Dealing with Indian financial institutions — a primer

My understanding of the retail banking experience in India has evolved a fair bit over the last year or so. Some general principles in this post, with reviews of specific experiences following.

First Principles:

If you’re coming from a first-world (is that still acceptable to say?) country, a few principles to keep in mind:

1. Banks in India are divided between government-owned (public sector banks — PSBs) or privately-owned. Generally, the PSBs are seen as less efficient and more bureaucratic, while the private banks are more efficient but there are some complaints about their poor customer-service as well.
2. The banking experience is bi-modal af — focused on the retail-customer and on the Ultra High net-worth individual (UHNI). The premium banking experience for the segment in between is comparatively.. lacking.
3. The financial products space is significantly skewed towards high-commission products with high information asymmetry such as regular mutual funds, ULIPs, participatory insurance plans etc. These products have high fees and salespeople receive hefty commissions to peddle them to you. Hopefully, this blog will change some of that.
4. Lots of meatspace interaction: Even though all systems are electronic and theoretically self-service, most transactions are conducted in person — either because two systems are not integrated or simply because of a warped definition of ‘good service’. You can apply for and be approved for a credit card online, but someone will still show up at your door to collect documents that you could have emailed or uploaded yourself.
5. Service quality is entirely dependent on the person you’re interacting with and their competence. A competent and well-connected relationship manager can make a world of difference to your experience and you will come to rely on their expertise and guidance for all your financial transactions.
6. India is not about that capital-account convertibility life. (If don’t subscribe to my particular brand of finance-nerdery and millennial-speak, this essentially only impacts you as a private person if you try to send large sums of money abroad from India.) Simply put, its hard to send money out of the country. So, plan for most of your capital flows to be incoming, rather than outgoing (more about this in another post).
7. Mobile phones are a big deal here. Embrace the concept of the OTP (one-time password).

On the other hand, if you have experience in a developing country, you will probably find your experiences and service standards in India to be familiar. Like other similar ecosystems many industries in India are mobile-first, low-bandwidth and retail-focused. Policy perspectives also reflect the concerns of similar countries — capital controls, high paperwork requirements and low-integration between systems.

Welcome back, please take a number and we’ll serve you in a few years. While you’re waiting, you might want to take a look at some of my actual experiences with banks in India, or look at the entire series here.

Disclaimer: These are my subjective anecdotal experiences with banking services in Mumbai. All opinions are my own and are not intended to be authoritative descriptions of the services provided. Please do your own research before availing services described here.