The Hindu : Tamil Nadu / Chennai News : A plethora of services that one banks on

Online edition of India's National Newspaper
Monday, Mar 31, 2008
ePaper | Mobile/PDA Version

Tamil Nadu

Tamil Nadu - Chennai

A plethora of services that one banks on

City Bureau

Nationalised banks have improved services in the face of competition from private sector, say customers

— Photo: K. V. Srinivasan

ON a HIGHER TRAJECTORY: Banks and the different services they offer have multiplied in recent years. A view of a busy nationalised bank in Triplicane.

CHENNAI: City residents have seen a quantum rise in the number of bank branches and banking services over the last decade. Besides the regular operations, banks now provide personal, car and home loans, deal in mutual funds, promote insurance and pension products and accept remittances on behalf of various service providers such as telecom firms.

This period has also been marked by the growth of private sector banks, prompting a reorientation of the strategies by public sector banks.

The private banks have acquired a reputation for better service, hidden transaction charges, outsourced customer care and, in one example, the employment of goondas for loan recovery. The nationalised banks have improved services, following the competition, and their transaction costs are relatively less, say customers.

Several customers today have accounts in both nationalised and private sector banks. Public sector banks are largely considered a safe choice. However, with more firms opting for electronic clearance of salaries through private banks — mainly owing to their aggressive marketing strategies — salary accounts are largely held in the new generation banks.

Out of the 66 banks operating in the city, 21 are private banks. Together these banks have 905 branches in the city. Officials of the Reserve Bank of India (RBI) here said the number of banks had marginally decreased due to mergers. The number of banks in the city in 2005 was 70. The RBI allowed merger of banks when smaller banks faced the risk of failure, an official said.

RBI’s Regional Director (Chennai) F.R. Joseph said that The RBI also presses the banks to introduce new products to suit the requirement of the customers. The no-frill account was one such product envisaged to provide basic banking services to a larger section of the population. Those opting for such accounts would be provided basic banking services under which they could have minimum balances as low as Rs.5 or Rs.10, he said. Under these schemes, the customers cannot maintain a balance above Rs.50,000 and cannot avail themselves of credit above Rs.1 lakh in a year. If these conditions are not met, the account would be treated as a regular savings account.

In view of the increasing competition, the banks have also liberalised the norms for issue of loans. A senior official of SBI said that the aggressive marketing of personal loans was also linked to the rising spending power of customers. As such loans were usually linked to salary accounts, recovery has not posed a problem for the bank, he said.

But a leading private sector bank was fined Rs.50 lakh by the Delhi Consumer Commission last year for employing goondas to recover loans. Earlier in the same year, the Supreme Court had disapproved of the practice in a case relating to the bank. “This is a frightening scenario, given that private banks have begun to outsource customer care,” said J.Jacob, a customer of a private bank. “I once inquired at a private bank about a vehicle loan but decided against taking one. One week later, I got a call demanding the repayment of the first instalment.”

New technology and charges

The growing competition and the need to provide value-added services have resulted in increased use of technology. This has led to a reduction in the footfalls in bank branches, an SBI official said. Banks are encouraging transactions through Automated Teller Machines (ATMs), the phone or on the Internet. Banks even charge fees for direct transactions that are free if the ATM / online banking services are used instead.

Unless specifically asked for, most of the private sector banks do not offer passbooks. Duplicates of statements can be had at a cost. “I wanted a duplicate statement and I was charged Rs.100 for it,” said K. Anne, a customer of a private bank.

Many of the banks provide cheque books with name of the account holders printed on them. Some of the banks, however, have limited the number of cheque books that would be issued free to an account holder in a year.

Current account-holders, particularly retail traders, say that they are being hit badly by the increase in bank charges, including demand draft commission. Tamilnadu Petroleum Dealers’ Association president M. Kannan said that though the customer care at banks has increased in recent years, the charges have also shot up. These are eating into the profits, particularly of traders dealing in controlled price products such as petrol and diesel. There is little that petroleum dealers could do as high levels of cash transaction make it mandatory for them to bank daily for security reasons, he added.

Purchase of train tickets or not maintaining the required minimum balance can also attract charges. A customer in one of the private sector banks said he was charged Rs.11 every time he booked railway tickets online. The minimum balance for savings account in most foreign banks is Rs.5,000. If the minimum balance is not maintained throughout the quarter, then Rs.750 is deducted as non-maintenance charges.

Some of the banks also charge for unused or cancelled cheques and for issuance of quarterly statement apart from those that the bank itself provides. A customer said he was charged Rs.60 for requesting a break up of his quarterly statement for a two month period. A bank manager in an international bank in Chennai agreed that charges were levied for certain services, but claimed that it was loan defaulters who presented a wrong picture of the banks. When loans are issued by foreign banks, they provide a three-year period and when a borrower defaults on EMI, legal action is taken, he said.

(Inputs from J.Malarvizhi, K. Lakshmi, R.Sujatha, Kannal Achuthan and N. Ravi Kumar)

Printer friendly page
Send this article to Friends by E-Mail

Tamil Nadu