When the Crown stumbled

Being somewhat familiar with Internet and computers, I have always been making my banking transactions from home, so that the bank is relieved of hosting at least one customer less at the branch. I am a strong advocate of Internet banking and use of other means which would desist customers from visiting a branch. I have also been under the impression that when you have sufficient balance at your disposal and the means to access it, you are safe at anytime to face any exigencies in life. And unfortunately, it was this surmise that fell in a heap early this week. No my bank did not go bust nor was there any run on the bank. Customers were simply unable to withdraw their amount and make any transactions. Their bank balance suddenly looked like the film heroine whom you could admire from a distance but could do nothing more than dreaming about doing!

The bank originally established to encourage 'Overseas' operations but very much 'Indian' as for its banking roots are concerned screeched to a halt last weekend. The bank, which has so far been boasting of being the only bank in India to be using a home grown software developed by its own computer department manned by its  dedicated set of domain rich knowledgeable officials, was in fact driving with its proprietary software for quite sometime, with occasional hiccups. The hiccups, as and when happened, were deftly handled more by the patience of its loyal clientele than by the experts who  pitched in to put it back on rails.

What happened this week was a disaster- What started as a trickle slowly spread from Internet Banking to the ATMs until the final crown viz., the main banking software came tumbling down, leaving both the branch officials as well as the hapless customers aghast. For close to four days, people could not effect any transactions, withdraw money, close loans, make overdue payments resulting in a reported loss of hundreds of crores of rupees. While Rome was burning, the Bank chose to play violin with its own melancholy of " Unable to service due to Maintenance...". The Bank chose to clean up its own backyard for four days, at the cost of innocent and patient customers, as per the bank’s self confessed announcement at its net banking site.

At branches there were many instances of customer silently suffering such as unable to withdraw matured deposits, a parent restricted from proceeding with purchases for their wards’ marriage and the variations of rupee value and gold prices not exactly helping them. An international travel could not be made and a student was forced to continue to live with the suspense about the fate of his educational loan application. 

The rumor mills were also doing the rounds which forced even some of the irate customers to rush to the branches as they were fearing the worst for the bank, since it  could not transact for days continuously.

The branch officials were the worst to be affected as they were left to fend for themselves against the angry customers, who at places even threatened to take law into their own hands. Some frustrated staff, unable to face the customer’s ire chose to vent their feeling over the social network.

A software crash is not an unknown incident and it can happen to any organization at any time. What was more appalling was the reaction of the bank to the disaster in keeping everyone in the dark about the reason and the status of the remedial measures. If they have taken four days to maintain the software at customer cost, as they claim, I have a feeling that their legal department will be having its hands full, facing compensatory claims in the months to come. Clearly the bank was found wanting in handling the situation and in my opinion, this is more a disaster from the PR perspective for the bank than the software .

It is also time for the bank to introspect whether it is adequately shielded against the shortcomings that normally accompany the home grown software such as sufficiency and independence of testing of its software, periodical independent audits and Disaster Recovery Measures.

A disaster of this nature impacting the customers, though tragic, is also viewed  in its aftermath as an awakening exercise. It will be in order for the Board to constitute an Independent enquiry to find out the robustness of the software to meet the increasing functional and non-functional stress and expectations arising out of the flurry of new branches, whether lessons learnt from any previous such outages were addressed and the effectiveness of the Disaster Recovery Management which is in vogue.

As one who is associated with the bank for decades, I bled to hear customers using expletives in their ire. But, it was also heartening to hear that some of the branches went out of the way to meet the customers’ needs by making payments despite the non availability of the support system.  It is such gestures from loyal staff that helps me to retain my belief that this bank will be held high soon.

Unlike yesteryear when customers used to visit branches to form opinions, present day clients conduct their banking transactions from across the globe. Their gateway to the bank is its software which sits as a crown on the massive edifice of the bank, built on years of service and reputation. When it falters, it creates a very bad taste in the mouth. So, it is paramount that such outages are reduced to absolute minimum in terms of minutes and not hours and days. Hope banks  remember that it is not a sin to falter but to allow that to repeat, is. 

Are Bankers ready for Appraisals?

As part of the ongoing wage revision talks between Indian Banks Association (IBA)  and workmen representatives, it is reported that the IBA is keen on introduction of concepts like Cost to company (CTC), Fixed pay and Variable pay. These concepts are in vogue in private sectors and more popularly in IT companies, where these are used to reflect the measure of employee's effectiveness. To gauge this measure there is an elaborate system of defined and accepted Performance Appraisal Process which are used to continuously monitor the performance of the employees as against their goals defined at the beginning of every year. Though there are still lacunas and challenges in this system, the private sector is well equipped to handle them to a reasonable satisfaction of all stakeholders.

The attempt of the Nationalized banks in India to sneak in this concept could be viewed from many perspectives. While it no doubt projects the forward thinking of the Bank management to keep pace with  other sectors' practices, one is not sure whether this is an attempt to remain on par with their private brethren or is this an attempt to force an opinion of the collective bargaining capabilities of the workmen. The later, if true, would make Chanakya blush with the wily technique adopted. At the same time one also wonders whether the IBA is aware of the shortcomings prevailing in the service conditions and definitions of  workmen, which makes it well nigh impossible to usher in this structure.

For instance, a part of  'Variable pay' is normally related to the performance of the employee and is measured from time to time by the various activities performed. The evaluation and its results will be periodically appraised to the employee. In Banks under the existing situation, how this could be practiced? How can the performance of an employee who handles a customer facing Savings Account counter be gauged? Is it with the number of correct transactions being posted or incorrect transactions? If correct, then will come the question 'is it not a part of the employee's duties to make correct entries for which he/she is being remunerated'? If it is incorrect, under the current banking scenario it will open up another Pandora's box, as we have a maker - checker system under which an official is to check and authorize every transaction. This will in turn put the onus on two and not one employee. In such cases, how can the performance, rather the lack of it, be shared?

This brings us to the question of reviewing the currently absent basic responsibilities, time bound assignments, expectations, a system to measure the effectiveness of the duty performed  that need to be defined and in place before we embark on this exercise. In the current scenario the workmen have a defined working hours and how will he be declared as having done an incomplete job, when he has worked through the defined working hours but the job remain incomplete due to reasons beyond his control? In private sector, this is handled in a more assertive way of "he shall complete his assignment irrespective of time"! This is a typical canyon that divides these two sectors and there are many such which will be huge stumbling blocks in implementing the fancied proposal of IBA. The need of the hour is to resolve and reduce such gaps first before proceeding to next steps.

Performance Appraisal System is a huge process which has to be clearly defined qualitatively and quantitatively and agreed. If this humongous process is worked around and agreed the IBA could justifiably feel proud of having taken a major stride in its efforts to modernize the system. But, given the prevailing realities, even at the risk of being dubbed a pessimist , it appears it should take a long time, say another one or two bipartite talks, to bring people around.

When the pay scales are connected to the performance, the workmen would start realizing the alternative and more transparent avenues for climbing the ladder. With the performance and recognition comes the direct conduits to the management which opens up greater transparency in the system of promotions and transfers. With such changes the role of  representatives will take a paradigm shift from banal issues to only the wage negotiations of the workmen. It would be interesting to hear the representatives on this diminished role.

Considering these, it appears the banks are not (yet) in a position to embrace this revised process. If attempts are made to exert pressure overtly or covertly to push through this without resolving other related issues, it will be akin to putting the cart before the horse and playing directly into the hands of the vested interests, waiting for triggers.

Ethical Bank beating?

Worst of the challenges  could also bring the best out of you and thus an unique solution, I realized today. I was approached by my bro for some cash to meet an urgent medical treatment. I assured him that I could do it in no time and logged into the Internet banking system of my bank. After making  some 'page not found' protests, the application finally opened up and I transferred the required amount from my cash credit account to my savings account.

I then walked to the nearest other bank ATM and tried withdrawing Rs 25,000/- but the ATM kept on asking me to request for a lesser amount and even a request of Rs 5000/- was met with the same cold response.

In frustration, I tried at my own bank ATM and after some attempts I realized that the maximum limit of withdrawal through ATM is only Rs 20K. As I wanted 25000, I withdrew another 5000 from another account's ATM card and thus met my requirement.

I then realized that if I have ATM cards for three different accounts say my pension, savings account and a cash credit against deposits, I can withdraw not 20K but 20K from each of these accounts, even if do not have sufficient amount in other accounts by deftly making some online transfers.

There is nothing unethical in this, as one can legally make the transfers online and withdraw through ATM, provided one has multiple accounts and related ATM cards. After all, if the money stashed in my accounts is not available for my own emergencies, then what is the purpose of saving for the rainy day?

I am sharing this especially for my non-bank friends, as I find many of them panic in case of emergencies. This is a cool way to tackle such situations without losing sleep.

Inconsistent Customer Service

State Bank of India has taken an unique step in extending its working hours today, the 24th Jan, as three consecutive bank holidays follow from tomorrow. It is appreciable that the bank has taken steps to extend its services through its own way of extending the working hours.

What comes to the mind of a bank customer is, if SBI feels that its customers will be impacted by consecutive bank holidays, what is preventing the other banks also to follow suite?

If all the banks are bound by a central agency , why can't that agency think of applying this uniformly across all banks ? After all this practice is not new as on some 31st of March in many years, this has been done to facilitate the customers to pay their taxes.

By allowing individual banks to define such sops, the banks no doubt create a healthy competition amongst themselves. But on the other hand such needs, if genuine, are left at the mercy of individual banks. This is where , I feel the central agency has failed in keeping the banks together, as has been done hitherto.

In the current scenario of ATMs and Internet banking , I personally feel that this is not necessary as the customers could definitely continue to do their activities without visiting the banks. One also wonders as to whether the bank extended the same gesture last week when the banks closed for consecutive days around Pongal.

Such arbitrary decisions could also trigger displeasure from the bank staff, not all are likely to be compensated for the extended working on such days. Will the concerned authorities think about it?

Costly indifference of Bank

This is further to my post on the indifference of some banks to the communication from the customers/public on  19-Dec-2012 at : http://bankerkapali.blogspot.in/2012/12/differently-abled-banking-system.html in this blog.

Earlier this year I observed at a branch of  a Nationalized bank that the customers operating lockers are forced to pass through the bank's cash counters. This exposes the lakhs of cash and also the cashiers at the Cash department to a great risk of being attacked from behind, when they are focused on serving the customers. Realizing the grave security risk I approached the branch manager and apprised him about my concerns and also sent an email to him and the Top management in May 2012.

It was distressing that the bank neither acknowledged the communication nor took steps to mitigate the risk. I reminded the bank again in July 2012, for which the Executive Director's office responded that the matter is being referred to their concerned Regional Manager & General Manager for appropriate action. But, to my surprise and anguish, till last week the bank has not taken any steps to rectify this thereby exposing the Bank and its staff to grave risk.

Under the light of the above warning and drawing attention, it is not surprising that yesterday at a Bank branch,  a stranger just walked into the banking hall, strolled into the staff area and took away Rs 11 lakhs from the Cashier's table in 30 seconds in broad daylight. It is again ironical that the loot was noticed only hours later before closing in the evening, as reported in Times Of India !

After reading the news report of the above incident, when I drew their attention today that the issue raised in my email dated 7-May-2012 is open still, my email was forwarded to the Customer Service Department , who in turn has forwarded the email to the concerned branch again!

It is a matter of concern that there seems to be little application of mind to a grave issue suggesting potential security risk to the Bank, their staff and property. One has to be thankful to God for small mercies, now that my today's email has been responded. But there are some questions still remaining open:

1. What about the status of the emails which were referred to the concerned Regional Manager & General Manager by the ED's office, in July 2012?

2. When and how was it closed?

3. Why is that this security risk identified by a common man has not been identified so far by the Security Dept or the periodical security audits?

4. Why is that the a grave security concern brought to the notice by a public has not been addressed by the Bank for months, inspite of follow-ups by him?

I can very well obtain these information by posting a query under RTI but my idea of following up on this issue is not to harass the bank or bring its name to disrepute or play the good cop here. I am truly concerned about the welfare of the bank and its staff and hence the agony arising out of indifference.

On a similar note, when I raised another concern , the management did not even care to acknowledge my email. I am now stumped as to where else can I knock the door when the majority of the responsible senior management has not cared to respond to customer communication.

If a customer communication cannot be even acknowledged , I wonder what are the other activities of the 'Customer Service Department"?

I am not elated. I don't want to say " I told you so" - but I am very saddened that a Bank of repute should be going down the barrel in service while there is all the technological and other support available to serve people better.

Dear Bank, there are Good people all around in this country and they are still searching for the right people with whom they could grow ! Please wake up.

Differently Abled Banking System?

This is to highlight an instance of apathy and calculated indifference of a Bank to the voice of an employee turned customer.

A certain additional facility was being extended to the retired employees in a bank and the communication to the eligible, I felt, was not properly done. Being a prime facility, I was of the opinion the bank was slack in even communicating the same.  I was also concerned that the facilities being extended after much deliberations should not be deprived to a section of the eligible due to communication issues, in this era of technological and communication advancements.

Not knowing whom to address, I wrote to the Chairman of the Bank copying one of the Executive Directors to the email ids available in the bank's website, politely drawing their attention to the shortcoming. My email of 12th Sep was not even acknowledged despite a reminder on Sep 18th. On the 22nd Sep, I connected to another ED of the Bank drawing his attention to the lack of response and requested for action, as the scheme was to close shortly. As this also fell on deaf ears I was at a loss as to where else I could go above the Chairman & senior executives for a genuine grievance against the bank's practice. Browsing through the website, I decided to knock at the doors of the Ombudsman and on the 23rd Oct I drew their attention to the indifference of the bank to the issue and the discourtesy of not even acknowledging a mail even by their highest officials.  

The Ombudsman office acknowledged fairly quickly but closed the issue yesterday (18th Dec) stating that the '. . . issue raised in my complaint does not fall under the purview of the Banking Ombudsman scheme. . . '.

What I fail to understand are:

•  If a bank is not responding to a communication from its customer, what is the recourse available?
•  In this computerized era, what is preventing the bank from acknowledging customer mails?
•  Why is that the office of Chairman was not even having an automatic reply facility which even an ordinary start-up company could boast of?  Should this be treated as ignorance of technology or indifference to customers?
•  Ombudsman might have been set up by the Apex body to look into some specific, identified categories of complaints and as such their claim of 'not falling under such categories' is understandable. But then, is this not an aspect which the Central Bank of the Nation should first insist upon? How is that, this is not in their ambit? People concerned must realize that in addition to grievances resulting in financial losses customers are also entitled to basic courtesies and have a right to be peeved if it is denied.
• As a matter of courtesy,  they were kind enough to forward a copy of the complaint to a General Manager of the Bank for' information and necessary action'. I am sure being forwarded from this office, I will be getting some response now. Or am I hoping too much that the Ombudsman's communication will be responded to!
•  But, then is this not the suggested solution for the issue reported - Ombudsman directing the bank to respond? What is preventing them from directing the bank in doing this as a solution instead of ducking the issue citing technical reasons about which a customer is neither aware of nor interested in?
•  To the most misused cliche , 'Last but not the least', if I still do not get any response, pray tell me which door is left for me to knock at?  When a bank is deaf to its customer's woes, its appointed authority is blinded by rules, should the customers remain mute to such insults of poor business ethics?

Is our banking Industry so severely crippled with deaf banks and blind authority producing dumb customers?

Cheque Truncation System

Recently banks are informing their customers that some of the cheque book they are using now will soon need to be replaced with a new cheque book for future use. This is due to Reserve Bank of India's initiative to speed up the clearing process thereby enabling the customers to get early credit of their cheques.

What is this Cheque Truncation System?

How will this benefit the customers?

What happened to the Post Dated Cheques already issued?

What will happen if the old cheque book is used after the stipulated date?

Is there any additional charges to be paid by the customers for obtaining the new cheque book?

RBI has clarified in their website such common doubts from the customers. and an extract on CTS is given below for reference:

1. What is Cheque Truncation?

Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point with the presenting bank en-route to the drawee bank branch. In its place an electronic image of the cheque is transmitted to the drawee branch by the clearing house, along with relevant information like data on the MICR band, date of presentation, presenting bank, etc. Cheque truncation thus obviates the need to move the physical instruments across branches, other than in exceptional circumstances for clearing purposes. This effectively eliminates the associated cost of movement of the physical cheques, reduces the time required for their collection and brings elegance to the entire activity of cheque processing.

2. Why Cheque Truncation in India?

As explained above, Cheque Truncation speeds up the process of collection of cheques resulting in better service to customers, reduces the scope for clearing-related frauds or loss of instruments in transit, lowers the cost of collection of cheques, and removes reconciliation-related and logistics-related problems, thus benefiting the system as a whole. With the other major products being offered in the form of RTGS and NEFT, the Reserve Bank has created the capability to enable inter-bank and customer payments online and in near-real time. However, as cheques are still the prominent mode of payments in the country and Reserve Bank of India has decided to focus on improving the efficiency of the cheque clearing cycle, offering Cheque Truncation System (CTS) as an alternative. As highlighted earlier, CTS is a more secure system vis-a-vis the exchange of physical documents.

In addition to operational efficiency, CTS offers several benefits to banks and customers, including human resource rationalisation, cost effectiveness, business process re-engineering, better service, adoption of latest technology, etc. CTS, thus, has emerged as an important efficiency enhancement initiative undertaken by Reserve Bank in the Payments Systems area.

3. Will there be any change in the process for the customers?

No. There is no change in the clearing process for customers. Customers continue to use cheques as at present, except to ensure the use of image-friendly-coloured-inks while writing the cheques. Of course, such of those customers, who are used to receiving the paid instruments (like government departments) would also receive the cheque images. Cheques with alterations in material fields (explained in detail later) are not allowed to be processed under the CTS environment.

4. What are the benefits of CTS to customers of banks?

The benefits from CTS could be summarized as follows –

• Shorter clearing cycle
• Superior verification and reconciliation process
• No geographical restrictions as to jurisdiction
• Operational efficiency for banks and customers alike
• Reduction in operational risk and risks associated with paper clearing

5. What is Cheque Standardisation and what does CTS 2010 Standard mean ?

Standardisation of cheque forms (leaves) in terms of size, MICR band, quality of paper, etc., was one of the key factors that enabled mechanisation of cheque processing. Over a period of time, banks have added a variety of patterns and design of cheque forms to aid segmentation, branding, identification, etc., as also incorporated therein a number of security features to reduce the incidence of cheque misuse, tampering, alterations, etc. Growing use of multi-city and payable-at-par cheques for handling of cheques at any branches of a bank, introduction of Cheque Truncation System (CTS), increasing popularity of Speed Clearing, etc., were a few aspects that led to prescription of certain minimum security features in cheques printed, issued and handled by banks and customers uniformly across the banking industry. A Working Group was set-up by RBI for examining further standardisation of cheque forms and enhancement of security features therein. Accordingly, certain benchmarks towards achieving standardisation of cheques issued by banks across the country have been prescribed like – quality of paper, watermark, bank’s logo in invisible ink, void pantograph, etc., and standardisation of field placements on cheques. In addition, certain desirable features have also been suggested to be implemented by banks based on their need and risk perception.

The set of minimum security features would not only ensure uniformity across all cheque forms issued by banks in the country but also help presenting banks while scrutinising / recognising cheques of drawee banks in an image-based processing scenario. The homogeneity in security features is expected to act as a deterrent against cheque frauds, while the standardisation of field placements on cheque forms would enable straight-through-processing by use of optical / image character recognition technology. The benchmark prescriptions are collectively known as "CTS-2010 standard". Indian Banks Association (IBA) and National Payments Corporation of India (NPCI) are co-ordinating with the banks on implementation of the new standard. Accordingly, the cheques issued are tested and certified by NPCI and only after such certification the cheques would be issued to the customers.

All banks providing cheque facility to their customers, have been advised to issue only 'CTS-2010' standard cheques not later than April 1, 2012 on priority basis in northern and southern region which will be part of the northern and southern CTS grids respectively and across the country by September 30, 2012 through a time bound action plan.

6. What is the prescription relating to alterations / corrections on cheque forms ?

The prescription on prohibiting alterations / corrections on cheques has been introduced to curtail cheque frauds on account of alterations in the various fields of cheques and to give protection to customers as well as banks. No changes / corrections can be carried out on the cheques (other than for date validation purposes, if required). For any change in the payee’s name, courtesy amount (amount in figures) or legal amount (amount in words), fresh cheque leaves should be used by customers. This would help banks in identifying and controlling fraudulent alterations. This prohibition is applicable to cheques cleared under the image based Cheque Truncation System (CTS) only and is effective from December 1, 2010. It is not applicable to cheques cleared under other clearing arrangements for the present.

7. What are the precautions required to be taken by the banks / customers to avoid frauds

Banks / Customers should use "CTS 2010" cheques which are not only image friendly but also have more security features. Customers may request/insist their banks for cheque forms that are compliant with the "CTS 2010" standard. They should preferably use dark coloured ink while writing cheques and avoid any alterations / corrections thereon. Preferably, a new cheque leaf may be used in the event of any alterations / corrections as the cheque may be cleared through image based clearing system as enumerated in 15 above. Banks should exercise care while stamping the cheque forms, so that it does not interfere with the material portions such as date, payee’s name, amount and signature. The use of rubber stamps, etc, should not overshadow the clear appearance of these basic features in image. It is necessary to ensure that all essential elements of a cheque are captured in an image during the scanning process and banks / customers have to exercise appropriate care in this regard.

(Refer: http://www.rbi.org.in/scripts/FAQView.aspx?Id=63)

Deadline:

Earlier it was reported that this will be effective from 01-Jan-2013 but today RBI has announced that the customers could continue to use the existing cheque books until 31-Mar-2013 ( Refer: http://www.firstpost.com/investing/new-cheque-norms-you-can-use-your-old-cheque-books-till-march-2013-557824.html)

Sample Image of the new form of Cheque: