I took a walk around the beautiful Horniman circle in Mumbai with a good friend of mine, visiting from the US. As we marvelled at some of the beautiful buildings, he spotted a Thomas Cook office and mentioned that he wanted to exchange some US dollar traveller’s cheques (TCs). As we were passing by a bank branch I asked him to cash his TCs at the bank. Thus began our saga. That day we had to walk into six bank branches before we could get our TCs cashed. The journey itself was quite a revelation.
At our first public sector bank branch counter, the clerk referred us back to the same Thomas Cook office that we had avoided in the first place. We stepped out and walked into another branch. The counter clerk here was not sure whether they cashed TCs and after discussing it with his officer politely told us that they don’t cash travellers checks in the branch. So, we decided to retreat to a foreign bank branch. There, at the “may I help you counter”, a girl pleasantly asked my friend whether he had an account with them. When he said he was only visiting she said, sorry, the bank extends this service only to account holders. There was another foreign bank branch right next to it and we walked in. The counter clerk told us that they cashed TCs only at their main branch at Fountain. So we went back to the other public sector banks around. We walked into one looking quite neat and clean and even saw a sign for TCs. We finally thought our ordeal was over. But when we walked over to the counter, the lady manning it asked him for his account number. When he said he did not have one, she said the new RBI know your customer (KYC) norms don’t allow them to cash TCs for non-account holders. As it happened, a chief general manager of RBI was walking with us and he said he did not believe RBI had issued any such instructions. The counter lady said that’s what her head office had instructed them. We were about to retreat to Thomas Cook when there was a branch right in front of us and we walked into it as the last one before we went to Thomas Cook.
The counter clerk there said that they did cash TCs but at a different counter. We walked to it and lo and behold they actually did cash the TCs. But it took them all of 22 minutes and three handoffs before my friend got his money.
As it happens, I know the chairmen of all these banks quite well and I called them to report this and they were all distraught. But the fact was it took us overall 80 minutes to get a few TCs cashed in bank branches, all of them were authorised dealers. I think the foreign bank branch had done its profitability calculations carefully and decided that they did not want to serve non-customers, or have a corporate branch conduct retail transactions, but the situation with the public sector branches was a little different. People were not clear about the instructions and not sure about how to process the simple transaction. This transaction would help them increase their fee income, but it did not seem that they were too interested.
For example, KYC regulations would have applied at the time of issuing the TCs, not at the time of cashing them, if the person had a photo identity. Even the branch that cashed the cheques could not have made money on the transaction because it took them 22 minutes to process it. I really enjoyed cashing the TCs because I learnt so much, but I am not sure about my US professor friend. Is it a surprise then that public sector banks struggle to raise fee income?
—The author is managing director, the Boston Consulting Group. These are his personal views