Let us hope that this noble thought of making banking services a right of every citizen does not remain a wishful thinking, but a way of revitalizing the banking services to enable over a billion people of this country to lead a life of security and safety of their hard-earned savings

“Just as education is a right, just as speech is a right, just as work is a right, banking services is a right of every individual”, said finance minister P Chidambaram while speaking at a function to celebrate the 102^nd  Foundation Day of Central Bank of India last week. He further said that banks were not doing a favour when they provide banking services; they were only discharging their duties.
 

This is a wonderful thought coming after 43 years of nationalization of the first set of 14 banks on 19 July 1969. Unfortunately, this right to banking services is not guaranteed under our country’s constitution. But fortunately, there is no need for any amendment to the constitution or any other act, as RBI (Reserve Bank of India) has got the powers to enforce this right under the existing laws though a simple fiat. It is, therefore, for the RBI to implement this right of every citizen to receive a satisfactory banking service by codifying the time norms for banking services and laying down guidelines for their compliance. It is only by enforcing this right that we can hope to achieve universal banking for over a billion Indians, many of whom are on the threshold of getting all their dues from the government in their banking accounts through the direct cash transfer system proposed to be introduced from the beginning of next year.
 

The RBI has already introduced a system of compensating banks’ customers who fail to get cash from the ATMs at the rate of Rs100 per day’s delay after ten days of making a complaint and this system is in vogue for over a year now. While this is restricted at present to only to one type of banking transaction, it is now necessary to extend these guidelines to all types of banking transactions with a view to make banking services a right of every individual. Following are some of the steps required to be taken in pursuance of this objective.

1. All requests for financial transactions must be completed within 24 hours:

At present banks do not attach any importance to customers’ requests to carry out financial transactions within a time-bound manner. Invariably one finds delay in executing customers’ instructions, putting the customer into financial loss, and the banks do not bother to compensate the customer for such lapses on their part. It should, therefore, be made mandatory for all banks to carry out all instructions for financial transactions within 24 hours, failing which banks should be penalized and asked to pay cash compensation to the customers. In addition to compensation, such transactions should be value dated to the earlier date of request to ensure that the customers do not suffer any monetary loss on account of delay in executing the transactions.
 

For instance, if a customer requests his bank to transfer a lump sum amount from his savings account to a fixed deposit account, the bank should normally comply with such instructions on the same day. But if it fails to do so even within the next working day, banks should not only be asked to pay appropriate compensation for each day’s delay, but also give the benefit of interest on the deposit from the original date of request by value dating the deposit, so that the customer does not lose the benefit of higher interest for which he is entitled to. This is not a double benefit to the customer, but only a compensation for the anguish caused to him by the bank in not honouring his instructions on time. Similarly for all such financial transactions, like payment of taxes, payment on account of standing instructions, transfer to PF accounts, payment of monthly/quarterly interest on fixed deposits, investment in mutual funds by systematic investment plans (SIPs), etc, such guidelines of compensation plus value dating must be invariably followed, without even asking by the customer.

2. Pensioners should be compensated if pensions are not credited on the due date:

At present all pensioners are supposed to receive their pensions on the first working day of the month. But many times pensioners anxiously waiting for their monthly pension are not disbursed pensions on the due date, but are paid with a delay, putting  the pensioners at the mercy of banks and they suffer in silence. Bank managements are not aware of the living conditions of many a pensioners and give a scant respect to the needs of these people, who make a living on the meagre pension received from the central and state governments. In all such cases, if the pensions are not credited on the due date originally fixed, banks should be asked to pay appropriate and adequate cash compensation for the delay and such compensation should be progressively increased each day as a measure of penalty to the banks for causing inconvenience to the pensioners. This system should be followed for all subsidy payments now proposed to be disbursed by the central government directly into bank accounts of beneficiaries, so that people depending on such government disbursements are not deprived of the benefits on the stipulated dates.

3. Customers must be compensated if decisions on loan applications are not communicated within a given time-frame:

At present though there are certain guidelines issued by the RBI for all banks to decide on the request for loans within a certain number of days depending upon the sanctioning authority and the amount of loans, these guidelines are more observed in their breach rather than in their adherence, resulting in avoidable inconvenience to customers. In all such cases, the RBI should fix appropriate compensation to the applicants for the delay caused for no fault of theirs and this should serve as a penalty to banks, which do not observe time discipline laid down for conveying sanction of loans or otherwise. This should also apply for disbursement of sanctioned loans within a time frame from the date of request from the customer.

4. TDS or any other amounts wrongly deducted or debited should be refunded with interest along with compensation for the wrong doing:

Many a times banks keep on deducting TDS (tax deducted at source) even where Form 15(G) or 15(H) has been submitted and then refuse to refund this amount when their mistake is pointed out to them. They invariably ask the customer to claim the refund from the Income Tax office by filing a return of income. In all such cases, banks must be asked to refund the TDS wrongly deducted along with the interest from the date of debit till the date of re-credit of this amount. In addition to crediting this amount with interest, customers should be appropriately compensated for the wronged action of the bank. This system should be followed for all wrong debits affected by banks and giving compensation to the customer for every day’s delay should form part and parcel of rectification of all mistakes done by the bank without any demand from the customer.

5. All type of services of banks should be benchmarked with time norms:

Apart from the delay in executing financial transactions, banks are lax in servicing customers’ routine requirements also, like sending statement of accounts, tax deduction certificates at the end of every quarter as required by the law, settling death claims, transferring account from one branch to another and a host of other services which do not receive the attention they deserve. Even for these routine services also time norms should be prescribed by the RBI and where they are not complied with, appropriate compensation should be prescribed to ensure that the banks take these services with the seriousness they deserve to make life easier and smoother for the harassed bank customers of today.  
 

The aforesaid services are only illustrative and not exhaustive and the RBI, in the interest of overhauling the banking services in our country, should come out with a complete list of banking services which should be covered under the rights of individuals and provide a mechanism for implementation on the lines mentioned above, to make banking a pleasurable experience for the citizens of our country. Many state governments have already introduced guaranteed service in government departments with provision for giving compensation to the applicants for delay, if any, caused by the apathy of state officials. The steps enumerated above are only an extension of such a guaranteed service to banking public, who, as the FM says, have a right to expect from the banking institutions of our country. 
 

Read: Right step to weed out corruption: ‘On Time’ service delivery enactments —Moneylife  dated 19 April 2012.
 

Let us hope that this noble thought of making banking services a right of every citizen does not remain a wishful thinking, or a political gimmick, but a way of revitalizing the banking services to enable over a billion people of this country to lead a life of security and safety of their hard earned savings, for which banks owe a duty as the repositories of the wealth of our nation.
 

 (The author is a banking professional, writing for Moneylife under a pen-name ‘Gurpur’)