22 Sep, 2009 

The Banking Codes and Standards Board of India (BCSBI) has in collaboration with the RBI and the banks and the Indian Banks’ Association (IBA) issued a path breaking Code of Bank’s Commitment to Customers in July 2006. The Code was intended to provide customers with a reference document of their rights and, more importantly, banks entered into a covenant with the BCSBI to observe the Code. It was then announced that the Code will be reviewed after three years. Accordingly, the Code has been revised in order to bring about greater transparency, further enhancements in banking practices relating to customer service, a more responsive grievance redressal system in banks and provide additional protection to customers.

Customers can now peruse, on the bank’s website, the policies of their bank relating to cheque collection, compensation, collection of dues and grievance redressal. If a customer has borrowed against a floating rate of interest, he will be informed of the reference rate to which his floating rate of interest is anchored and the bank will have to disclose on its website changes in such reference rate as and when they take place. Banks are now committed to disclose minimum interest clause, reset clause, all charges etc. at the time of offering loan products, as also convey the Most Important Terms and Conditions (MITC) for credit cards and loans.

Customers are entitled to compensation for delay in collection of cheques or delay in returning documents/securities beyond 15 days of settlement of dues without their demanding the same.

Banks are also now committed to explain the provisions of Income Tax Act applicable to interest income and obtain Form 15G/H at the time of opening a term deposit account, wherever applicable; notify the joint holder/s, in addition to the first holder of an account, before classifying an account as dormant/inoperative; not to insist that insurance cover for securities lodged be obtained from a particular provider; disburse any pre-sanctioned credit facilities offered and accepted over telephone, only after obtaining written consent from the customer; introduce a system of checks before referring a loan to a Collection Agent; dispose customer complaints in 30 days etc. The full text of the revised Code of Bank’s Commitment to Customers – August 2009 is available on BCSBI’s website www.bcsbi.org.in and will also be made available by banks at their branches.

BCSBI has opened its membership to Scheduled Urban Co-operative Banks and Regional Rural Banks. As on date BCSBI has 79 members. BCSBI will commence credit counseling services from its premises at BKC, Mumbai from October 1, 2009. The services will be free of cost to any retail borrower and MSE customers of member banks. Borrowers may directly approach the Centre. Member banks may also encourage borrowers, who, in their opinion, need credit counseling to approach the Centre. The cases of willful defaulters will not be pursued. The centre would maintain confidentiality of information of the borrowers. A prescribed format of application form for counseling is placed on BCSBI’s website.