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Five Things That Are Wrong With Indian Banks, According To The Reserve Bank

Five Things That Are Wrong With Indian Banks, According To The Reserve Bank
MUMBAI, INDIA JANUARY 30: SS Mundra, chairman and managing director of Bank of Baroda during MINT annual Banking Conclave on Indian Banking: New Landscape, on January 30, 2014 in Mumbai, India. (Photo by Abhijit Bhatlekar/Mint via Getty Images)
Mint via Getty Images
MUMBAI, INDIA JANUARY 30: SS Mundra, chairman and managing director of Bank of Baroda during MINT annual Banking Conclave on Indian Banking: New Landscape, on January 30, 2014 in Mumbai, India. (Photo by Abhijit Bhatlekar/Mint via Getty Images)

The quality of service offered by Indian banks to its customers is rather lackadaisical. This is the inference you can draw from a recent speech by the deputy governor of the country's central bank, the Reserve Bank of India. SS Mundra, the deputy governor, spelt out five areas that need urgent improvement.

1. Customer complaints about transactional fraud and identity theft such as unauthorized fund transfers, fraudulent withdrawals from ATMs using fake cards, and instances of phishing, have increased “manifold”. Mundra felt that it is critical for banks to address such financial fraud to shore up customer confidence, while educating customers on the dangers of potential fraud. He added that the RBI is examining additional regulation to limit the liability of customers on card-related and electronic transfer fraud.

2. A survey of almost 4,000 ATMs across the country revealed that about one third of the ATMs were not working. ATMs were also found to be in violation of regulations on display material and facilities for differently-abled people.

3. There have been an increasingly large number of cases of misleading and “mis-selling” of third party products, specially insurance products, which are often sold to customers bundled along with loans. Mundra cited a recent incident that involved a senior citizen being sold an investment scheme promising a tax-free 11% return. However, upon a visit from another banking representative who prompted the citizen to prematurely close fixed deposits worth Rs7 lakh and invest in the same scheme, the individual ended up earning only 3.5% return instead of the promised 11%.

4. Many banks were also violating RBI guidelines that prohibit the imposition of extra charges on the non-maintenance of minimum balance in a savings bank account, leading to instances of negative balance in these accounts.

5. The status of the implementation of customer service codes set by banking practices watchdog Banking Codes and Standards Board of India (BCSBI) a decade ago remains “far from satisfactory”. There have been several instances of “flagrant violations” of the code, evident not just from the numerous complaints received by banking ombudsman offices but also through customer interactions.

Mundra was addressing a conference organized by BCSBI in Mumbai.

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This article exists as part of the online archive for HuffPost India, which closed in 2020. Some features are no longer enabled. If you have questions or concerns about this article, please contact indiasupport@huffpost.com.