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CUSTOMER SERVICE WILL GET BETTER WITH MORE BANKS: CHAKRABARTY

Amid the lengthy clarifications issued by the central bank on
new bank licences on Monday,the Reserve Bank Deputy Governor K.C. Chakrabarty has
said customer service in the banking industry will be better if more banks come in as it will drive competition.
“Why we are suffering is that we
have not allowed new banks to come in. If new banks come in,
then many of our problems on the customer service front will be solved,” Chakrabarty said at an
event here.
He also said the number of homegrown domestic banks is less than the number of foreign
banks present in the country.
“So, one demand should come from everybody that more banks should come in. If you allow more banks, then consumer
service will be better,” he added.
Interestingly, the statement of the Deputy Governor, who
overseas banking services at the central bank, comes on a day
when the RBI released detailed clarifications on the new bank
licences, which many analysts felt only limits more number of players entering the fray apart
from further delaying the process.
The last time a new private bank was allowed to open shop was in 2004 (YES Bank).
The Deputy Governor also noted that it is the endeavour of the
central bank to increase the penetration of the banking system in unbanked areas.
Reacting to the clarification released by the RBI on new
banking licences, Chakrabarty said, “We require more banks,
that’s why we are asking for applications.”
He, however, declined to give the number of banking licences that
would be issued saying it would depend on the number of applications.
On the Cobrapost expose and subsequent investigation into
alleged KYC violation, Chakrabarty said, “AML or KYC systems are foolproof, but transactional error
could happen.
Our system is robust, though there may be laxity in finding out
the error and taking corrective actions.”
Earlier in February, news portal,Cobrapost had alleged violation
of money-laundering norms by many private and public sector banks in a sting operation.
On the proposal to increase penalty on erring banks imposed
by RBI, Chakrabarty said that law
makers would decide on this matter.