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The right to financial privacy

The right to financial privacy
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First Published: Fri, Jun 25 2010. 12 30 AM IST
Updated: Fri, Aug 20 2010. 06 00 PM IST
Located in Noida’s main shopping area, the Sector 18 branch of my bank is a busy place where it is difficult for customers to find a seat. I stood around for 15 minutes, watching an altercation about a signature mismatch in which I saw the customer sign so many times that I learnt every stroke. An office boy came along waving a statement. A banker was standing in the aisle explaining a transaction loudly to a customer.
It’s not the best ambience to convince a customer to part with his money. Perhaps that’s why the bank official was not meeting with much success in getting elderly Mr Mehra to take the almighty step of moving from fixed deposits (FDs) to mutual funds. A chair next to him was vacated and I quickly sat down to present a redemption request of a mutual fund. The officer read it and suddenly turned to Mr Mehra. “See what good returns this person is getting,” he said. “She invested Rs3,000 and has earned 12% more. Can any FD give you this? That’s what I am explaining to you, the market is very good right now, it is the time to enter.”
I looked embarrassed, almost sorry about the 12%. Mr Mehra raised a bushy eyebrow and got curious. Soon I found myself taking Mr Mehra through the details of my small financial success. Someone else joined in and related his own misadventure with another fund. The bank officer was moderating the lively debate.
I was vaguely discomfited by the fact that the privacy of the investor was completely compromised. There is a confidentiality clause in any agreement between a bank and its customer, as stipulated by the Reserve Bank of India. While this is adhered to in a very fundamental sense of not deliberately revealing account balances/transactions without the customer’s permission, frontline staff of banks often violate customer confidentiality, without even realizing it.
The home loan executive is prone to revealing that he processed a loan for a colleague who is buying a luxury flat in Gurgaon. Or that the doctor across the neighbourhood has bought his new Toyota through an auto loan from the same bank. He says these things to assure you that you are in safe hands as he has dealt with others of similar profile. He is not even aware that he has violated customer confidentiality as the colleague or doctor may not want this information shared. This happens routinely in India.
There are two reasons for this. Firstly, privacy has a cultural context. Respecting privacy doesn’t come naturally to Indians. After all, we are the people who can’t go through a train journey without ferreting out intimate details of our co-passengers’ life. We are upholders of the joint family system and believed in community living long before the hippies. Since bank officials are products of the same society, they are unable to leave this cultural baggage behind, even if they are now part of the new corporate India.
In the West, where privacy is a fiercely guarded right, the confidentiality clause between lawyer-client, psychiatrist-patient or banker-customer is sacrosanct. In a litigious society such as the US, more so for fear of getting sued. A colleague recalls that when she was studying in England, she once visited her bank accompanied by her room-mate. Before discussing her account details, the official requested her friend to step out. As an Indian, she was bemused, but now appreciates the bank’s adherence to the confidentiality clause.
The traditional Indian disregard for privacy is only one problem. The other is that the concept has become unworkable in India due to sheer numbers. The customer base of Indian private banks has grown in such a monstrous way that the branch banking network can no longer look at the softer aspects of service. (Year-on-year deposit growth in the banking system is 14.3%). In branches of leading private Indian banks, it is difficult to have an uninterrupted conversation with a banker. There are so many people milling around and there is such a palpable sense of frayed nerves that asking for privacy would be Marie Antoinette-like.
In Europe or the US, the number of customers are a fraction of what Indian banks handle. So any customer can fix an appointment with the local branch and get exclusive time with their banker. In Indian banks, this privacy is available only to high networth customers, each of whom is allotted a relationship manager.
But even a customer with Rs10,000 in his account has a right to financial privacy. Having spared no effort in the past decade to swell their deposit base, retail banks now have a responsibility to offer quality service to their account holders. This includes making their branches places where there is some modicum of silence and privacy for the customer who wishes to talk about his money. Frontline staff must be trained to rewire their cultural instincts and take a leaf from their western counterparts. After all that’s something that also comes very easily to us!
Vandana Vasudevan writes stories of mass urban consumer experiences. She is a graduate from the Indian Institute of Management, Ahmedabad, and currently works with HT Media Ltd. Comment at toughcustomer@livemint.com
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First Published: Fri, Jun 25 2010. 12 30 AM IST