The Hindu Business Line : RBI panel begins monitoring

Banks can no longer take their customers for granted. Banking Codes and Standards Board of India, an autonomous body set up recently by the Reserve Bank of India, has started monitoring services provided by banks to ensure that they follow certain minimum standards of banking practices while dealing with their customers.

The board, headed by Ms K.J. Udeshi, former Deputy Governor of Reserve Bank of India, has come out with a "Code of Bank's Commitment to Customers".

This is a voluntary code, "which sets minimum standards of banking practices for banks to follow when they are dealing with individual customers," said Ms Udeshi.

According to Ms Udeshi, 52 banks, accounting for 93 per cent of the banking business in the country, have already joined the board as members. The members are expected to follow the code. Ms Udeshi said the board would make public non-compliance of the code by any member-bank.

The board is currently not taking co-operative banks as members, though some have approached the board, she said in an interaction with a select group of journalists.

She said there are several areas where customers' interests are being ignored. For example, she said, some banks are not taking enough care in ensuring safe custody of securities and documents deposited with them by borrowers.

Similarly, some banks sell products to their customers on the basis of their implicit consent. This is wrong. A bank cannot assume that the customer accepted its product simply because he failed to communicate to the bank that he did not want its (unsolicited) offer.

Currently, the board is functioning from a small office. The infrastructure would be expanded to enable it to do effective monitoring of banks. The board was constituted on the recommendation of an expert committee, and the RBI would meet its expenses for the first five years. Members of the board include Mr M.G. Bhide, former chairman of Bank of India, Mr R.K. Krishna Kumar, Director, Tata Sons, Mr Divakara, Director General, Forum of Free Enterprise, Mr Mukund M. Chitale, Chartered Accountant, and two officials from the Reserve Bank of India.

More Stories on : Consumerism | RBI & Other Central Banks

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Union Bank introduces loan product

Bihar milkmen tie up with UTI MF

Concern on the dilution of FRBM guidelines

Bonds down on profit-taking, purchases by banks, insurers

`Hindi Fortnight' observed

Union Bank chief upbeat on 35 pc growth

Chidambaram unveils plan for IMF reform

National meet on financial inclusion

RBI panel begins monitoring