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Banking Codes and Standards Board Of India [ Back ]

The Banking Codes and Standards Board of India (BCSBI) in collaboration with the Indian Banks’ Association (IBA) has evolved two codes - Code of Bank’s Commitment to Customers and the Code of Bank’s Commitment to Micro and Small Enterprises which have been voluntarily adopted by member banks..

The Code of Bank’s Commitment to Customers was reviewed in the year 2009 in collaboration with IBA. The objective of the review was to bring about greater transparency, more efficient grievance redressal systems and enhancement in the minimum standards of banking practices relating to customer service, keeping in view the contemporary regulatory framework, growing expectations of consumers of banking services, emerging issues in customer service, on-going market developments and innovations in the banking system.

Chairman, BCSBI and members of the Governing Council held a meeting with the Principal Code Compliance Officers of member banks at Mumbai on March 27, 2010 which was very well attended. Issues emanating during discussions are listed below with BCSBI’s clarifications.

Code Of Bank's Commitment To Customers

Sl. No.

Para of the Code

Issues Raised by Member Banks

BCSBI Clarifications

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  • There are multiple codes and charters for customer service from BCSBI, IBA and RBI. There may be need to move towards unification thereof. 

  • The contents covered in the Fair Practices Code are also covered in the BCSBI Code. BCSBI member banks are required to follow, practice and provide information on both the codes to customers. Branches are often getting confused.

IBA has clarified on its website that the following codes evolved by them are not applicable to members of the BCSBI.

  • Bankers’ Fair Practice Code

  • Fair Practice Code for Credit Card Operations 

  • Model Code for Collection of Dues and Repossession of security.

Member banks are, therefore, required to follow BCSBI Codes.

A reference is invited to the introductory para in the Code which clarifies that the Code does not replace or supersede regulatory or supervisory instructions of the Reserve Bank of India (RBI) and that banks will comply with such instructions/directions issued by RBI from time to time. Provisions of the Code may set higher standards than what is indicated in the regulatory instructions and such higher standards will prevail as the Code represents best practices voluntarily agreed to by banks as their commitment to customers.

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2.1.6 To Publicise The Code We Will: 

   a. provide you with a copy of the Code, on request, over the counter or by electronic communication or mail   
  
b. provide you ( new customer) with a copy of the Code when you open your account

As the Code is a large document, portions applicable to the product opted for may be given to the customer

The full text of the Code must be given to the customer as he may avail of different products / services offered by the bank and he must be made aware of all his rights.

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3.2 'Do Not Call Service’ 

When you become our customer, we will automatically register your name under our 'Do Not Call ' Service. We will not inform/extend to you through telephone calls/SMS/e-mails any new product /service unless and until you inform us in writing that you consent to avail of this information/ service

Why cannot there be an entry in the DNC only at the specific instance of the customer?

  • The customer is entitled to receive all updated information on our products / services to enable him to take a prudent decision.

  • It is the responsibility of the bank to inform the customers also, as to the latest information on products and services.

  • In the era of technology the most convenient way of marketing is e-mail, telephone, SMS etc. but item 3.2 of the Code says that it should be done only after seeking specific consent under ‘Do Not Call’ service.

The underlying principle of the Code is the need for explicit consent and not implicit consent. The customer has a right to privacy and should not be taken for granted. 

Member banks can ask the customer to exercise his option, in writing, as to whether he would like to receive information about new products / services offered by the bank over the telephone, through SMS or e-mail before using these modes for marketing their products.

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3.4.2 Changes in Fees & Charges 

If we increase any of these charges or introduce a new charge, it will be notified one month prior to the revised charges being levied / becoming effective.

The medium through which customers can be intimated about changes in fees and charges should be included in the Code. For example: any of the following modes:

i. Notice at the branches
ii. Annexure to the statement of account
iii. Letters
iv. e-mail
v. SMS 
vi. Website
vii. Newspaper

A reference is invited to Para 3.5.1 of the Code wherein the modes of communicating changes to terms and conditions have been listed. 

Banks need to ensure that changes to terms and conditions including fees and charges reach the customer 30 days prior to the changes becoming effective.

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Is Email a valid mode of communication for customers who have given their email ID to the bank for regulatory purpose - informing that the account is inoperative / dormant / Nomination confirmation etc

If a customer has registered an e-mail id with the bank, communications may be sent to him by e-mail.

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4. Advertising, Marketing and Sales 

d. We may, from time to time, communicate to you various features of our products availed by you. Information about our other products or promotional offers in respect of our products/services, will be conveyed to you only if you have given your consent to receive such information/ service either by mail or by registering for the same on our website or on our phone banking/customer service number.

In spite of DNC registrations, we (the bank) will continue to intimate changes in product features and send email/SMS alerts for security purposes.

Please see clarifications at items 3 & 4 above.

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5.1 Credit Reference Agencies

d. If your loan account has been in default, and thereafter regularised, we will take steps to update this information with the CRA in the next monthly report.

This para needs to be modified to read as “If your loan account has been in default, and thereafter regularised, bank will take steps to update this information as applicable with the CRA in 60 days in the format as per guidelines issued by CRA/RBI from time to time

As per Regulation No.10 (a) (ii) (A) to the Credit Information Companies (Regulation) Act, 2005 credit information is to be updated on a monthly basis or at such shorter intervals as may be mutually agreed upon between the credit institution and credit information company.

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6. Collection of Dues 

Whenever we give loans, we will explain to you the repayment process by way of amount, tenure and periodicity of repayment. However, if you do not adhere to repayment schedule, a defined process in accordance with the laws of the land will be followed for recovery of dues. The process will involve reminding you by sending you notice or by making personal visits and/ or repossession of security, if any.

‘Calling and SMS alerts’ should be included as modes for contacting the borrower.

It is preferable for the bank, in its own interest, to send reminders in writing or through personal visits.

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6. Collection of dues

 b. We will also make available on request details of the recovery agency firms/ companies at our branches.

The provision should be amended to read as “these details are available on the website  and can also be obtained by writing to the Nodal officer of the Bank.”

The bank is committed to have details of recovery agents on their websites. Therefore, if a customer requests the branch for details of the recovery agency firms the same can be provided to the customer at the branch.

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8.1.1 Savings/Current Accounts -Statements (a)

 a. To help you manage your account and check entries in it, we will provide you with a monthly statement of account unless you have opted for a pass book.

Banks should have the freedom to decide periodicity of sending physical statements to customers. However, the customer can walk into the branch to collect monthly statements free of cost.

According to RBI regulations banks must issue monthly statements of account, free of cost to those customers who opt for statements of account.

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8.1.1 Savings/Current Accounts Statements

 e. We will ensure that entries in your pass book / statements are brief and intelligible

  • Entry of the name of the payee of a cheque in case of debit entries need not be entered as the customer is expected to keep a record of the cheques he issues.

  •  Existing systems do not allow such entries.

This is a fraud-prone area and the source of several complaints. It is, therefore, imperative that member banks modify their procedures and systems to enter the name of the payee in the pass book / statements of account.

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8.1.2 Term Deposit

When you place a term deposit with us, we will

 f: obtain Form 15 H / 15 G from you at the time of application if you are not liable to pay tax on your interest income.

The provision may be modified to read as We will accept Form 15 H / 15 G from you at the time of application if you are not liable to pay tax on your interest income. Additionally it needs to be mentioned that:

 For FDs booked through Internet banking/ phone banking the customer will have to walk into the branch and submit Form 15H/15G

The bank is committed to explain the IT rules and obtain Form 15 G /15H, at the time of placement of Term Deposit.

 If a bank is willing to accept an application for FD through electronic media, it can also transmit Form 15G / 15 H through internet to the customer to enable him to submit the same.

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8.1.6 Dormant / Inoperative accounts
 
We will

 b. notify the joint holder/s also before an account is classified as inoperative / dormant

  • How can the bank notify the joint account holders before an account is classified as dormant, when the address of the joint account holders are different? The system only captures the address of the 1st account holder. 





  •  Is it practically possible to assess any account as dormant / inoperative or unclaimed three months in advance? Decision to classify any account as dormant / inoperative or unclaimed could be taken only after the expiry of the stipulated period?

It is important to advise the joint account holder(s) that the account is proposed to be classified as dormant / inoperative. The joint account holder(s) has the power to operate the account, except if mandated otherwise.

The account opening form should have the provision for address of the joint account holder(s) and the system should be enabled to capture contact details of all the account holders. 

Yes. 

The Code provides that the account holders be advised that their account is liable to be classified as dormant after a period of inoperation of 1 year and 9 months i.e. three months before the account is classified as dormant / inoperative.

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8.2 Clearing Cycle / Collection Services 
b. We will pay you compensation as per our Cheque Collection / Compensation policy for any delay in collection of instruments, without waiting for a demand.

  • With regard to collection of cheques, it is mandated that the collecting bank should compensate its customer for delay in collection. No liability is fixed on the paying bank, for delay, if any, at its end. The paying bank is expected to remit the proceeds of the inward instrument as early as possible, but in any case by the following day of receipt. Time limit and compensation amount should be set for delays at the paying bank and such amount should be remitted voluntarily. 

  • RBI has instructed that a customer should not be inconvenienced in any way, just because his account has been rendered inoperative. In the scenario of ‘Anywhere banking’ cheques drawn on a dormant account may be presented at another centre. The non-home branch may not be able to contact the customer. Hence, it will be difficult for them to honour the cheque which may cause inconvenience to the customer.

A person who deposits a cheque to be collected from another bank is a ‘customer’ of the collecting bank. Compensation for delay, must, therefore, be paid by the collecting bank. The customer has a relationship with his bank and not with the paying bank.










In the present CBS environment banks should keep all details of accounts including phone number(s) of customer(s) up-to-date so that the data can be accessed at all branches besides the home branch.

Bankers have to use their discretion and exercise due diligence while allowing operations in such accounts.

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8.3 Cash Transactions 

d. We will reimburse amounts wrongly debited in failed ATM transactions within a maximum period of 12 days from the date of receipt of your complaint.

While RBI has set a limit of 12 working days for settling these transactions, many a times there is a delay beyond 12 working days when the ATM is owned by some other bank. In such cases, the compensation to be paid should be shared by the other bank and time limit for responding to other bank ATM failed transactions should be specified.

Compensation should be paid by the card issuing bank to its customer. The customer has a relationship with his bank and not with the ATM owning bank.

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8.3.1 Direct debits and standing instructions 
We will

 b. act upon mandates given by you for direct debits [say Electronic Clearing Service (ECS)] and other standing instructions. In case of any delay or failure in executing the mandate resulting in financial loss or additional cost, we will compensate as per the compensation policy of the bank. If the mandate cannot be executed due to insufficient balance in your account, we will levy charges as per the Tariff Schedule as amended from time to time

In case of pensioners’ account Life Certificate is obtained during November every year. In the event of death of pensioner say during December and bank not being informed, the bank shall continue to pay pension till October (till due date for next Life Certificate). Standing Instructions accepted under such accounts will allow transfer of funds even after death of the pensioner. Pension paid after death cannot be recovered under such circumstances.

“The paying branch before commencement of pension obtains an undertaking from the pensioner in the prescribed form for this purpose and therefore, can recover the excess payment made to the pensioner's account due to delay in receipt of any material information or due to any bonafide error. The bank has also right to recover the excess amount of pension credited to the deceased pensioner’s account from his/ her legal heirs/nominees.” (c.f http://www.rbi.org.in/scripts/FAQView.aspx?Id=68)

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8.9 Foreign Exchange Services 

f. In case of delay beyond the day when the amount is due for credit, you will be compensated (a) for any loss on account of interest for due period beyond the due date and (b) also for adverse movement of forex rate as per the Compensation Policy of the bank.

Compensation would be paid provided the beneficiary details are correctly mentioned by the remitting bank

The beneficiary of the remittance is a customer of the receiving bank. Compensation for delay, must, therefore, be paid by the receiving bank. The customer has a relationship with his bank and not with the remitting bank. The receiving bank has to make efforts to ascertain correct beneficiary details.

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8.11.1 Loan products Applications for loans and their processing

 c. We will give you the Most Important Terms and Conditions (MITC) governing the loan / credit facility you have availed.

  • The various terms of the loan are provided to the loan applicants while applying for a loan and also clearly indicated on the sanction letter which is accepted by the applicant / borrower. In view of the above the MITCs may not be insisted upon



  • BCSBI may prescribe a format of MITC so that uniformity is maintained and to avoid subjectivity between most important and important terms of loan sanctioned.

The MITC must necessarily contain the most important terms and conditions including those which affect the customer adversely.

The sanction letter may not contain all terms and conditions of the loan. Some conditions may form part of the loan agreement. The Most Important Terms and Conditions may, therefore, be listed separately.

Banks should be able to decide the most important terms and conditions for each of their products. Terms and conditions of similar products may differ from bank to bank.

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8.11.1 Loan Products Applications for loans and their processing 

l. We will compensate you for any delay in return of securities / documents / title deeds to mortgaged property beyond 15 days of the repayment of all dues agreed to or contracted.

Compliance with the provision may not be possible under the following circumstances:

  •  A third party makes final payment and the mortgager does not claim the document;

  •  Documents have been mutilated / destroyed due to natural calamity; 

  •  The account is closed by intervention of Courts and there is a delay in receipt of the title deeds from the Courts.




The mortgager should be advised to collect the documents. 

The bank should compensate the borrower and assist the customer in obtaining duplicate documents.

Courts have to be made aware of the Code commitment and compensation has to be paid for the delay.

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8.14.3 Credit Card Statements

 a. To help you manage your credit card account and check details of purchases/cash drawings using the credit card, we will offer you free of cost a facility to receive credit card transaction details either via monthly mail and, if you so desire, also through the Internet. Credit card statement will be dispatched on a predetermined date of every month free of cost at your mailing address

Some banks may choose not to send statements in following scenarios- 

1) In case no transactions or outstandings are involved 

2) In cases after sending the statements the customer is delinquent for over 180 days

3) For oustandings below Rs. 100




Item No. 1 has been noted for consideration at the appropriate time.

Credit card statements are required to be sent in the case of scenarios 2 & 3.

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8.14.3 Credit Card Statements

c. We will let you know / notify changes in schedule of fees and charges and terms and conditions. Normally, changes (other than interest rates and those which are a result of regulatory requirements) will be made with prospective effect giving notice of at least one month. The changes will be notified along with the monthly statement of account or copy thereof

Besides monthly statement we can let a customer know of changes through emails or SMS or letters. However it is also the customer’s responsibility to have latest address/mobile number and email id updated with the bank

A reference is invited to para 3.5.1 - Changes in terms and conditions. (Account statements is one of the modes)

 

Code Of Bank's Commitment To Micro And Small Enterprises

Sl. No.

Para of the Code

Issues Raised by Member Banks

BCSBI Clarifications

1

5.3 Sanction / Rejection 
We will 

f. Follow a rating system, the parameters of which will be shared with you.

A bank has suggested that as there are several specific internal parameters on the basis of which a bank rates a customer and takes a call whether to lend or not to lend and would vary from product to product, sharing of the parameters without complete information would not be of any use to the applicants. Moreover, the reasons for rejection are invariably shared with the applicants as prescribed by RBI.

Parameters need to be shared so that the customers are able to take appropriate measures to ensure that their performance on these parameters meet the required standards.

 

Other Issues

Sl. No.

Issues Raised

BCSBI’s Clarifications

1

Nomination is recorded in the principal account of the depositor (Savings a/c) and FDR is issued at the request of the depositor by debit to the Savings account. 

  • Do we need to obtain a separate nomination for FDR. 

  • Whether position will change when the account is opened with sweep facility.

Fixed Deposit is a separate account and will need separate nomination even though the FDR is issued to the debit of the Savings Bank account of the customer. 

When an account is opened with sweep facility the application form itself should clearly specify the position regarding nominee for the deposit.

2

Issuance of chequebook to blind and illiterate person. How will the bank clear such cheques which are with thumb impression?

RBI has issued instructions that banks should offer all the banking facilities including cheque book facility, ATM facility and locker facility to the visually challenged persons and also assist them in withdrawal of cash following the orders dated 05.09.2005 passed, in Case No. 2791/2003, by the Honourable Court of Chief Commissioner for Persons with Disabilities. The Honorable Court observed that visually impaired persons cannot be denied the facility of cheque book, locker and ATM on account of the possibility of risk in operating / using the said facility, as the element of risk is involved in case of other customers as well.

Banks may please note that a visually impaired person may be able to sign documents just like other customers.

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BCSBI newsletter can be provided in e-mail format and contents thereof can focus on Banking Codes initiatives so that it can be widely circulated to bank branches

BCSBI newsletters are available on our website www.bcsbi.org.in under quick link - Publications. Banks may make use of the same. Initiatives of the BCSBI are included in the newsletters.

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BCSBI can publish small handy booklets of do’s and don’ts regarding customer service which can be purchased by member banks for wide circulation amongst their branches.

BCSBI has placed FAQs on BCSBI, MSE Code, Housing Loans and Credit Cards on its website www.bcsbi.org.in

BCSBI also publishes a quarterly newsletter ‘Customer Matters’ to create awareness which is also available on its website.

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Training Plan for the BCSBI Code.

  • Trainers’ training: The faculties of training institutes of banks can be trained by BCSBI
  • BCSBI can also introduce a system of accreditation for proficiency in customer service like NCFM by NSE or certified by AMFI or IIBF. 
  • A chapter on banking code should be made a part of course curriculum of any course on banking done by public or private institutions like NIBM, IIBF, NIIT etc.

BCSBI has held workshops for faculty of banks. BCSBI is willing to lend faculty support to any member bank, if required. 

Matter is being taken up with IIBF to introduce a Certificate Course on Customer service with due emphasis on the Codes.

BCSBI is taking up the matter with NIBM.

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A trend analysis of customer complaints received by BCSBI may be carried out every month and BCSBI can provide findings of the analysis to all member banks , which will facilitate timely review and corrective actions by the member banks.

The Annual Report of the BCSBI has a paragraph on customer complaints as also a profile of complaints under various heads.

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Keeping in view the technology interface of the banking services and increasing role of IT in banking services and increasing prominence of alternate delivery channels like ATMs and Internet, a periodical interaction of BCSBI and IT heads of banks would be fruitful.

BCSBI has noted the suggestion and is open to dialogue with IT officials of member banks, if necessary.

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A periodical report on decisions from Banking Ombudsmen where the bank concerned was found wanting in service levels, can also be provided to all member banks which would also facilitate systemic corrections and improvements in customer service.

Compendium of cases handled by the offices of the Banking Ombudsmen, classified under certain heads like Operations in Deposit accounts, Complaints relating to loans etc. are available at www.bankingombudsman.rbi.org.in

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BCSBI may suggest inclusion of a para on Customer service Initiatives under Directors’ Report in the Annual Report of banks.

The activities of the Customer Service Committee of the Board of a bank are reported in the Directors Report which forms part of the Annual Report of the bank.

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BCSBI can follow the SLBC model for spreading the organisational reach to State capitals. In each of the States, one of the member banks can take the responsibility for holding periodical meetings of all member banks on the subjects related to Banking Code compliance and customer service in which a representative of BCSBI as well as a representative from Head Offices of the member bank can also participate.

BCSBI has requested Convenors of SLBCs to disseminate the MSE Code.

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BCSBI officials visiting the branches are requested to submit branch-wise report regarding the deficiencies observed to facilitate speedy compliance.

BCSBI’s objective is to ensure that systemic gaps do not exist in any of the bank branches and not mere compliance of Code provisions by a particular branch.

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BCSBI officials conduct incognito visits to select branches to evaluate the level of compliance of the codes adopted by the banks. It is considered desirable that the level of compliance is given a rating over a scale of 1-10 or 1-100 and the rating system is made known to the banks so that they can strive for improvement and carry out self assessment periodically.

The suggestion has been noted for consideration.