When it comes to fair banking practices, a bank, as an institution, cannot afford to be unfair to its customers because its operations are governed by banking regulations. However, there are violations, which usually occur only at the individual level. Ultimately, such shortcomings in service delivery harm the bank’s business as customers seek out alternative channels.
We generally find that customers generally tend to complete their banking work quickly. They do not bother to realize the essential features and important terms and conditions of the product or service they are availing themselves of. Even bank staff at the operational level do not bother to educate the customer on the features of a system in a transparent manner.
Let me explain. If a client wishes to open a savings bank account (S/B), he goes to his bank branch, completes the application form and submits it. It meets the required KYC (know your customer) standards and submits the relevant documents.
At this stage, as a first step, the customer should normally have inquired about his rights as an account holder. He should have even looked into the terms and conditions governing his account. Second, the bank official was required to inquire about the characteristics of the account.
Even terms and conditions such as minimum balance requirement, penalty for not maintaining minimum balance, account transaction fees, checkbook fees, possibility of appointment, applicability of holdback withholding tax (TDS) on interest, etc. should have been indicated to the customer.
However, in the majority of cases, neither the customer bothers to ask for details of his rights and duties as an account holder, nor bank officials bother to educate him on the guidelines governing banking transactions. its account.
We very rarely see customers requesting service fee information for using digital services such as debit/ATM/credit card, internet banking, etc. bounce fee.
Meanwhile, over a period of time, a huge segment of banking customers feel at the beneficiary end as banks chase them for being loan account guarantors.
Fundamentally, the guarantor dilemma is not a new phenomenon. Guarantors mistakenly see being a guarantor as just a formality to help someone get a loan. Banks have been looking for guarantors for decades to force defaulting borrowers to line up and repay delinquent loans.
However, over time banks have gained strong legal backing to get hold of guarantors and recover money from them in the absence of the primary borrower.
In other words, securing the repayment of the loan is usually done very informally. Often family members or friends stand surety without understanding the legal ramifications.
The problem is compounded when the guarantor cannot remedy the default due to lack of sufficient financial resources to honor any of the financial obligations arising from the borrower’s default. In this situation, the bank can sell the guarantor’s assets and use the funds to pay principal, interest, and other fees.