Private banks and elusive passbooks

Why do you need a passbook; why don't you use Internet banking instead?" the HDFC Bank manager told Dinakar S. The 38-year-old  energy analyst for a US information provider had asked for a passbook for his savings account at the bank's Raja Annamalaipuram branch in Chennai.

That's when Dinakar reminded him that under a recent RBI notification, a bank had to issue a passbook. "It's just a rumour," he was told. This was about a week after the RBI made the announcement. The well-informed Dinakar decided to press on. Finally, the manager told him: "Sir, we have received no information from our central office on this issue." Other customers of private banks would probably have been fobbed off faster.

The concerned RBI notification (DBOD. No. Leg. BC.32, dated 09.07.2005/2006-07, available at www.rbi.org.in says that the customers of private banks could opt for a passbook or a statement of account. It also states that the banks can no longer charge customers for issuing either of the two.

While Internet banking is becoming popular, there are many who do not have access to computers or are not technology savvy. The RBI move followed a representation by customers in this regard.

This correspondent first went to Kotak Bank, where she has a savings account, to do a reality check. "Madam, we don't offer passbooks," said a smiling bank official. "If you require a statement of account, you can get it from the other counter."

I persisted: "But, the RBI has said that even private banks will have to issue passbooks. Can you give me a passbook later?" This reply was no less amusing: "Madam, RBI may have made the announcement, but we don't offer passbooks." "This speaks volumes about the credibility of the RBI's notification and how seriously it has been taken by the banks," says Dinakar. 

A passbook is preferred to a statement of account as it is a ready reckoner of transactions, handy and compact.

Statements have some inherent difficulties -- they need to be filed regularly and the opening balance has to be tallied with the closing balance of the last statement. Also, there is no way to check one's transactions in the period between the receipt of two statements as ATM slips do not provide sufficient details. Besides, statements often get lost in postal transit.

It seems that banks are unwilling to offer passbooks as it adds to their cost of operations. These banks are largely technology driven and their cost of maintaining an account is much higher than for public sector banks.

The help desk at UTI Bank's Mylapore branch in Chennai told Outlook Money that the bank charges Rs 150 to issue a passbook and has not received any intimation from its central office about the recent RBI guidelines.

After so many refusals, the reply of ICICI Bank, India's largest private bank, was refreshing. Officials at its Adyar branch in Chennai said the bank would provide passbooks within a month or two.

Insiders say that it took almost a year before banks implemented RBI's notification against stapling notes. It is anybody's guess how long would it take to implement the passbook notification.