k c chakrabarty : developing the humanware to improve customer service address by dr k c chakrabarty, deputy governor of the reserve bank of india, at the launch of the course “ customer service & banking codes and standards ”, at the indian institute of banking & finance ( iibf ), mumbai, 12 november 2010. * * * assistance provided by shri d g kale in preparation of this address is gratefully acknowledged. 1. mrs udeshi, chairperson, banking codes and standards board of india ( bcsbi ), shri o. p. bhatt, president, indian institute of banking and finance ( iibf ) and chairman, iba, shri b. m. mittal, ceo, bcsbi, shri bhaskaran, ceo, iibf, distinguished guests, ladies and gentlemen. it gives me great pleasure to be here to launch the certificate course on “ customer service and banking codes and standards ” that has been designed by iibf in association with bcsbi. iibf has played a pivotal role in developing the professional skills of bankers, and in tune with times, it is also a leading organization in providing training, consultancy and counselling to the business correspondents, recovery and marketing agents of banks. 2. the iibf was set up in 1928 as indian institute of bankers ( iib ) with a mission to “ develop professionally qualified and competent bankers and finance professionals primarily through a process of education, training, examination, consultancy / counselling and continuing professional development programmes ”. the mission statement of the iibf and the timing of the launch of the new certificate course in customer service go hand in hand. i must compliment and congratulate shri bhatt and shri bhaskaran and his team for conceptualising, designing and developing this particular course. i am also happy to note that bcsbi was closely involved in designing this course. as you are aware, the banking ombudsman scheme, which has been in existence for some time now, does not look into systemic issues with a view to enforcing a prescribed quality of service. it was in this context that the bcsbi was set up as an autonomous body to monitor and ensure that the banking codes and standards voluntarily adopted by the banks are adhered to in their true spirit. the codes represent the minimum standards of service which a customer can expect from a bank including transparency in services, prohibition of unsolicited marketing and compensation for delays or

losses incurred by a customer. two separate codes, one catering to customers and the other to msmes have been brought out. while the codes are intended to instil confidence in the customers when dealing with banks, the ultimate objective in following these codes is to forge a long - lasting and harmonious customer - banker relationship which will stand the test of time. it is indeed very appropriate that iibf is launching a course in association with bcsbi on the subject. 3. let me first begin by asking why, as a regulator, am i here today? the reason is two - fold. the reserve bank of india, as you know, dons many hats which many other central banks do not. one of its many roles is developmental in nature, i. e. nurturing and promoting institutions that have gone on to play a key role in our financial system. it is coincidental that the rbi has had a role in development of all the three institutions whose representatives are present here on the dais. these institutions are gems among the institutions promoted / sponsored by rbi. the other reason has to do with a question which i am often asked and which is, “ why, as a regulator, are you concerned about customer service? why is it not left to the market forces and competition to take care of? ”. the answer to this lies in the fact that in any service industry where market forces and competition play out freely, it may well have been the case, but banking is a highly regulated service industry with very stiff entry norms and customer service cannot entirely be left to the market forces and, hence, the regulator has a role. in fact, as per the banking regulation act, 1949, banking business has to be carried out in the public interest and, as a corollary, wherever customers interest are involved, regulator has an obligation towards the customers. customer service in banking and finance industry has certain special features that need to be very carefully understood and appreciated by all concerned. as such the free market mechanics of competition may not be easily replicated here in terms of a choice for the customer to switch on or switch off a relationship merely on the basis of pricing. further, globally the trend is towards treating the customers fairly ( tcf ) which is becoming an integral part of the regulatory and supervisory manual. those who are following international developments will be aware that regulations on tcf will become more and more stringent in the days to come. 4. customer service is a challenging issue