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Home > Business > Special

Solve this case, earn Rs 25,000!

Prashant Mishra, The Smart Manager | December 22, 2006

Rediff Business presents the TCS Smart Business Case Study Contest for managers, along with The Smart Manager, the management magazine! We give you a profile and the history of a company.

All you have to do is study it and post your solution here, in 500 words or less. The best solution will win a cash prize of Rs 25,000 and a one-year complimentary subscription to India's first world class management magazine! The Smart Manager will also publish the winning solution along with your photograph.

Hurry! The last date to post your solution is January 18, 2007.

Prime Bank: Serving the customer?

Date: Monday 23 August 2004. Time 5.00 pm. Dr Ram Naresh Mehra, a B-school professor, was in his office looking visibly tense and in a very pensive mood. He had just returned from Prime Bank's Chennai office, where he has gone to foreclose a personal loan which he had taken six months ago.

He had taken with him a foreclosure statement he had received that day itself from Prime Bank's Pune branch, where he had originally taken the loan. After a long wait at reception, he was told by the customer service executive that since the foreclosure statement didn't carry any signature, it was invalid.

Ram Naresh was given another statement levying 4% foreclosure charges amounting to approximately Rs 7,000. Taken aback, Ram Naresh protested and asked for an explanation about the discrepancy in the two foreclosure statements generated by the same bank.

As the customer service executive could not answer his queries satisfactorily, she directed Ram Naresh (on the latter's insistence) to a senior manager in the personal loan section.

Ram Naresh went to see the manager, but he was not available as he was out on official business. Another bank official guided Ram Naresh to a third person, Nagesh Rao, in the personal loan section, to whom Ram Naresh narrated the whole story and demanded that the original foreclosure statement be honored and the discrepancy, if any, be informed in writing to him and sorted out later.

Nagesh patiently heard out Ram Naresh but he too refused to accept payment on the basis of the earlier foreclosure statement. However, he promised to gather the details of the case from Pune and other concerned persons and get back to Ram Naresh next day.

Left with no other choice, Ram Naresh returned to his office. In the evening, mulling over the episode, he decided to wait until the next afternoon before taking any steps.

When Nagesh failed to contact him, Ram Naresh called him in the afternoon to get an update. Nagesh said he had yet to get a response from the Pune office. Feeling let down, Ram Naresh decided to write to the bank's CEO.

24 August 2004
Shri PVR
Prime Bank Ltd

Sub: My experience with Prime Bank

Ref: My Personal Loan AC NO. LPPN 00002869

Dear Mr PVR,

With a deep sense of disappointment I am writing this mail to you as a first step to seek justice for myself and also to put and end to a continuous ordeal at the hands of numerous persons and systems associated with Prime Bank.

Let me introduce myself to you first. I am Ram Naresh Mehra, a member of Prime Bank family availing various services offered by this institution for the last four years.

Last February I availed of a personal loan of Rs 195,000 (LPPN 00002869) from Pune (where I was working with the National Institute of Management, Pune as a Faculty) for a personal contingency.

At the time of signing the agreement for this loan I was informed by the DSA representative interacting with me that in case of foreclosure after six months I will have to pay a foreclosure charge of 2% of outstanding as of date, which Ms Priya Dandekar of Prime Bank Pune (Personal Loans) also confirmed in my telephonic conversation with her.

I had approached Prime Bank for this loan through Mr Qamar Rangoonwala, Brach Head of Prime Bank's MG Road Branch in Pune, who in turn gave the reference to Ms Priya Dandekar. The DSA representative met me on Ms Priya Dandekar's instructions.

In April I moved to Mumbai on a new assignment with another business school. Due to this change of place I tried to get my address changed in the records of Prime Bank as well as the auto debit mandate to a new account for continued repayment of my installments. Subsequently I tried to get the address changed through the call center, which at that time changed the address putting a condition that I have to submit a proof of address to the Race Course Branch of the Prime Bank Mumbai.

Upon visiting the branch on 26 May 2004, I contacted an officer (Ms Heeral Virani) who collected a check (No. 648626, drawn on Prime Bank for EMI of June 2004 vide receipt No. 5174353), and also my request for auto debit through a new account with Prime Bank (Acc No. DD4101265670) in Mumbai after initially refusing on grounds best known to her. After customary hassle and a lot of persuasion on my part, she finally accepted my request.

In June I once again moved, to Chennai, to join the International School of Business, Chennai on a new assignment. I got my address changed again through the call center, but to my surprise this time there was no request made for address proof and a customary branch visit.

My ordeal started when I went to the ATM to check my account and what I saw troubled me. The Prime Bank had drawn one additional installment from my account in the month of June using the auto debit facility despite the fact that for the month of June, I had already issued the check and had specifically mentioned in the auto debit request form that the auto debit should start from July 2004 (I have a copy of the debit form submitted to the bank).

Upon contacting the call center I could not get a satisfactory response as to why the bank had drawn one additional installment from my account, and secondly, how it was possible that when the auto debit instruction was to withdraw transfer money from 7 July, how could a transfer be done before that? To me, it's a breach of trust on behalf of the institution.

The money withdrawn was refunded to my account after seven odd days but no penalty was paid. I wonder if I delay my payment by seven odd days how much penalty the bank will charge? Secondly, I still don't have an answer why this mistake happened and who was responsible for it. Is there any accountability for errors which caused me great discomfort? Excess withdrawal could easily have landed me in trouble had I issued new checks assuming a particular balance in my account.

Startled by all this I decided to foreclose my account, and that is when my ordeal got compounded, and today I am feeling completely lost and hugely disappointed.

In the last week of July, I contacted the call center (through the number 9000137800) just to reconfirm the procedure for foreclosure.

I was told by a gentleman (whose name I can't recall) that I have to put a request for foreclosure after the payment of six installments i.e. on 7 August 2004, and also that I can put a telephonic request too.

When I called again (through the number 9000137800) after 7 August 2004, surprisingly I was told that it is not six installments but six months after the disbursal of the loan, which makes it 13 August 2004 after which I can make this request.

When I verbally confronted the gentleman on the other side he feigned ignorance about how some one from his side could tell me that a foreclosure request can be made after six installments. Assuming the second call content to be true, I called again after 13 August 2004. This time the third person said that actually the norm for foreclosure request is that it can be made after payment of six installments.

Startled by inconsistent information disseminated by the bank's employees, I got my request for a foreclosure registered (the request id was 90-54676678) and was told that the foreclosure generally fetches prepayment charges of between 2% to 4% of the outstanding principal, depending on the customer's track record of payment and other things at the discretion of the bank. I was told that within fourteen days I will receive a foreclosure statement from the bank after which I can go to the local branch and close the account.

I did receive a foreclosure statement couriered from Prime Bank Pune branch (I can provide a copy of the same if needed) on 23 August 2004. I took this to the Chennai branch to make the payment as outlined in the statement. After the customary wait, I was told by the customer care officer that she did not consider the statement valid since it was not signed by any one and produced another statement with various charges. When I tried to enquire about the discrepancy between the two statements, the executive's response was to continue denying the earlier foreclosure statement's validity as it was not signed.

As far as I am aware, I know of numerous communications from banks which are in the form of computer generated print outs and are not signed, one such document in my possession is the Installment (amortization) schedule sent by Prime Bank to me.

The question is, does a Prime Bank's employee have the right to declare the document valid or invalid at their free will? Now I am in a real dilemma whether the numerous communications I have received from various banks are really valid or not since they are computer generated?

My requests that the payment be taken as per the earlier foreclosure statement (dt 17.08.2004) and deficiencies, if any, be formally communicated drew a blank. The branch personnel refused to take my payment or provide any satisfactory answer. I asked the customer care officer to guide me to a higher authority. She mentioned one name (Subroto) to me and asked me to meet him.

As the gentleman was not there in the office, I was guided to meet another gentleman who in turn guided me to another person named Nagesh Rao in the loan section, who I was told is the right person for loan related queries.

I still fail to understand why I was first sent to some other person if he was not the right person. Nagesh tried his level best and admitted to me that a personal loan does attract a foreclosure charge of between 2% to 4% of the outstanding, and it was he who told me that in my contract the foreclosure is 4%. This came as a rude shock to me as it was different to what was told to me at the time of the agreement, as I have mentioned earlier.

Nagesh also refused to accept any payment on the basis of the earlier foreclosure statement citing similar arguments such as not valid, wrong and so on.

After all this I called the Prime Bank Pune to talk to Ms Priya Dandekar and I got another dose of shock when she simply refused to accept that she had mentioned a 2% foreclosure charge and also disowned the foreclosure statement issued to me (ref 17 August 2004) saying that may be done by "some one else" and the statement is not valid.

She also insisted that there is no 2% to 4% foreclosure charge band, and rather it is only 4%, which is not consistent with what the guys in call center say, and what Nagesh Rao told me in Chennai.

I am completely lost. It seems to me that a charade is being performed to delay and make me pay more and more by any means possible. I never imagined in my distant dream that employees of an organization of such repute would behave in a manner quite unbecoming of even minimal professional standard.

Circumstances compel me to even think negatively about their integrity as they simply went back on their words, and harassed me to the best of their ability. Telling lies, misinforming, refusing to own their mistakes, misguiding is all that I see in my interactions. I only have a few questions to ask, but no answers from anyone whom I have met.

All I want to do is pay back my loan as quickly as possible without any hassle and with dignity. The delay caused is not my fault but as things stand, it is I who pays the penalty and even face undue harassment.

Anticipating your attention and consideration,

Thanking you

With warm personal regards

Ram Naresh Mehra
(M) 999988833

Wednesday, 25 August 2004. 12.45 pm

Ram Naresh was in his office preparing a lecture when he got a call from Pramod Ekka, Business Head Personal Loans Division, Prime Bank. Though based in Bangalore, Pramod called from New Delhi where he was on a business tour. The following conversation took place between Ram Naresh and Pramod:

PE: Am I talking to Dr Mehra?

RNM: Yes. Who is this?

PE: Dr Mehra, good afternoon. This is Pramod Ekka, Business Head-Personal Loans Division of Prime Bank. I have been forwarded your mail written to our CEO. Let me at the outset express my deepest regrets over the episode and the difficulties caused to you. However, I would like to assure you that it is not as if the bank has singled you out to harass you. There is nothing personal in the whole affair.

RNM: (interrupting) I have just narrated in mail the facts! Nothing less, nothing more. And yes, I sent the mail to get my concerns addressed. However, the fact of the matter is that even today I have not been able to pay back my loan despite best of my efforts and willingness. Who is responsible? I am paying interest on each passing day. I am told various versions each time I meet or talk to someone from the bank. I am always being told stories and at best they are confusing, conflicting and self serving. Just one example I can give you. . .

PE: Dr Mehra, I appreciate that. Let me first. . .

RNM: NO! Let me complete first. I was telling you about the foreclosure charges. First, I was told various versions on foreclosure process, then I was told about a 2% charge when I took loan, later I was issued a statement with 0% charge and when I go to pay I am told that I have to cough up a 4% charge, otherwise they won't accept my payment and I end up paying for the delay. Is this a sophisticated way of extracting more from clients?

PE: Absolutely not. Let me inform you that foreclosure charges have always been 4% for personal loans for a period of more than two years. No one, including me, has the power to make it 0%. However, in your case as you say, since you have been promised 2%, we will honor that. I am sending instructions to the Chennai office, they will contact you, and you can make payments accordingly.

One more thing, we will not charge any interest since 23 August 2004, the day when you first went to the bank to make the payment.

RNM: This is fine, but what about the statement already issued, Sir. Is that valid or invalid? And why did the executive refused to accept that in the first place?

PE: I haven't seen the statement's copy so I would not be able to comment. However, we will work to sort this out. What do you want?

RNM: I want nothing, if you are looking for a quantitative answer. All I want is a dignified end to this ordeal and harassment, and answers to my questions.

PE: I don't think you should feel that way. We will sort this out.

RNM: Fine, I will go to the bank today.

PE: Fine then. One last question, Dr Mehra, if you don't mind. . .

RNM: Go ahead.

PE: Can I ask you whether you are closing the loan due to these problems by taking a loan from another agency?

RNM: I won't tell you my source, but I can share with you this much: that I have not swapped the loan from any other agency. But yes, the developments of the past few months are the catalyst for closing the loan.

PE: Thank you Dr Mehra. If you still wish to continue the loan, we will be more than happy to serve you.

RNM: No, the best way I can be served is to close the account as soon as possible. Bye Mr Ekka and thanks for calling.

Ram Naresh had mixed feelings after the call. On the one hand he felt placated by the response to his mail, on the other hand, his anger grew because Pramod too tried to underplay the problem, and skipped answers to more pointed questions.

Nevertheless, Ram Naresh proceeded to the bank's Chennai branch to pay the money. There he first met Nagesh who was more courteous this time and asked Ram Naresh to make the final payment as per the foreclosure statement first sent to him (with a 0% foreclosure charge).

Ram Naresh was surprised and told Nagesh about his morning conversation with Pramod who had mentioned a 2% foreclosure charge. Ram Naresh asked Nagesh to be doubly sure as he wanted no more hassles. Ram Naresh also called Subroto (Nagesh's superior) and told him every detail. Subroto checked with Nagesh who told him that he had received a communication from headquarters about settling the account at 0% and that he had an official communication in this regard.

Finally Ram Naresh made a payment with 0% foreclosure charges and interest up to 23 August 2004. Before leaving, Ram Naresh went to meet Subroto and enquired about the refund of his post-dated checks and a no-dues certificate from the bank. Ram Naresh was told that he would positively receive both in seven days.

On his way back home, Ram Naresh wondered whether the bank had really viewed his case in the right perspective. In the morning Pramod had told him to settle the loan at 2% foreclosure charges yet another part of the bank had sanctioned a settlement at 0% charges. Had the bank really fixed accountability for the issues raised in his mail?

Friday, 27 August 2004. 12.45 pm

His account closed, Ram Naresh turned his attention to the backlog that had piled up in the office. The day's email included one from Shaina Mitra, Service Quality Manager, Customer Service Group Prime Bank.

To: Dr Ram Naresh Mehra
From: Shaina Mitra
26 August 2004

Dear Dr Mehra,

This refers to your mail dated 24 August 2004 to Mr PVR regarding your loan account. At the outset, we sincerely regret that the experience you had was not satisfactory. Thank you for writing to us with your feedback, which will help us to take appropriate steps to ensure that such instances do not recur.

We understand that Mr Pramod Ekka, Business Head, has spoken to you and discussed the matter. We have arranged to foreclose your loan at 2% charges. We earnestly hope that the experience you had will not come in the way of your continuing to expand your relationship with Prime Bank.

With Regards,

Shaina Mitra
Service Quality Manager, CSQ Group

Friday, 27 August 2004. 1.23 pm

While responding to this email, Ram Naresh once raised his questions:

Dear Ms Mitra,

Thank you for your response. I did have a talk with Mr Pramod Ekka regarding my mail to Mr PVR. On the same day I submitted a check for Rs 179,171.00 towards pre-payment and foreclosure of my personal loan as per instructions of Subroto and Nagesh (at Chennai office). If anything else needs to done on my part, please let me know. However, I still do not have answers to several questions I raised in my mail. Let me repeat those questions once again:

1. Why in June 2004 was an additional installment withdrawn despite there having no auto debit mandate operational by that date? (My auto debit mandate was valid from 7 July 2004). Why should the bank not pay me the same penalty for overdrawing the money from my account which the bank usually would have charged if the case be vice-versa?

2. Why did the personnel at the call center give, on three different days, different info for the same questions causing delay and great distress? Who will own up the responsibility for the delay since I had to pay almost Rs 89 per day as interest on the outstanding amount?

3. Why did the bank personnel refuse to honor a statement issued by the bank on the pretext that it is not signed?

Though you may feel I am being belligerent, I would request you to keep in mind the fact that every visit to the branch here in Chennai costs me Rs 300, and at least two to three hours of my time, that too within working hours, plus the distress of all these events. Secondly, yet more importantly, justice, as I prayed for, should not only be done, but also seen to be done.

I hope this time around I may have satisfactory response to the issues raised in my mail.

With best wishes

Ram Naresh Mehra
Friday, 3 September. 6.17 pm

A few days later, Ram Naresh received another email from Shaina.

Dear Dr Mehra,

This refers to letter mail dated 27 August 2004 regarding your experiences with regards to your personal loan account. We deeply regret the anxiety that these incidents have caused you.

The June 2004 EMI was debited from your savings account, despite receiving your payment towards the same. We acknowledge that this was due to an inadvertent error at our end.

We regret that the information about foreclosure provided to you by our officials at phone banking was contradictory. Corrective feedback has been given to the officials concerned to ensure that such instances do not recur. We focus considerable effort on training our staff to ensure high levels of service and we shall further strengthen our initiatives in this direction, based on your feedback.

It is unfortunate that your experience at our Chennai office was not satisfactory at the time of foreclosure of loan. While there is no excuse for what happened, we are grateful to you for bringing this occurrence to our attention and appreciate your patience in settling this matter.

We have sent across a gift to you as a small token of our appreciation. We request you to kindly accept the same.

We once again sincerely apologize for the inconvenience caused to you.

With regards,

Shaina Mitra

Friday, 3 September 2004. 6.33 pm

Almost ten day after Ram Naresh closed the account, he received the no-dues certificate. In fact he received three no-dues certificates: two issued from the bank's Mumbai office and one from the Chennai office. However, the bank did not return the post-dated checks submitted by Ram Naresh at the time of the loan disbursal. Ram Naresh emailed Subroto and Nagesh acknowledging the certificates, and raising the non refund of the checks issue.

Dear Subroto / Nagesh,

This is in reference to the foreclosure of my personal loan Acc No. 00001896224. I have received a no-dues certificate from Prime Bank Mumbai. However, I have not received my security post-dated checks PDCs (eight in numbers) drawn on Kalupur Commercial Cooperative Bank, Pune, each of an amount approximately equivalent to six installments (approx Rs 34,000) i.e. 6 x Rs 5,727.

As far as I am aware I should get back my post-dated checks also. I earnestly request you to expedite the matter and arrange to return my checks asap.



Subroto immediately emailed back:


Friday, 3 September 2004 7:10 PM


Sir, Will check and revert asap.



ASM - Personal Loans, RAPG

Acknowledging Subroto's promptness, Ram Naresh emailed back:

From: RNM

Sent: Sunday, 5 September 2004. 6.28 pm


Thax, Subroto. I will be waiting.


When ten days had elapsed with no further contact, nor any sign of the post-dated checks, Ram Naresh reminded Subroto again about the issue.

From: RNM

Sent: Monday, 13 September 2004. 11.45 am


Dear Subroto

I am still awaiting your response regarding my security PDCs which I have not received till date.



Subroto sent an express response, with a copy of an earlier mail which he has forwarded to his colleagues for necessary action.


Date: Monday, 13 September 2004. 5.21 pm



Pls revert asap without any further delay.



+ Attachment mail


Date: Friday, 3 September 2004. 7.10 pm


Pls do the needfull. --very urgent case.



After receiving these emails Ram Naresh tried calling Subroto and Nagesh throughout the day but could not get through, due either to non availability or failed connection. He tried again on the morning of 14 September 2004 but of no avail. Finally he shot off another email to Subroto.

From: RNM

Sent: Tuesday, 14 September 2004. 1.29 pm


Dear Subroto

This is my last mail pertaining to the issue of foreclosure of my loan and non-receipt of PDCs. I am disappointed at the kind of responses I am getting since last two weeks. Just to remind you and recall the whole sequence, I wrote you a mail on 3 September 2004 informing you about receipt of a no-dues certificate and non-receipt of the PDCs.

You responded to the mail immediately saying that you will revert back ASAP. As I haven't heard anything so I shot a reminder mail to you on 13.9.2004 (exactly ten days later!), to which you again forwarded to some persons with an instruction similar to the first one.

I do not know what is going on at your end which takes more than ten days to just let me know what the problem is and also I am completely in the dark about whether I will be getting back my PDCs or not?

I leave it to you to judge whether I am right in feeling aggrieved in the light of all these developments despite the prior developments which you are well aware of.

Best wishes,


Monday, 20 September 2004. 4.51 pm

Subroto called Ram Naresh the very next day with assurances that he has taken up the matter on an urgent basis, that there will be immediate action, and also that Ram Naresh will get feedback by the evening. In the evening someone called on behalf of Subroto to inform Ram Naresh that he will receive his checks in two days time as they will be dispatched the next morning. After Ram Naresh got his checks back on 20 September 2004, he emailed Subroto and Shaina.

Dear Subroto

Thanks for your help off late. I have received my PDCs today afternoon.

Thanx once again

Ram Naresh

Dear Ms Mitra,

Thanks for your response (dt. 3 Sept 2004) to my mail (dt 27 August 2004). I took time to respond to your mail since I was still battling (literally) to complete the closure process. Today I got my security PDCs back after almost four weeks since I gave the check for foreclosure. I am also attaching my communication to Mr Subroto Nath for your perusal.

As far as accepting the gift I am to get as per your mail (though I am yet to receive any such gift), I am not sure whether I have done anything to be gifted. My plea is, if it has not been sent, then I may be excused.

Since my present loan account is closed now and I still continue my relationship with Prime Bank as a savings account holder, I can just hope and pray that similar inconveniences and disappointments do not occur in future.

My experience has been that since I wrote the first mail to the CEO on 24 August 2004, I am still to see a perceptible change at least in my interactions with the bank till date.

Thanking you for your help and concern,

With best regards,

Ram Naresh

The question that you have to solve is:

This case illustrates issues of service guarantee, service failure and service recovery. Clearly identify the problem areas and suggest how the bank can overcome these problems.

Please submit your case here!

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