%ent%# suffer on a$$ount of indifferen$e of banks even to provide simp%e basi$
servi$es %ike disbursing the pension on the stipu%ated dates, pa#ing interest on fi7ed deposits on
due dates, et$, De%a# in putting through these simp%e transa$tions for .hatever reasons, $auses
$onsiderab%e in$onvenien$e and agon# to those depending on%# on su$h in$ome streams for their
%ive%ihood,
It is, therefore, ne$essar# for the RBI to identif# a%% t#pes of servi$es rendered b# banks and
stipu%ate time norms for de%iver#, .hi$h shou%d be mandatori%# honoured b# banks .ithout
e7$eption, If an# bank does not $omp%# .ith these time norms for .hatever reasons, the# shou%d
be made to pa# a minimum $ompensation to the $ustomers at a rate, .hi$h .i%% serve as a
deterrent for repetition of su$h instan$es in future, -o ensure that this s#stem of $ompensating
the $ustomers is fo%%o.ed both in %etter and spirit, the bank shou%d automati$a%%# $redit the
$ompensation pa#ab%e to the $ustomers: a$$ount .ithout even asking for it,
Moneylife Foundation 305, 3rd Floor, Hind Service Industries Premises, Off. Veer Savarkar Marg, Shivaji Park,
Dadar (W), Mumbai 400028. Tel: 022-49205000 (Board) Fax: 022-49205022
-he RBI has so thoughtfu%%# introdu$ed re$ent%# a s#stem of $ompensating banks: $ustomers
.hose a$$ounts get debited but fai% to get $ash from the &-!s, at the rate of Rs100 per da#:s
de%a# after ten da#s of making a $omp%aint and this s#stem is in vogue for over a #ear no.,
"hi%e this is restri$ted at present to on%# to one t#pe of banking transa$tion, it is no. ne$essar#
to e7tend these guide%ines to a%% t#pes of banking transa$tions .ith a vie. to make banking
servi$es a right of ever# individua%,
Prote1t the rights to a++roa1h ban.ing ombu&sman in 1ase of &issatisfa1tion:
9o.ever, it shou%d be ensured b# the RBI that this s#stem of giving $ompensation to the
$ustomer at the rates stipu%ated b# the $entra% bank shou%d not take a.a# the rights of the banks:
$ustomers to approa$h the banking >mbudsman for a higher $ompensation, if he or she fee%s that
the $ompensation offered b# the bank is not $ommensurate .ith the agon# and suffering
undergone b# the $ustomer due to the defi$ien$# in servi$e provided b# the bank, or instan$e, if
a $he<ue is dishonoured b# a bank for no va%id reason, the $ustomer not on%# %oses his fa$e, but it
affe$ts his reputation in so$iet#, .hi$h $annot be eva%uated in terms of mone#, &s per the
banking pra$ti$e, the sma%%er the amount of the $he<ue, bigger the $ompensation pa#ab%e, as it
hurts one:s reputation most, if a $he<ue for a re%ative%# sma%% amount is .rong%# returned b# the
bank for the reason of insuffi$ient funds, .hen the a$$ount had ade<uate funds to meet the
$he<ue, -herefore, the $ustomer shou%d have a right to approa$h the >mbudsman, if he?she is not
satisfied .ith the $ompensation pres$ribed b# RBI and paid b# the bank,
In a$tua% pra$ti$e b# introdu$ing this ne. s#stem of empo.ering depositors and formu%ating
$ompensation norms, it ma# bring do.n the $omp%aints %odged .ith the banking ombudsman
$onsiderab%#, and he%p in improving the banker $ustomer re%ationships to a %arge e7tent,
3mulate international +ra1ti1e of 1om+ensating ban. 1ustomers:
9ere are a fe. e7amp%e of ho. 8@ banks vo%unteered to $ompensate the $ustomers, .ho had
fa$ed prob%ems .ith their a$$ounts,
BB* reported that >n A !ar$h 2011, $ustomers of Ro#a% Bank group $overing Ro#a% Bank of
S$ot%and 'RBS(, Bat"est Bank and 8%ster Bank .ere unab%e to a$$ess their a$$ounts and $ou%d
not even use their $ards to .ithdra. mone# from &-!s for a $oup%e of hours, -he banking
group, .hi$h is majorit# o.ned b# the 8@ government, b%amed a )hard.are fau%t+ for $ausing
its s#stems to $rash, but prompt%# apo%ogi0ed and promised to $ompensate $ustomers .ho
e7perien$ed prob%ems be$ause of the disruption, .hi$h %asted for a $oup%e of hours, -he RBS
banking group had to honour $%aims from mi%%ions of $ustomers .ho .ere unab%e to .ithdra.
$ash, pa# for goods and servi$es or $arr# out te%ephone or on%ine banking for no fau%t of theirs,
9ere is an e7amp%e of ho. one $ustomer got $ompensated b# the bank even for a %itt%e
embarrassment fa$ed b# him at a restaurant,
Moneylife Foundation 305, 3rd Floor, Hind Service Industries Premises, Off. Veer Savarkar Marg, Shivaji Park,
Dadar (W), Mumbai 400028. Tel: 022-49205000 (Board) Fax: 022-49205022
&s per the BB* report, a $ustomer of the bank had to get someone e%se to pa# for his dinner that
evening, as his $ard .as not a$$epted due to a te$hni$a% g%it$h in the bank, -he bank instant%#
offered C0 pounds 'e<uiva%ent of about RsC,000( for the embarrassment $aused and it .as paid
into his a$$ount straight a.a#,
In 6une 2012, about 1A mi%%ion $ustomers of RBS, Bat"est and 8%ster Bank had diffi$u%ties .ith
$ash .ithdra.a%s, phone and on%ine banking and debit $ards, .hi$h the bank had b%amed on a
soft.are g%it$h, It .as reported b# BB* that the disruption .as one reason .h# Stephen 9ester,
*;> of RBS de$%ined to a$$ept part of the annua% bonus, In fa$t, the bank paid out over 122
mi%%ion ster%ing pounds to $ustomers as $ompensation %ast #ear, and bran$h opening hours .ere
e7tended to he%p $ustomers .ho e7perien$ed diffi$u%ties, Su$h is the sensitivit# to $ustomers:
in$onvenien$e in 8@, .hi$h is .orth emu%ating b# banks in our $ountr#,
RBI shoul& ta.e a 1ue from this an& a1t ob4e1ti5ely:
It is ver# $ommon for banks in India to put the b%ame on $omputers for an# disruption in their
operations and rare%# pa# an# heed to $ustomer $omp%aints .hen $omputers fai% to de%iver, If
$omputers fai%, it is not an a$t of God, but s<uare%# a human fai%ure, and it is the $omputer
maintenan$e peop%e .ho shou%d be he%d a$$ountab%e, But so far as the $ustomers are $on$erned,
it is the bank that shou%d be he%d responsib%e for $ompensating the $ustomers .ho have suffered
for no fau%t of theirs, &s seen in the 8@ e7amp%e, banks take fu%% responsibi%it# for $omputer
g%it$hes as .e%% and had she%%ed out substantia% $ompensation to $ustomers even .hen the
disruption .as $aused b# hard.are and soft.are prob%ems, "hi%e banks in 8@ have vo%unteered
to $ompensate the $ustomers due to pub%i$ pressure and threat of %oss of business, .e $annot
e7pe$t banks in India to fo%%o. suit, as the# are thi$k/skinned to the point of being indifferent to
pub%i$ opinion and insensitive to $ustomer in$onvenien$e,
It is, therefore, ne$essar# for the RBI, to step in and introdu$e a s#stem of pena%ties and
$ompensation for defi$ien$# in a%% banking servi$es .hi$h shou%d be ben$hmarked against
internationa% best pra$ti$es and fo%%o.ed b# ever# bank in the $ountr#, 5ena%i0ing banks and
$ompensating the $ustomers for the defi$ien$# in servi$e de%iver# standards shou%d be the
bedro$k of the proposed *ustomer *harter to give a ne. orientation to $ustomer servi$e
pra$ti$es and $reate an environment of trust and $onfiden$e bet.een the banks and the banking
pub%i$,
-hese are on%# i%%ustrative and not e7haustive suggestions for the RBI to ponder over and bring
out a $omprehensive $harter, .hi$h $an make banks more effi$ient, more $ompetitive and more
$ustomer oriented in the %arger interest of the banking industr#, It is on%# b# making the
minimum %eve% of <ua%it# of servi$e mandator#, $oup%ed .ith pena% provisions for non/
$omp%ian$e, that pub%i$ $an hope to get troub%e free, stress free and tension free banking, .hi$h
the# right%# deserve,
Moneylife Foundation 305, 3rd Floor, Hind Service Industries Premises, Off. Veer Savarkar Marg, Shivaji Park,
Dadar (W), Mumbai 400028. Tel: 022-49205000 (Board) Fax: 022-49205022
0i&en the 1onsultation +ro1ess to e5ol5e an e+o1h ma.ing Charter:
-he present draft of *harter of *ustomer Rights appears to be an in/house e7er$ise of RBI .ithout an#
e7tensive $onsu%tation .ith the stake ho%ders, 8n%ess and unti% the $harter is .idened to e%i$it the vie.s
of vita% stakeho%ders %ike depositors, borro.ers and a%% other $ustomers of banks, it .ou%d not be
$omprehensive enough to $over the entire gamut of banking servi$es .hi$h is essentia% to make an
impa$t in the rea% .or%d of $ontradi$tions, imperfe$tions and un$ertainties,
-he RBI shou%d, therefore, immediate%# $onstitute a $ommittee of e7perts .ith majorit# representation
from the users of banks: servi$es and other stake ho%ders to ensure that a fair, just and e<uitab%e *harter
of *ustomer Rights is evo%ved in the best interest of $onsumers, "hat .e need is an epo$h making
do$ument that $an $hange the fa$e of Indian banking for the greater good of bank:s $ustomers in
parti$u%ar and our e$onom# in genera%,
-hank #ou for #our time and attention and %ook for.ard to a %ine in a$kno.%edgment,
"ith our best regards,
4ours sin$ere%#,
or !one#%ife oundation,
Su$heta Da%a% Debashis Basu
ounder/-rustee ounder/-rustee
'DE2014121A( 'DE200EA12A(

,$$
!r, R, Gandhi
Deput# Governor
Reserve Bank of India
,$$
Dr, Deepa%i 5ant 6oshi
;7e$utive Dire$tor
Reserve Bank of India
,$$
!r, &run 5asri$ha
*hief Genera% !anager
*ustomer Servi$e Department
Reserve Bank of India
Moneylife Foundation 305, 3rd Floor, Hind Service Industries Premises, Off. Veer Savarkar Marg, Shivaji Park,
Dadar (W), Mumbai 400028. Tel: 022-49205000 (Board) Fax: 022-49205022
5SF & rea% %ife stor# that appeared in G5roa$tive Indian: re%ating to a Senior *iti0en:s intera$tions .ith
his bank demanding his rights .ith a bank offi$er is reprodu$ed here be%o. for #our kind information,
Proa1ti5e In&ian
Ref%e$tions on ever#da# %ife in India and e%se.here
If more 1ustomers &eman& goo& ser5i1e 6
5osted on &ugust 10, 2014
&t about 10,00 am one da#, I submitted a re<uisition for a Demand Draft at a bran$h of a %eading private
se$tor bank, -he person at the $ounter to%d me that the DD $ou%dn:t be issued be$ause the printer .as
not .orking, She assured me that the DD .ou%d be de%ivered to me at m# residen$e b# 1,00 pm that da#,
I rep%ied, )>@, But, p%ease a%so pa# me Rs, 100,00 Hate 5a#ment ee and interest for one da# I 403
per annum, -hat:s .hat #our bank $harges me if I pa# m# $redit $ard dues after the due date,+ She
%ooked tota%%# pu00%ed, then spoke on the inter$om to somebod# and re<uested me to meet the !anager
in his room, I po%ite%# stated that I .anted m# DD immediate%# and I had no desire to meet the !anager,
"ithin a fe. se$onds, the !anager $ame to meet me, I to%d himF
a, &$$ording to his bank:s norms, Demand Drafts shou%d be issued .ithin 10 minutes, -here is no
dis$%aimer about printer breakdo.n, et$,,
b, 9is bank $harges a%% $ustomers Rs, 100,00 Hate 5a#ment ee and interest I 403 per annum if $redit
$ard dues are paid after the due date, irrespe$tive of the reason for de%a#, In a%% fairness, the same s#stem
shou%d app%# .hen his bank issues a DD after 10 minutes,
"hen the !anager rep%ied that there is no provision for Hate 5a#ment ee and interest for de%a#s in
issuing DDs, I to%d him I .ou%d make m# demand b# a %etter to him .ith a $op# to the Banking
>mbudsman, 9e re<uested me to .ait for a fe. minutes and .ent to his room,
&bout 10 minutes %ater, he $ame out, gave me a hand.ritten DD and e7p%ained that he $ou%d do this
on%# after taking permission from his senior, I thanked him and to%d him that, if he had done this in the
ver# first instan$e, he .ou%d have saved himse%f the embarrassment of being spoken to b# me in the
presen$e of his other $ustomersJ
I had observed that other $ustomers, in$%uding a fe. e%der%# persons, .ere being asked to $ome ba$k to
the bank at 4,00 pm to $o%%e$t their DDs, &%% of them agreed .ithout a murmur of protest, I .onderedF
1, "ere these persons not a.are of their rights as $ustomersK
2, "hi%e a%% others .ere being asked to $ome ba$k to the bank to $o%%e$t their DDs, I .as to%d that the
DD .ou%d be de%ivered to me at m# residen$e, "h# this dis$riminationK 9ad the person at the $ounter
been instru$ted to hand%e potentia% Gtough $ustomers: .ith $areK
Moneylife Foundation 305, 3rd Floor, Hind Service Industries Premises, Off. Veer Savarkar Marg, Shivaji Park,
Dadar (W), Mumbai 400028. Tel: 022-49205000 (Board) Fax: 022-49205022
-here are time norms for various servi$es avai%ab%e at bank bran$hes in India, or e7amp%e, one bank:s
norms areF
*ash pa#mentF "ithin E minutes
Issuan$e of Demand DraftF "ithin 10 minutes
*o%%e$tion of %o$a% $he<uesF "ithin 2 .orking da#s
*o%%e$tion of outstation $he<uesF "ithin 14 .orking da#s,
I:m not sure if a%% banks have the same norms, and if these norms are e7pe$ted to be adhered to ver#
stri$t%#, &s far as I:m $on$erned, these norms are indi$ative, and s%ight deviations are a$$eptab%e be$ause
of unforeseen situations %ike po.er $ut, s%o. s#stem, et$,
If the servi$e in an# organisation is be%o. the stated norms or be%o. m# reasonab%e e7pe$tations, I
demand better servi$e and, in most $ases, I get better servi$e,
8nfortunate%#, most persons in India are e7treme%# undemanding $ustomers, -he# patient%# put up .ith
poor servi$e, Some are not even a.are of their rights as $ustomers,
If more $ustomers demand good servi$e, poor servi$e .i%% be$ome the e7$eption rather than the ru%e,
Moneylife Foundation 305, 3rd Floor, Hind Service Industries Premises, Off. Veer Savarkar Marg, Shivaji Park,
Dadar (W), Mumbai 400028. Tel: 022-49205000 (Board) Fax: 022-49205022

You might also like