CUSTOMER

Summary

Delivered by Anand Sinha, Deputy Governor of the Reserve Bank of India, at the Ninth M. R. Pai Memorial Award Function in Mumbai on 31 October 2013 and published as a Forum of Free Enterprise booklet on 3 December 2013, this address argues that the customer is the very ‘raison d’être’ of business and treats consumer protection and empowerment as the organising centre of banking policy. Sinha frames the talk as a tribute to M. R. Pai and to the award’s recipient, Shirish Deshpande, casting both as exemplars of the consumer-rights tradition; he leans on Mahatma Gandhi’s well-known lines on the customer as the speech’s foundational text.

The core argument rests on three ‘mutually reinforcing pillars’ of efficient customer service: promoting competition, enforcing regulation, and empowering customers through financial literacy. Sinha defends regulation as a necessary discipline on service providers — using KYC norms (likened to airport frisking) as a worked example — and surveys the Reserve Bank’s apparatus for customer redress, including the Banking Ombudsman Scheme (1995, fifteen offices, twenty-seven grounds of complaint) and the Banking Codes and Standards Board of India (2006), alongside the Damodaran Committee and the recent Financial Sector Legislative Reforms Commission (FSLRC) recommendations on consumer protection.

A substantial middle section catalogues the Reserve Bank’s financial-inclusion measures: branch-authorisation relaxations for unbanked Tier 2–6 centres, the Business Correspondent/Business Facilitator model, the Basic Savings Bank Deposit Account with Zero Balance, Kisan and General Credit Cards, and the three-year drive (April 2010–March 2013) that opened roughly 268,000 outlets and 109 million accounts. Sinha closes by arguing that competition alone cannot ensure good service — only regulation plus an informed, ‘wary and alert’ customer can — and exhorts service providers to ‘get their act together’ in meeting customer expectations.

Key points

• Memorial address by RBI Deputy Governor Anand Sinha at the Ninth M. R. Pai Memorial Award Function (31 October 2013, Mumbai), sponsored by Punjab & Maharashtra Co-operative Bank and arranged jointly by AIBDA, the Forum of Free Enterprise and the M. R. Pai Foundation.

• Frames the customer as the ‘raison d’être’ of business and uses Mahatma Gandhi’s lines on the customer as foundational text.

• Proposes three mutually reinforcing pillars of efficient customer service: promoting competition, enforcing regulation, and empowering customers through financial literacy.

• Surveys post-1991 banking competition — twelve private-bank licences across 1993 and 2001, current totals of 87 banks (26 public, 20 private, 41 foreign), 82 RRBs and 1,618 urban co-operative banks — and the RBI’s Discussion Paper on ‘Banking Structure in India — The Way Forward’.

• Defends KYC norms as analogous to airport frisking and lists simplifications: small-account self-certification, Aadhaar, NREGA card, e-KYC, and the proposed Central KYC Registry.

• Anchors customer redress in two institutional pillars — the Banking Ombudsman Scheme (1995; 15 offices; 27 grounds; free online complaint route) and the Banking Codes and Standards Board of India (2006) — and cites the Talwar (1975), Goiporia (1990), Narasimham, Tarapore (2004), Damodaran (2010) committees, and the FSLRC.

• Catalogues financial-inclusion measures: branching relaxations for Tier 2–6 unbanked centres, the BC/BF doorstep-banking model, the Basic Savings Bank Deposit Account with Zero Balance, KCC and GCC credit instruments — yielding ~268,000 banking outlets and ~109 million BSBDAs over April 2010 – March 2013.

• Argues that competition alone is insufficient and that an informed, ‘wary and alert’ customer — supported by RBI Outreach, eBAAT and Financial Literacy Centres run with state governments and NGOs — is the biggest disciplining factor on service providers.