Must ensure customers are not inconvenienced during subsequent bank integrations
By Ashish Kapur
The recent initiative by the Reserve Bank of India (RBI) to conduct a telephonic customer satisfaction survey on the impact of bank mergers—with 20,000 respondents spread across 21 states—after a year of public sector bank (PSB) mergers taking effect, besides a couple of private banks being rescued, is laudable and comes not a moment too soon.
Given the massive organisational restructuring—the merger exercise included eight target PSBs amalgamating with five larger banks last year—this task of prodigious proportions was bound to create more than a ripple. That said, if the implementation process was managed somewhat better, teething troubles being faced by bank clients today could have been largely avoided. There have been multiple instances of customers having to run around for rectifying mistakes arising from tardy execution.
For the starters, while most client savings and current account numbers during migration were thankfully left unchanged—although customer IDs were tweaked with prefixes in certain cases—changes in target bank names and IFSC/MICR codes necessitated most customers to visit branches during the pandemic period to avail new chequebooks with updated credentials (which remain a prerequisite for online RTGS and NEFT transfers and other routine banking operations). Customers were left wondering why tech systems in this day and age couldn’t be upgraded to allow dual-use credentials!
There was an interesting instance of a banker having to undertake a road trip to Mumbai around March year-end—just before the second wave pandemic travel restrictions kicked-in—to obtain new personal chequebooks as the target PSB branch’s phone numbers were unreachable and e-mails barely elicited a response. It seemed that the branch had organised a carnival funfair with middle-aged and senior citizens flocking for clarifications, which otherwise could have been cleared on a call.
Later, it transpired that whilst the target branch had shifted next door to this marquee address on the FPJ Marg in downtown Nariman Point, customers of both target and acquirer bank branch had no way to reach any official even on board numbers since the metro rail authorities had refused approvals for phone connections in the CBD belt.
Secondly, the overstretched set-up post-merger lacking basic apparatus and technology does not inspire confidence in the PSBs’ ability to provide superior customer experience. Bank officials working on navigating through a difficult Rs 2,000 crore Reliancesque transaction in that Nariman Point branch could be seen struggling on their mobile phones to effectively communicate with the client and the hub-office.
Forget customer satisfaction, in spite of the customer service officer making best possible efforts, the stressed PSB set-up with inadequate paraphernalia as a big handicap seemed a fertile ground, breeding operational risk. One can only hope that things are better in more affluent areas in the countryside.
Third, many demat account customers of the merged banks were impacted due to simple issues being overlooked in the implementation phase. If managements had proactively shared changes of their customer account details and branch IFSC codes with the depository, demat customers wouldn’t need to worry getting their client master details updated.
Numerous instances of dividend credits—that share registrar & transfer agents (RTA) process through ECS/NACH—getting rejected occurred due to the credentials mismatch issue. RTAs working with their horse-blinders on couldn’t care less, while happily processing dividend transfers with old bank names and codes, which the whole financial world knew were not in existence anymore.
Never mind if the honest taxpayer has to be content with only TDS on the dividend deducted by company appearing in his or her Form 26AS tax certificate in FY21, while the actual dividend proceeds are credited at leisure in FY22, after RTAs have taken their own sweet time to comply with their out-dated physical warrant dispatch procedure.
Finally, as regards borrowers, many smaller establishments are facing the brunt of delayed approvals. Since customers are required to undertake all operations from the target bank branch while all sanctions or modification approvals emanate eventually from the acquirer bank branch, precious time is wasted for even simple deviation sign-offs to come through, thereby impacting the already fragile business recovery.
So, what are the takeaways from the merger process last year that can prove useful given the imminent PSB privatisation? How can we make sure clients are not inconvenienced during subsequent bank integrations?
Firstly, the time and effort wasted in updating demat account credentials can be avoided if RBI or bank managements proactively instruct sharing of relevant client details with depository and RTAs through appropriate financial regulatory counterparts, thereby ensuring customers are not unfairly burdened.
Next, making sure the critical infrastructure is in place is a prerequisite before planning difficult mergers and divestment processes. Efficient mechanisms for decentralising routine credit approvals to wider PSB teams during the integration process also merit consideration.
Finally, consistent investments for technological advancements, both at individual bank level and central payment gateways, to secure satisfactory customer experience is another significant takeaway that the banking regulator would do well to emphasise and insist upon across the financial system.
The author is a certified treasury manager and veteran corporate banker