Simplify retail products: RBI to banks

The Reserve Bank of India (RBI) wants banks to simplify their retail products as it feels banks are selling what they want to sell rather than what the customers want.

"The emphasis in retail boom is on selling. Banks must have plain vanilla products. Banks offer complicated products which they want to sell and not what the customer wants," Kaza Sudhakar, chief general manager "" customer service department at RBI, said at the Indian Banks' Association's second annual retail banking conference.

Besides complicated products and services, bank customers are also being harassed by false selling and false promotion, lack of transparency and an absence of financial education and credit counselling, according to Sudhakar.

Referring to the working group's report on reasonableness of bank's service charges, he said, "Banks should have just and fair charges and do away with any charge for no transactions."

The central bank also warned banks against pushing all core banking charges to customers, who may not even use those services.

Sudhakar also pointed out that banks have failed to deliver end-to-end processing to the customer. Straight-through processing should not be only up to debit from customer's account but up to credit to the beneficiary's account, he said.

The RBI has taken several steps to safeguard customer's interests such as revising the Banking Ombudsman Scheme, including credit card complaints, starting a customer service department in the RBI, ensuring service charges and fees are available on bank web-sites and display boards and also a complaint form.

"All steps should not be regulatory driven. Banks should not be told how to sell their products. It is the job of the banker," said Sudhakar.

The maximum customer complaints involve high-end technology banks. "This could be either because their customers are more literate or because there is a wider disconnect," said Sudhakar.

Banks need to provide a higher level of grievance redressal within the bank against the present attitude of "letting customers go to the ombudsman" after the initial level of redressal.

At present, 90 per cent of complaints are redressed on mere reference by the banking ombudsman to a bank. "This is an attitudinal issue," said Sudhakar.