Widely read:
What with SEBI's (attempted) takedown of Pearl Agro and the regulator's newly granted powers to stop questionable financial schemes on the one hand, and the Prime Ministers Jan Dhan Yojana on the other, there's renewed attention on how the country must move from informal and unregulated financial services to regulated ones.
It's implicit in this debate that regulated services that are provided to urban, prosperous customers are close to the required level of probity. Unfortunately, that is far from the truth. Rather, maybe it is or maybe it isn't but as a consumer you have no way of knowing. If you wanted to choose a bank based on the quality of its customer service, or on how many of its customers made serious complaints against it, and what happened about those complaints, you have no practical way of doing so.
You can some aggregated data from the regulator's website and the banking ombudsman' annual report but that data seems carefully chosen to be useless. You can look at tables and charts on idiotic pieces of information like a comparison of how many complaints were received by fax versus how many by email over which years, but there's nothing to help you make an informed choice as a consumer. And obviously, if there's nothing to help you decide which bank is good to customers and which is bad, then the system doesn't create an incentive for the bad banks to become better.
In fact at an aggregate level, one can glean out the somewhat alarming fact that most complaints are disposed off through 'mutual settlement'. The problem with these mutual settlements are that they are a secret between the bank and the aggrieved customer and thus make no contribution to the system getting better. Earlier this year, a well-known case of truly obnoxious mis-selling by HSBC Bank was resolved by mutual settlement with the complainant, the actress Suchitra Krishnamoorthi. The details were widely known because the case had been vigorously pursued by the Mumbai-based Moneylife Foundation. However, the final settlement was a secret between the bank and Krishnamoorthi--we didn't know what the bank admitted to and what compensation it gave. If an entity is permitted by RBI to offer banking and related services to the public, then surely the public has a right to know the truth about its behaviour.
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