Address by Shri V.P. Shetty, Chairman, IBA on the occasion of
release of "Code of Bank's Commitments to Customers" by the Governor, RBI on July 1, 2006 at Central Office, Reserve Bank of India
Respected Dr. Y V Reddy, Governor, Reserve Bank of India, Smt. K. J. Udeshi Chairperson, BCSBI, Members of the Governing Council of BCSBI, Deputy Governors, RBI, senior functionaries from RBI, distinguished invitees and my colleagues from the banking industry. I am privileged to address you on this occasion of the release of "Code of Bank's Commitment to Customers" by our Honorable Governor Dr. Y V Reddy.
IBA's vision, inter alia, is of an integrated banking and finance system catering to all financial intermediation requirements of customers. The growing expectations of the customers are the catalysts for our vision. The customer would continue to be the center-point of our business strategy.
In the emerging banking and financial environment, IBA envisages an increased need for self-regulation. Development of best practices in various areas of banks working would evolve through self-regulation rather than based on regulatory prescriptions or Government intervention by way of legislation.
The role of the Indian Banks Association would become more pronounced as a self-regulatory body. IBA would be required to play a more pro active role in the areas of development of bench mark on risk management, corporate governance, disclosures, accounting practices, customer charter, lenders liability etc.
In terms of RBI's roadmap, the Indian banking arena will be opened up over a period of time for presence of foreign banks in India. Hence, corporate governance being adopted by banks particularly those who have gone public will have to progressively meet global standards.
As we proceed further in time, there will be greater convergence of all the international standards with Indian standards be it in accounting, customer service, risk management, etc.
Banks will also have to deal with issues relating to reputation risk on account of operational lapses, opaqueness in operations and shortcoming in services. Hence, there is a compelling need for standardizing activities in the banking industry so as to ensure minimum quality services and transparency in all transactions.
RBI, as a regulator, has been taking pro-active steps so that the transparency is brought in all spheres of banking to ensure the credibility of the banking system. In the recent past, RBI's positive initiatives in the various aspects of financial inclusion have ensured that the common man is not deprived of the basic banking needs by the system.
Let me recapitulate at this moment about the role played by IBA in the matter of ensuring efficient customer service. IBA had brought out its " Bankers' Fair Practice " code in July 2004 and all our member banks had adopted it voluntarily. IBA had also come out separately with " Fair practice code for credit card operations " and " Model Code for Collection of Dues and Repossession of Security " to address specific concerns voiced by customers about banking practices in these areas.
In the year 2000, IBA, had reviewed the charters of different banks and brought out a ' Model Citizen Charter ' explaining to the customers what they could expect from the banks as a matter of right.
BCSBI is modeled on the Banking Codes and Standards Board in United Kingdom, which monitors implementation of the ' Banking Code ' of the British Bankers' Association. We are glad that the Reserve Bank of India came forward to partner with banks in setting up BCSBI as a society and assume the responsibility for running the body for an initial period of 5 years.
The Code of Bank's Commitment to Customers is a comprehensive code which incorporates the essence of the commitments contained in the previous three codes published by IBA. The Code also contains some of the finer points from the fair practice codes adopted by Bankers in other domains like Canada, Hong Kong, Singapore and Australia.
Let me, at this moment; highlight some of the action points that will emerge out of this code.
Firstly, the banks will be required to register themselves with BCSBI as members and have the Code adopted by their respective boards.
Thereafter, when they are ready to implement the commitments contained in the code, the banks will enter into a covenant with BCSBI binding them to monitoring by BCSBI as far as implementation of the code is concerned.
As I see it, this process could take some time, since banks will be required to revisit certain policy and procedural aspects around their products and services.
I strongly believe that the Code of commitments will ensure that the banks will remain customer focused at all times.
Banking has undergone a paradigm shift in the past decade with the extensive use of technology.
Banks use multiple channels for communicating with their customers. Keeping the cost of transactions down while, satisfying the demands of all segments of customers will always be a challenge for the banks.
A number of customer complaints arise out of the complexities in managing multi-channel deliveries.
I believe that the Code and efforts of the BCSBI will help in strengthening banker-customer relationship.
Under the able leadership and guidance of Mrs. K.J. Udeshi, I am sure BCSBI will go a long way in establishing credible watchdog body working for the improvement of Banker-customer relationship. On behalf of the Indian Banks' Association, I wish Mrs. Udeshi and her team all success in their endeavor. As the industry body, we offer our wholehearted support to the success of your mission
Before I conclude my speech, I would like to thank the Governor for taking keen personal interest in driving all such initiatives that will ensure transparent and excellent customer service in the banking industry.
Thank you all.