A recent RBI circular reminds us that digital banking, welcome as it is in the overall context, does not benefit all sections of society equally.
In what has been hailed as a major step in stepping up of their standards of banking service towards the elderly and persons with disabilities, the Reserve Bank of India (RBI) has issued a circular with instructions to commercial banks.
First and foremost, banks will have to be more sensitive to their needs.Though not original, the RBI has taken off from its fourth bi-monthly credit policy statement in October and compiled a list of dos and don’ts to meet the obvious requirements of senior citizens and persons with disabilities.
The value of the central bank guidelines lies more in discussing its overall context rather than its individual points. The latter, in any case, are repetitive and merely stating what should have been standard banking practice.
Nevertheless the latest instructions are noteworthy for another reason. India’s financial environment has moved away, as it were, from seniors and people with disabilities. Individual managers and bank officials might consider these sections of society as more of a nuisance; interfering as it does with what is perceived to be more glamorous and lucrative work.
There are several misconceptions behind such a crass attitude. It is a fact that the deposits of seniors tend to be more stable. Driving them away through disincentives or neglect can cost banks, especially of the public sector kind, dearly.
It is likely that individual banks do not deliberately act against the senior citizen or person with disability. The rapidly-changing environment can lead to the marginalisation of bank staff of a particular vintage.
That again is a real problem. Attitudinal adjustments on the part of bank managers and others are hard to come by. Catering to the special requirements of the elderly and people with disabilities is a mammoth task and does not come easily.
The RBI has done well to highlight the problems of senior citizens in the wake of large-scale applications of technology in the financial sector.
To quote from the circular, “notwithstanding the need to push digital transactions and use of ATMs, it is imperative to be sensitive to the requirements of senior citizens and differently abled persons”. Implicit in that statement is a tacit recognition that bank computerisation and adoption of core banking solutions, welcome as they are in the overall context, do not benefit all sections of society equally.
For instance ATMs. They have become ubiquitous. It is difficult to imagine a scenario without them. For senior citizens and persons with disabilities, it sometimes becomes challenging to use ATMs. There are long queues at some of the ATMs. Inserting the card, punching in the PIN numbers and so on are not all easy tasks if you are not fully fit. The solution to this might be to have dedicated ATMs, but that would defeat the very purpose of having machines to do the work of bank tellers.
Ultimately it boils down to having dedicated counters and giving preference to senior citizens and persons with disabilities, a point the RBI makes emphatically. But in many instances, that course of action is easier said than done. Staff shortage, whether real or imagined, is a hinderance. And so it goes with space constraints at the branch level.
Even more generally, technology at the branch level tends to discriminate against those who are not have even a working knowledge of computers. In many cases, e-statements have replaced physical statements of accounts. One would be hard pressed to find senior citizen or customer with a disability who says it has simplified basic banking. How many senior citizens can download a computerised statement, remember so many passwords and above all have a laptop which they can operate without help?
Technology has benefited banks as well as their customers. It has prevented fraud (although simultaneously creating a different set of issues), helped in the balancing of books and freed the bank manager to pay greater attention to customers. But all these benefits come at a price which should not be forgotten,
The central bank has also advocated “door step banking” in some select cases. Making it universal is clearly not feasible. Door-step services would involve providing basic banking facilities such as cheque encashment, delivery of demand drafts and so on.
It is true that some banks are doing it on a very limited scale. The catch, as with most things, is that those who are provided such services are better off (income-wise) and do not necessary need that help.
With all the above caveats, what is the thrust of RBI’s circular instructions?
As pointed out, the key take-away is making policy makers understand the concerns of the elderly and persons with disabilities.
However, one key point that the RBI has stayed away from – which is obviously not within the domain of such general circulars – is a favourable interest rate stance for senior citizens and people with disabilities. A measly 0.5 percentage point above the card rates for fixed deposits for seniors hardly meets their needs. Then again, interest rate policy takes into account several other variables, a few of them outside the purview of the central bank.
Post demonetisation, as India hurtles towards a new digitised (and ostensibly more inclusive) future, we would do well to remember the people that are falling through the cracks.
C.R.L. Narasimhan is a senior financial journalist.