Extending the reach of banking services

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of financial products, especially the more complex ones. Banks, as seen in many cases, are not being fully transparent and lucid in communicating the truth about their offerings to their customers. This could be either with the overt reliance on the principle of ‘caveat emptor’ (without paying much attention to the long-term implication) or inadvertently, as bank employees are not well-trained to communicate clearly to customers.

On the other hand, customers should also be more literate around various financial offerings. They should interrogate and understand financial offerings well before purchasing them. In this direction, many banks have started educating the public through various means such as advertisements and education camps, on the effective usage of various financial offerings. The Reserve Bank of India (RBI) also provides basic information to customers regarding various banking services. It has directed commercial banks to display the most important terms and conditions for all their offerings prominently on the homepage of their websites. Hence, steps are being taken at all levels to minimise the risk of miscommunication.

Fairness in lending: Today’s competitive business environment is characterised by pressure to increase market share and maximise profits. One of the prime concerns in today’s scenario is—in some ways—excessive lending by banks. Banks are using all avenues to hard-sell their offerings, such as credit cards, loans, security brokerage services, financial instruments, etc, without necessarily evaluating the appro- priateness of such products for its users. Firstly, it may lead to irritate an educated customer, who may not need the product at all, and hence could result in impacting the bank’s reputation and brand value. Secondly, it might lure an unsuspecting customer to purchase the product (due to the rewards attached to the offering) even if that product does not suit the customer’s requirements and hence, may become a cause of concern both for the bank and the customer in the future. Incase of corporate banking, where the switching cost for customers is high, cross selling of products is very common. In many cases there is inadequate assessment of the need and suitability of the product for the customer before it is sold.