Now that, all passion spent, the dinner and speeches of the Bank of Mauritius event of 1st December have been digested – or undigested – by the Guests and the media, it is time to write the “post mortem” of the event.
This “post mortem” could take the form of a Public Notice as follows : ‘WANTED’ a bank that honours the principles of equity, best practice and open competition for no such example exists in Mauritius”.
Some of the blatant cases of abuse of position by banks have already been pointed out, like the difference between the repo rate and the borrower’s rate (5.2%) and that between the buying and selling rates of foreign currency, 6%, but these are only the tip of the iceberg of bank malpractices. Scrutinise your bank statement carefully and you will pick “service fee” “Consolidated entry” “Tax Amount due”. The jargon is peculiar to MCB, like “auto-credit”, to deny your six weeks’ credit on your credit card purchases, as is the case in U.K. Any ploy is handy to rip off the client.
We always look to Britain as a role model, for our Parliamentary system, our legislation, our education policies etc., so why not as far as best banking practices are concerned ?
Best Practices in U.K.
In the U.K. you are not charged for your credit card, it is free, (Bank commission on credit card transactions is profit enough), for direct debit, for a 3rd statement from an ATM, for your chequebook, for annual renewal of your overdraft facilities, for monthly statements, for “ledger fees” and, if you happen to hold a Gold Card, you do not pay any commission on foreign exchange transactions over the counter.
Banks here are only open during normal office hours from 9.00 to 3.00, five days a week, which means that office workers use their lunch time to effect banking transactions, which swells the crowds queuing up for service often for 45 minutes or more. In the U. K Banks open until 4 or later and half day on Saturdays so that bureaucrats can do their banking on week-ends. On week days waiting time is rarely more than 10 minutes.
Compare these, which are standard practices in the U.K., with the situation obtaining in Mauritius, where every little gesture a bank makes is automatically charged. There are occasional exceptions : Barclays gave me a statement to certify that I had an account with them – without a fee ; (MCB charges Rs300.00 for this courtesy) ; HSBC recently processed applications for house and personal loans without a handling fee, although this was a promotion limited in time. (MCB charged Rs 5,000 as “facilitation fee” on a car loan of Rs 500,000).
Sledge hammer for scalpel
Years ago – in the late 1970s to be precise – City Bank approached me as Managing Director of British American Tobacco to offer a preferential rate of exchange for the dollar for my company’s imports of tobacco leaf from the U.S.A. This enabled me to save tens of thousands of rupees. A few months later, Pierre Benville, the CEO of City Bank, called on me to advise that he had been forced to join the Bankers’ Association and was now bound to toe the line of the Association’s rates of exchange. In other words, he could no longer offer a competitive rate. And the Bankers Association protests vehemently that it is not a cartel. (Benville left in disgust and City Bank later closed).
One can understand in these circumstances why, tired of fruitlessly using friendly persuasion and gentle prodding, like a scalpel, to moderate the super profits of the banks, Governor Manou Bheenick lost his patience and resorted to the sledgehammer, which he wielded with consummate skill in his dinner address. Trying to discipline Bank Managers, he now knows, is like herding cats – fat cats, and the exercise in both intractable and infuriating.
Banks have themselves to blame for the public denunciation of their obsessive greed. Poor marketing hampers the competition small banks could offer to the two behemoths, the MCB and SBM, which between them ran away with profits of 6.5 billion rupees last year. But they are not professional and innovative enough for this challenge. They have to hone their act first.
The Financial Times reported recently that in the U.S. the bonuses paid out to Bank Managers last year were much higher than the tax Wall Street paid to the Internal Revenue Service. Thereby hangs a story. No wonder Britain, the E.U. and Washington are all now considering ways and means of curbing the scandalously high annual gratuity of managers, regardless of the performance of their banks.
A European Union official said this week “when the banks are considered the enemy and the root of all the problems we are facing today, Cameron’s arguments are the wrong arguments for the wrong people”. The British Prime Minister was trying to protect the city of London’s financial hub from supervision by Brussels.
Smug in their comfort zone
In Mauritius the Banks are so confident of their lobbying clout and that people need them more than they need people that they do not seem to care about their public image, and can even scuttle any initiative designed to protect their customers from their grasping claws. They wallow smugly in their comfort zone, which they believe is impregnable. For example they have, with the complicity of the Ministry of Finance, aborted the appointment of the Financial Ombudsman to whom aggrieved customers could have referred their grievances, and the requirement of changing Auditors periodically, while their excessive charges and enormous profits continue unabated.
Which one will stand up and be counted ?
When will a bank have the courage to break ranks with the Bankers’ Association and offer a fair deal to its customers, a deal that rewards its investment while showing awareness of the environment in which it operates by responding to the socio-economic expectations of Mauritius ?
As I said at the beginning, “WANTED : A Bank that honours the principles of equity, best practices and open competition, for no such bank exists in Mauritius”. And the “Reward” for the challenger can be substantial : a larger customer base, a bigger market share, a more positive public image, professional pride in offering cutting edge quality of service. Any takers ? Which bank will dare to stand up and be counted ?