Priority Banking or Privilege Banking is a relatively new term in the Indian banking context. Many banks in India, especially the private banks have followed international banks in providing specialised services to a certain set of customers known as priority customers. These customers are determined usually by the average balance they maintain with the bank or based on the number of years they hold the banking relationship. While in some cases, customers are automatically offered priority banking status, there are many instances when one has to apply for this.
So is priority banking the same as wealth management services offered by banks? The answer is no. Wealth management service is concerned with providing first class customers with customized services on all their financial needs, which includes investment advice and portfolio management. Priority banking on the other hand deals with providing the same banking services to priority customers at specialised rates or offering a particular convenience level. While wealth management is not priority banking, priority banking as a part of its services may include wealth management. Let’s look at some of the benefits which a priority banking customer can experience:
- Dedicated service area in the branch, thus eliminating the need to queue up for transactions
- Client relationship managers assigned to take care of all banking needs
- Free ‘at-par’ cheque books and waiver of charges on a host of products like NEFT, RTGS, demand drafts, cheque returns, duplicate statements, stop payment of cheques etc.
- Premium debit and credit cards free of cost
- Free cheque pick up facility
- Concessions in locker rent
- Access to exclusive lounges and other areas
- Preferential pricing on a variety of products and services
- Relationship benefits across branches in different locations
The above are a few illustrative benefits and can vary from one bank to another. While the gamut of services and benefits covered are not important, it is useful to see that priority banking customers often stand to gain compared to normal customers.
So does it make sense to become a priority banking customer with your bank? It is first important for you to ascertain two things – your banking needs and if the priority banking status is offered for free. While in many cases priority banking is free and is based on the past history of the account, some banks charge for offering this service. For example, Standard Chartered Bank charges a fee for providing priority banking services and this is set out in the priority banking tariff sheet of the bank which changes from time to time.
Ascertain if you have to pay to become a priority banking customer. If yes, then evaluate your banking needs. As far as banking needs are concerned, each individual and household has different needs depending on their financial situation, background, how tech-savvy they are, etc. You will need to determine if you currently need heavy banking services for your personal and professional needs or if banking is only a small part of your financial life. For most people, banking stops with depositing and withdrawing cash, opening fixed deposits, operating the locker and maybe take demand drafts. Now, with the advent of mobile banking and internet banking, the need for cheque books, demand drafts and physical visits to bank branches is also greatly reduced for the common man. You can carry out most services on the internet by simply logging in to your account, with a click of the mouse. In such a scenario, applying for a priority banking account by paying a fee does not make much sense.
On the other hand, if you think you will need to avail some services repeatedly from your bank, you can consider a priority banking relationship. For instance, you may have the need to take demand drafts at regular intervals, which entails hefty demand draft charges. Or you may not be tech-savvy and therefore may need to visit the bank regularly. You may also want an unlimited cheque book facility, which is not available to you as a normal customer of the bank. In such cases, you can look at priority banking as an option to enhance your banking experience. However, always remember to compare the benefits you receive vis-à-vis the cost borne by you to avail such services.