Banking on Writing

Let me start with a personal story that happened to me almost two decades back. I went to my local bank one day asking for a fresh chequebook. The teller told me that he is not able to issue a new one since according to the bank records most of the cheques had not been used. I explained to him that I had issued post-dated cheques for a loan which would not reflect as used cheques in their records. He said he was helpless and asked me to meet the bank manager. What I thought would be a simple thing to sort out only got worse with my meeting with the manager. He even suggested that I was “deviating from standard principles”. Being young and naïve about such matters yet hurt with his comment, I told him that I did not understand what deviation meant but I considered myself a law-abiding citizen and had not broken any rules.  With no solution in sight, I came back dejected. Later, a colleague suggested that I ask the bank to give me in writing the reasons for their inability to issue a fresh chequebook.

 The next day, I went back to the manager and asked for a written note. This made him angry and said I was wasting his time. However, I insisted and finally, he told me to come back the next day to get the note. I went the next day pretty apprehensively not sure what to expect. To my utter surprise, the same manager was a totally different person and greeted me with a smile when I walked into his cabin. He said “Mr. Ghose, as a special case, we have made an exception for you and here is your chequebook”. I was almost in a state of shock! Days, even months later, I kept reflecting on what made him to change so dramatically in such a short time. I realised it was the simple yet powerful age-old custom of asking for things in writing. It’s so powerful yet we often don’t leverage it fully. 

Fast forward twenty years to recent times. Once again I am dealing with a bank – this time a foreign bank. With a floating rate which kept rising, I suddenly realised I was paying substantially higher interest than others were paying in general. So I asked the bank to reduce my rate which they declined. I decided to move the loan to another bank which was offering a lower interest. I was told that there would be heavy foreclosure charges. I tried to reason with my relationship manager and finally shot out a note. The note read “…You mentioned that the foreclosure charges are still applicable since the RBI has not issued a notice to that effect yet. However, as per RBI Monetary policy statement 2012-13 (by the Governor, dated April 17 2012) there is a clause (Pg. 16, #82) which I quote:...Accordingly it is proposed, not to permit banks to levy foreclosure charges/pre-payment penalties on home loans on a floating interest rate basis. I am attaching the policy statement with this mail. In view of this, pl. confirm that the bank would not be charging any foreclosure and/or pre-payment for my existing loan”. Immediately I got a mail back from my relationship manager that the corporate communication department would take over from there on. The response from that department among other things read “We confirm that in lieu of the circular received from RBI with regards to the foreclosure charges, the referred charges have been withdrawn and would not be applicable on your Home Loan account”. Such is the power of written communication.

This concept works at all levels and all types of organizations. Mr. Raghuram Rajan, the high profile  governor of the Reserve Bank of India has not cut interest rates for fear of rising inflation for the last two years (finally did two days ago!) much to the annoyance of several politicians. Unlike the practice at the United States Federal Reserve and many other central banks, where interest rate changes are voted on by a committee, such decisions in India are the personal responsibility of the governor, although he may consult with others. Interestingly, the central bank governor has less independence, at least on paper. The governor may be dismissed and replaced by the finance minister, who may also order the governor to make an interest rate change, although the order must be issued in writing. Because either move would be highly contentious, finance ministers have refrained over the years from exercising these powers.

So next time, you want to convey or clarify, summarise or just remind, by all means communicate in person for that personal touch. But soon thereafter, follow it up in writing. Its powers can be almost magical.