Don’t use credit cards like this!

A seven-member committee of the Reserve Bank of India (RBI) has come up with wide-ranging recommendations to radically improve customer service standards at banks and non-banking financial companies across a diverse range of pain points frequently suffered by customers all over the country.

The most significant of these involve some of the commonly felt pinches by customers.

KYC update
One of the suggestions said that banks cannot halt an account while it is updating KYC. Currently, banks simply switch off access of a current customer to an account till the KYC updating is not complete, putting the individual under tremendous difficulties.

The Committee for Review of Customer Service Standards in RBI regulated entities has said that a centralised KYC database should be maintained and a unique customer identifier should be maintained. It might remove the need to periodically submit KYC documents to the bank.

One of the major changes suggested is that if a customer expires, the legal heir can settle claims online. This measure can be of immense help to people who might be living outside a state or the country.

Life certificate
In what might be a major relief to senior citizens, the committee said that pensioners should be able to submit their life certificate to the nearest branch. According to current practice, they need to visit the branch where their pension account is maintained to submit the certificate. Pensioners have to mandatorily submit the life certificate once a year to ensure the continuation of pension.

Property papers
It has also suggested a time limit within which the bank should return property or documents related to a property that was given out as collateral for a loan. If the bank fails to return it, it could even be liable to pay a fine.

If the bank loses property documents, it should help the customer get them back free of cost and compensate the customer.

The committee has also suggested that the risk profile of customers should be nuanced and if the inflows and outflows from the salaried individuals are consistent with their profile, they should not be regarded as high-risk.

It also proposed extending the depsoit insurance scheme to prepaid payment instruments. It said it should first extended to bank PPIs and then to non-bank PPIs.

The committee led by former deputy governor B P Kanungo, was set up in May last year to have a thorough look at customer services and recommend ways of improving services. The suggestions were made public on Monday.

The report of the committee clearly said that the current “framework for Strengthening Internal Grievance Redress Mechanism in banks is not functioning effectively” and the number of complaints is consistently rising.