DYK: Banks are governed by a code to dealwith customers

Live mint : Saurabkumar :Thu, Apr 04 2013. 06 09 PM IST

It seeks to establish a minimum standard of banking practices that customers should expect from banks.

Last week, Reserve Bank of India (RBI) deputy governor K.C. Chakravarty said that the central bank is mulling to include financial inclusion in the Code of Bank’s Commitments to Customers. This voluntary code is governed by the Banking Codes and Standards Board of India, an autonomous and independent banking watchdog.

What is the code?

The code seeks to establish a minimum standard of banking practices that customers should expect from banks. It provides protection to the customers through an array of instructions that member banks agree to follow. These instructions are in compliance with RBI guidelines. However, at times the banks may agree to raise the bar and follow higher standards voluntarily.

A copy of the code is provided to customers when they open new accounts and is available at all bank branches.

What does it apply to?

The code applies to most banking products such as savings and current accounts, term and recurring deposits and Public Provident Fund. It also governs services such as remittance through drafts, wire transfers and other electronic transfers and other services including currency exchange, credit and debit cards, loans and other government transactions.

What does it say?

The code lays down some basic standards and commitments that banks should display. For instance, banks should be transparent with products they offer, encourage healthy competition among banks so that better and higher standards emerge and develop a trustworthy banking system wherein customers and banks have a cordial relationship. In terms of commitment, banks commit to offer safe and secure banking systems, work within the ethical principles of integrity and follow laws and rules while offering products and services.

It also says that the bank will not discriminate in terms of gender, race and other factors. The bank and staff are directed to provide all information regarding interest rates and charges upfront and not conceal anything from the customer that may be disadvantageous. Also, any changes in policy, rates and others should be communicated to the customers through branch notices, emails, letters, text messages and newspaper announcements. The banks are also directed to not put up misleading information through any of these mediums. The code also talks about complaints, grievances and feedback, dues collection process and confidentially norms.