Loan Shark? Pawn Broker? No, HDFC Bank Relationship Manager & Personal Banker

In the old days, they used to call them loan sharks and pawn-brokers. Now they call them Relationship Managers and Personal Bankers. In their quest for year-on-year growth, retail bankers are crossing over some boundaries of the client-banker relationship. HDFC Bank is abundant in examples of this unwholesome trend. Without providing you with adequate grounds for filing complaints to RBI or the banking ombudsman, HDFC Bank is routinely exploiting the customers' dependency and blind trust.

HDFC Bank is like if your doctor collects real-time information about when and with whom you have sex, and then he goes and hires a bunch of MBAs and college freshers, calls them "Relationship Managers", lets them hang around his clinic pretending to be doctors till you start telling them about your intimate problems. And then this doctor gives these relationship managers access to your information on their computer screens, with monthly targets for selling you condoms and other contraceptives. Conflict of interest? Absolutely!

Bankers are routinely privy to salary details, annual income, etc. that it is their business to know. However, the salesmen and women who hang around your bank have no business to know your financial details. These glib young men and women go out of their way to fill up account-opening forms, etc. for you. You think they are "bankers" and so you ask them to access your account on their computers. This gives these sales people access to your very private financial details, such as a huge cash-flow into your accounts when your life insurance policy matures, or you take VRS, or sell your house, or book profits in the share market.

HDFC's bankers and non-bankers acting together in an orchestrated way, exploit customers systematically in the long run.

If you are flush with funds, your "personal banker" tries to persuade you to buy tax planning products, annuities, etc. Alternatively, if you are struggling to pay credit-card bills, frequently overdrawing your current-account, breaking fixed deposits prematurely, etc., your relationship manager nudges you to take a personal loan or gold loan. Loan disbursal lets him meet his monthly targets and earn commissions, and when you default on repayments, your bank reaps handsome profits by imposing heavy penalties and selling the collateral of gold loan.

Why is HDFC Bank so keen on opening lots of new accounts, even if they don't transact much business? Because it "provides customer base for ongoing cross-sell through branches". In other words, every account holder is a potential customer for credit cards, loans, etc.

Let's look at HDFC Bank's online behaviour. As a customer, I have given my email address to HDFC Bank to enable them to keep me informed of my account balance, etc. Here's an example of an acceptable email from HDFC Bank:

Emails giving you updates about your HDFC account balance are ethically OK... but these are the narrow end of the wedge.

But then HDFC Bank ups the ante, and starts using the same email channel to sell you products. Here's an example of a salesman-like email:

Emails selling you the bank's debit card services seem ethically OK, but only because banking and debit/credit card businesses are so inextricably mixed up.

Still, it's tolerable because debit cards are an intrinsic part of modern banking. But HDFC Bank doesn't stop at selling their own products, they try selling you other companies' offerings, earning advertisement revenues like a newspaper company. Here's an example:

Marketing emails cross the line from banking to advertising and marketing. Using the bank's customer base for marketing products of other companies --  how is that banking? How is it even a related business? This is just blatant abuse of the trust that customers repose in their bankers!

Surely, advertising Amazon's festival sale is beyond the bounds of the client-banker relationship. Advertising cannot be considered a part of a bank's legitimate activities. Is this why we give the bank our email address in the first place? No! Using the bank's customer base as a captive market for selling the products of other companies is abuse of trust and misuse of the client's information! It's not very different from selling their client data to marketing companies, is it? The bank's customers are silent simply because they have gotten used to it. It's similar to their tolerance to receiving unwelcome marketing calls from their "Relationship Managers" or "Personal Bankers".

HDFC Bank earns substantial revenues from third party product sales, fees and commissions. See this slide from HDFC's investor presentation:

The box on top right shows that third-party product sales is a source of fees and commissions for HDFC Bank. The bullet points at the bottom shows that Fees and Commission form about a quarter of other Income (non-fund revenues) of the bank.

ISSUED IN PUBLIC INTEREST BY
Krishnaraj Rao

9821588114
krish.kkphoto@gmail.com

Other articles about HDFC Bank:

1) Is HDFC Bank letting Justdial steal your money?

2) Pawn your wife's gold now  -- No documents needed!