Some smart banking tips

Recently my friend applied for a passport which warranted a year's statement of his bank account. He had to trek a couple of times to his bank and after some exchanges got the same one afternoon, with a statutory warning that suitable charges will be taken from his account and he nodded lamely for this Hobson's choice. But when he was deducted around Rs 600 for a six page statement, he lamented whether the bank could not even make a free statement for a customer who is patronizing the bank for many years.

While the bank charging the customer is correct or not is a moot point, a prudent customer can avoid such charges and also save himself from the leg work and foul temper that invariably accompany a branch visit for such purposes. Here are some personal banking tips:

1.  Most of the popular banks are offering Internet banking which comes with an option to download online statements for a maximum period of six months that could be saved in different formats. If one could , in a disciplined way, extract and save these statements every six months one can generate statements for any number of years, whenever required without paying a rupee.

2. Many banks are charging for cheque books beyond a certain number of leaves. This charge could be avoided by making online transfer between banks, wherever possible, which are free of charges up to a limit. Also, payment for utilities such as Electricity bills, credit card bills, Flat maintenance charges, Mobile charges etc., could be made through Internet banking and one can completely stay away from using cheque leaves at all.

3. Submit and update your KYC (Know Your Customer) form promptly and demand that every transaction on your account has to be reflected with a short message on your mobile. Though many banks are offering this service free of cost, it is even worth paying for this, so that you can keep track of your account and also ensure against any misuse.

4. Banks also charge for executing the 'Standing Instructions' by making payments from the customer's account periodically- say for payment to housing loan institutions, children school fees and monthly transfers to your different Recurring Deposits. These are no more required by the banks to be done at a charge as one can execute these from anywhere in the globe making use of Internet banking. For those who are too busy, they can make use of the many electronic reminder tools that are freely available.

5. Avail online access to your bank accounts and keep tracking the transactions. You may not me initiating any, but the bank could be making some debits, which are avoidable. In case you are away from your place and not operating the bank for a specified period of time, the bank will brand these as non-operative and also periodically deduct from charges. To avoid this, make some online transfer from one account to another. Note that even though there are credits to the accounts, some banks insists that debits  have to be made to be considered as 'operative', though this contention may not hold against the rule. But then who has the time to argue and so make a dummy debit and save some money.

6. If you have some fixed deposits whose yearly interest you are accounting for while filing your annual tax return, make sure that you not only leave necessary instructions but also get an acknowledgement and preserve the same. Despite the many good staff, still the banks are notorious for not updating your intention in the system, which you will realize only at the time of maturity of the FD with a reduced maturity value !

7. If you hold a Safe Deposit Locker, some precautions need to be exercised. Operate the locker at least once in a year, so that you can use the opportunity to pay the yearly rental for the same. Many banks provide a facility for putting your own lock in addition to the bank's inbuilt lock. Even if you are not interested in using this, please put a lock there, as by mistake some one else could lock yours instead of their locker- Believe me it has happened !!

In many such ways, you can save yourselves from some minor charges and more importantly a visit to the branch, which is what exactly the modern day banks are also expecting !!

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?