Banks struggling with non-performing assets (NPAs) have showed a sharp decline on the transparency front, a survey conducted by the Banking Codes and Standards Board of India (BCSBI) has said.
Reserve Bank of India constituted BCSBI said it is a matter of concern that the overall average score, based on five parameters, has fallen from 78 to 77 compared with 2015 survey. Not only has overall average fallen, some banks have been downgraded, it said.
“There is a sharp decline in the overall score under the parameter group ‘transparency’ mainly owing to a drastic fall in the score of public banks,” BCSBI said. Although, there is a significant decline in compliance under transparency, the foreign banks have improved their compliance level almost close to perfect. “As the overall score of PSBs as a group is much lower as compared with other groups, they need to improve their compliance under this parameter group too,” BCSBI said.
While the score of PSBs under the parameter group transparency declined to 63 in 2017 from 70 in 2015, that of private banks fell from 83 to 80. The score for all banks declined from 77 to 71. Banks had recently hiked service charges on various services.
Although private and public sector banks secured a score of ‘above average to high’ and ‘average to above average’ respectively, there was a decrease in the overall average score of banks to 77 in 2017 from 78 in 2015, BCSBI said. BCSBI chairman AC Mahajan, said, “while expecting the banks to improve their Code Compliance over the previous scores, in view of trends in the last few years, it is a matter of concern that the overall average score has fallen from 78 to 77 when compared to 2015 survey. Not only have overall average scores fallen, even some banks have been downgraded.”
The code compliance of a mere 12 out of 51 banks in India was rated ‘high’ by the BCSBI, according to its annual code compliance rating released on Tuesday.
This year, banks (public sector, private, foreign and scheduled urban cooperative banks) were rated on their fair banking practices based on five categories — information dissemination, transparency, grievance redressal, customer centricity and customer feedback. The survey sought individual feedback from 8,485 banking customers across the country.
Both the survey and the rating covered all PSBs, a majority of private banks, three foreign banks and five urban cooperative banks, accounting for approximately 85 per cent of the total bank business. Scheduled urban cooperative banks, surveyed for the first time, achieved above-average rating while banks in high category saw a slight decrease from 13 to 12.
“In this era of stiff competition for retaining customers, I advise all banks, especially those which have been downgraded or are in ‘Average’ category, to look into areas that need improvement and pay close attention to monitoring Code Compliance at the branches, either through audit/regional controllers or imparting regular training to frontline staff and managers,” Mahajan said.
According to the report, overall ratings of all foreign banks were high along with those of eight private banks and one public bank.
Although foreign banks have managed to score well in most categories, grievance redressal by foreign and private banks could improve, particularly with regard to grievance redressal, thus reducing the complaints received at the offices of Banking Ombudsmen.
On the process of the survey, Mahajan said, “the nationwide survey was conducted by senior retired officers of commercial banks as well as RBI. They visited various branches selected randomly with structured questionnaire based on parameters culled from the code. These representatives visited the branches with proper authorisation but without prior intimation, to verify whether or not the various parameters of Code Compliance were implemented. They also interacted with a few customers for their feedback which provides an insight into the level of code compliance at the branch.”