RBI governor Raghuram Rajan’s suggestion to banks that they not penalise customers for not having a minimum balance in their savings accounts has not evoked much favour with bankers, particularly private and foreign banks that charge hefty penalties when minimum balance norm is breached. Dr Rajan suggested that instead of penalising them one can start charging for services like ATMs and cheque books till the balance is achieved. This, according to a private bank chief, will put a heavy burden on the customer as paying for services obviously costs more than the penalty charged. He has a point if this is so. Dr Rajan’s suggestions were made in good faith, with the laudable intention of protecting the bank customers, and there must be some way that this suggestion can be tweaked in favour of the customer.
Dr Rajan has recognised the imperative need for customer protection and he has said the RBI, which is all for transparency, is proposing framing of regulations for comprehensive consumer protection. So while this process is on the concerns raised by bankers can be taken into account. There is no doubt that customers need protection against powerful institutions as few of them have the stamina to take on these bodies. HSBC recently had to make one of the biggest ever payments by a foreign bank to actor-singer Suchitra Krishnamoorthi in a case of mis-selling, and the case dragged on and saw many twists and turns from 2007 till March 2014.
