2. Banking Codes and Standards Board of India (BCSBI)
was constituted on the recommendation of the
committee under the Chairmanship of Shri S.S.Tarapore
former deputy Governor of RBI.
Registered as a Society under Societies registration Act
1860 in February 2006.
BCSBI is a board for hassle free service to the Common
Man.
BCSBI is an independent and autonomous watch dog to
monitor and ensure that the Banking Codes and
Standards adopted by the banks are adhered to in true
spirit while delivering their services.
3
3. Code will apply to all products and services of the banks like
Deposit accounts, Safe deposit lockers, settlement of
deceased accounts, Forex, remittance within India, Loans and
advances including guarantees, credit cards, internet banking.
Code also Apply to interest rates, tariff schedule, terms and
conditions governing relationship between the bank and the
customer, compensation of loss, privacy and confidentiality of
the information relating to the customer, norms governing
advertisements, marketing and sales by banks.
4
4. FINANCIAL CONSUMER PROTECTION – ISSUES
5
Consumer
Protection
Less
competition
due to stiff
entry barriers
Low Levels of
Literacy
Large scale
Information
Asymmetry
Product
Proliferation due
to technology
enabled delivery
channels
5. MAJOR CONCERNS
Mis-selling of products and services- Misleading
advertisements, unsolicited products, forced bundling
Transparency and Disclosure – Complex terms and conditions,
Non-disclosure of penal provisions, hidden fees and charges,
usurious penal charges
Consumer Education – Lack of awareness of MITCs, poor
customer responsibility
Collecting Dues – Harassment/ Intimidation, conduct of
recovery agents
No. of customers approaching BOs still high, indicating
inadequacy of banks’ internal redressal systems
6
6. CHALLENGES & TRENDS IN CONSUMER
PROTECTION
Product proliferation in the name of innovation- Structured products,
derivatives
Increase in virtual and cross-border transactions
Imbalances in bargaining power
Segregation of consumer protection and market conduct issues from
prudential regulation
Treating Customers Fairly (TCF)
7
7. CONSUMERS’ RIGHT TO FAIR TREATMENT
What is TCF
- Consumers understand the features, benefits, risks
and costs of products they buy and the services they use
- Transparent and non-discriminatory pricing
TCF characteristics:
access to adequate, comparable information
honest and ethical dealings
effective, responsive and robust grievance redressal
system
appropriate advice on suitability of products
8
8. FAIR TREATMENT OF CUSTOMERS THROUGH
PRODUCT LIFE -CYCLE
• CONTINUOUS SUPPORT
TILL EXPIRY OF TERM
• PROMPT SETTLEMENT OF
DISPUTES
• EASILY ACCESSIBLE
• OBJECTIVE TIME-LINES FOR
REDRESSAL
• INFORMATION ON
ALTERNATE DISPUTE
RESOLUTION MECHANISM
• ACCURATE INFORMATION
• TRAINED STAFF
• NO MISLEADING ADVTS.
• SIMPLICITY
• FAIR CONTRACT TERMS
• PLAIN LANGUAGE
• TRANSPARENT & NON –
DISCRIMINATORY PRICING
PRODUCT
DESIGN
MARKETING
AND
ADVERTISING
AFTER SALES
SERVICE
GRIEVANCES
REDRESSAL
9
9. ARE CONSUMERS BEING TREATED FAIRLY ?
Bundling of insurance with bank’s regular products
Perverse incentive structures encourage mis-selling-
Sale targets for front desk staff!
Floating interest rates – Sticky on the downside !
Wide variation in interest rates charged for retail
loans- Customers discriminated in spite of similar risk
profile
Discrimination in rates offered to old and new
customers with identical risk profiles
Discount on rate of interest charged during festivals
Charges for not providing services
- Non-maintenance of minimum balance
- Charges for no transaction in accounts
- Prepayment penalty 10
10. SOCIO- ECONOMIC FALLOUT OF IMPROPER
MARKET CONDUCT
Banks might meet legal and regulatory prescriptions but whether their market
conduct is in tune with wider socio-economic interest
- Lending against the security of gold (why it should not be treated as
consumption loan)
- Opening of accounts of MLM companies and allowing transactions
Cobrapost episode:
-Staff facilitating tax evasion through splitting of transactions
-Customers allotted multiple IDs, even within the same branch
- Laxity in CTR/STR reporting
- Sale of third party products/gold coins at branches – Without KYC
Lack of follow up on export bills sent for collection – implications for CAD
Large ‘unhedged forex exposures’ of corporates– implications for individual
banks and for systemic stability
11
11. CASE FOR TWIN PEAKS REGULATORY
ARCHITECTURE
Segregating prudential regulation from market conduct regulation –
Institutional solvency and systemic stability does not ensure consumer
protection
Growing recognition that institution-based structures are becoming irrelevant
- Changes in industry characteristics
- Changes in product characteristics
Neither institutional nor functional approaches were/ are adequate
Problem of scarce specialist skills – supervisory and regulatory
12
12. CHANGING PROFILE OF FINANCIAL
SERVICES INDUSTRY
Emergence of financial conglomerates – growing size
and numbers
Abolition of barriers/ restrictions on investment/
commercial banking combinations
Bank- insurance linkages becoming commonplace
Need for a “group-wide” perspective for monitoring
prudential soundness
13
13. CHANGING PRODUCTS PROFILE
New/ innovative products that overlap conventional deposit/ insurance/
securities boundaries
Credit default swaps – are they exposure in terms of credit or insurance ?
Problems posed in the area of consumer protection – who regulates which
product ?
Systemic issues – OTC derivative markets increased the interconnectedness
of institutions, banks and non-banks
14
14. TWIN PEAKS MODEL - OBJECTIVES
Functional Specialization
Optimum and efficient use of resources
Ensuring accountability
Avoiding comprehensive single point regulatory lapses and
systemic failures
Standardized KYC requirements-Remove irritation of
multiple KYC requirements
15
15. PRUDENTIAL REGULATION
Objective - ensure safety and soundness of individual entities and overall
financial stability (Systemic stability concerns)
Focus on large financial entities including financial conglomerates
Tools used include stipulation of liquidity and solvency requirements and
regulation of the payment system
16
16. MARKET CONDUCT REGULATION
How firms conduct their business, design and price their products, treat their
consumers
- Banks financing speculative products (Gold, Equity)
- Banks receiving commission/ fees from dealers/ suppliers
Whether banks’ activities are in national/societal interests
Objective is to secure consumer protection, improve market confidence,
promote access to financial services and protect the system from financial
crimes
Tools include prescribing standards and codes, monitoring performance
against these codes
17
17. CONCLUSION
Fair Treatment to Consumers not ingrained in the ethics and culture of
financial institutions in India
Conduct of banks not in the best of economic and societal interests
Need to nurture a culture of fair treatment to customers – A Board/Top
Management driven change in outlook necessary – If customers are not
happy, institutions can’t survive
Need to recognize that market conduct and consumer protection essential for
financial stability as well - Banks have to act as agents of change – for ending
the social divide and discrimination against the poor and the vulnerable
sections
BCSBI and the PCCOs have an important role to play
18
18. INTRODUCTION
This is a Code of Customer Rights, which sets minimum standards of banking
practices we will follow as a member of BCSBI while dealing with individual
customers. It provides protection to customers and explains how a member bank
is required to deal with customers in its day-to-day operations
19
19. OBJECTIVES
The Code has been developed to :
• Promote fair banking practices
• Increase transparency
• Achieve higher operating standards
• Promote a fair and cordial relationship
• Foster confidence in the banking system
• Promote safe and fair customer dealing
• Increase awareness of customers
20
20. CODE OF BANK’S COMMITMENT TO CUSTOMERS
This is a Code of Customer Rights, which sets
minimum standards of banking practices, we will
follow as a member of BCSBI, while dealing with
individual customers. It provides protection to
customers and explains how a member bank is
required to deal with customers in its day-to-day
operations.
21
21. RIGHT TO FAIR TREATMENT
1. Minimum banking facilities of receipt and payment.
2.Meeting the standards and commitment for the product and
services
3. Relevant laws
4. Ethical principles
5.Offering digital banking
6. Training staff
7. No discrimination
22
22. RIGHT TO FAIR
DEALING,TRANSPARENCY AND
HONESTY
• Timely and adequate information
• Advertising and Promotional literature is
clear and not misleading.
• Do Not Call service and Interest rate
• Tariff schedule
• Complete information through SMS,print media
etc.
• Displaying information in our branch and website
our policies
• Create awareness of the code among customers
23
23. RIGHT TO SUITABILITY
We will offer you product appropriate to your needs and based
on an assessment of your financial circumstances.
24
24. RIGHT TO PRIVACY AND
CONFIDENTIALITY
1. Personal information as private and
confidential Exceptions:
a)CICs-Loans,unsecured loans, credit
card etc. b)Information required by law
or regulator. c)Authorised by us
d)Banker’s reference
e)T
o prevent fraud
2.Marketing purpose
3.Information collected other than KYC 25
25. RIGHT TO GRIEVANCE
REDRESSAL AND FORUM
1.Correcting our mistakes promptly
2.Handling complaints
3.Guidances
4.Problem arising out of technological
failures
26
26. It is generally understood as the framework of rules,
relationships, systems and processes within and by
which authority is exercised and controlled in
corporations.
CORPORATE GOVERNANCE
27
27. NEED FOR CORPORATE GOVERNANCE
• Rights and equitable treatment of share
holders
• Role and responsibilities of the board
• Integrity and ethical behavior
• Corporate Scams or Scandals
• Globalization
28
29. THE MICRO, SMALL AND MEDIUM
ENTERPRISES DEVELOPMENT ACT, 2006
No. 27 oF 2006
[16thJune, 2006.]
An Act to provide for facilitating the promotion and
development and enhancing the competitiveness of
micro, small and medium enterprises iiDd for
matters connected therewith or incidental thereto.
30
31. • Micro, Small and Medium Enterprises (MSMEs) are often hailed
as the pillars of Indian economy.
• MSMEs areProviding employment to nearly 312 lakh people
through about 128 lakh units, located in both the rural and urban
areas across the country.
Why MSMEs are important?
ManufacturingSector:39%
MSMEs
Others
Export:33%
MSMEs
Others
32
32. Code Of Bank’s Commitment To
Micro And Small Enterprises
It provides protection to you and explains how banks are expected
to deal with you in your day-to-day operations and in times of
financial difficulties
Objectives of Code
a. To give a positive thrust
b. To promote good and fair banking practices
c. T
o increase transparency
d. To improve our understanding of your business through
effective
communication.
e. To encourage market forces, through competition, to achieve
higher
operating standards.
f. To ensure timely and quick response to your banking needs.
g. To foster confidence in the banking system.
33
33. LENDING
• Credit Guarantee Fund Trust for Micro and Small
Enterprises which is extended by eligible banks
and is popularly known as CGTMSE guarantee
scheme for MSEs
• Reality: Most of the MSMEs crib that bank officials
very rarely
talk about the scheme
34
34. Code for loan application
Acknowledge, in writing, the receipt of your loan application,
whether submitted manually or online, indicating therein the time
frame within which the application will be disposed of.
ICICI InstaOD:
ICICI Bank has launched instant overdraft ‘InstaOD’ facility for
MSME. Customers can get overdraft facility up to Rs 15 lakh for
a year anytime, anywhere using the bank’s Internet and mobile
banking app. the new facility will avail the facility without visiting
a branch and submitting physical documents.
35
38. Introduction
• Meaning of Banking Ombudsman?
• Appointment of banking ombudsman
• Number of banking ombudsman’s till date
• Banks covered under the Banking Ombudsman Scheme, 2006
1.Commercial banks
2.RRB’s
• Scheduled Primary co-operative Bank
An inexpensive forum
39
39. Grounds of
Complaint
Non-
adherence to
prescribed
workinghours
Failure/delay
in providing
Banking
facilities
Complaints
from NRI in
relation to
remittances
Refusal to
open deposit
Accounts
Levying of
charges
without prior
notice
Instructions of
RBI onATM or
Credit card
operations
Non-
disbursement/de
lay in
disburement of
pension
Delay in
Accepting
Payment
towards taxes
ForcedClosure
of deposit
Account
Refusal to
close/Delay in
closing the
Account
Non-Payment
or Delay in
Payment
40
40. Complaint in respect to loans and advances
Non-observance of
Reserve Bank
Directives on
interest rates
Delays in sanction or
non-observance for
disposal of loan
applications
Non-acceptance of
application for loans
without giving valid
reasons
Non-observance of
Reserve Bank
guidelines on
recovery agents by
banks
Non-observance of
any other instruction
specifiedby the RBI
41
41. When and where can one file a complaint?
When:-
• No reply is received from the bank within one
month
• Bank rejects the complaint
• The customer is not satisfied by the reply given by
the Bank.
Where:-
• Complaint can be filed at the office of the
Banking Ombudsman
• Complaint related to credit cards and other type of
services
42
42. Steps for lodging a Complaint
• The complaint has to be made within one year
• The complain can be given on a plain sheet of
paper
43
43. Powers of the Banking Ombudsman
• Issue general powers of Superintendence.
• Control over the office .
• To incur expenditure on behalf of the office. In order to
exercise such power, the Banking Ombudsman will draw up
an annual budget for his office in consultation with Reserve
Bank and shall exercise the powers of expenditure within the
approved budget. The Reserve Bank will indicate the share of
expenditure to be borne by the concerned banks.
• The Banking Ombudsman shall send to the Governor,
Reserve Bank, by 31st May every year, a report containing a
general review of the activities of his Office during the
preceding financial year.
• Authority of each Banking Ombudsman extends to the
territorial limits entailed by the Reserve Bank of India.
44
44. When will one's complaint not be considered
by the Banking Ombudsman?
• The complaint to Banking Ombudsman is made after the lapse of more than one
year and one month from the date of complaint made to the bank.
• The subject matter of the complaint is pending for disposal / has already been dealt
with at any other forum like court of law, consumer court etc.
• Frivolous (not having any serious purpose or value) or vexatious (causing
trouble) complaints.
• The institution complained against is not covered under the
scheme.
• If the complaint is for the same subject matter that was settled through the office of
the Banking Ombudsman in any previous proceedings.
45
45. Rejection of Complaint
• The Banking Ombudsman may reject a complaint at any
stage if it appears that the complaint made to them is:
• Not on the grounds of complaint mentioned above.
• Requires consideration of elaborate documents and oral
evidence.
• The complaint is without any sufficient cause.
• The complaint that it is not pursued by the complainant with reasonable diligence.
• There is no loss or damage or inconvenience caused to the
complainant.
46
46. Limits of Compensation
• The amount, if any, to be paid by the bank to the complainant by way of
compensation for any loss suffered by the complainant is limited to the
amount arising directly out of the act or omission of the bank or ₹ 20
lakhs, whichever is lower.
• The Ombudsman may choose to award the compensation, not
exceeding Rs 1 lakh, to the complainant for mental agony and
harassment.
47
47. Legal Route
• If you are not happy with the settlement offered by the
Ombudsman, you can file an appeal before theAppellate
Authority within 30 days.
• The Appellate Authority in this case is the Deputy Governor of
the RBI.
• Alternatively, you can approach consumer redressal forums,
which take up bank-related complaints, or even the courts.
48
48. BANKING OMBUDSMAN COMPLAINT FORM
(TO BE FILLED UP BY THE COMPLAINANT)
To: The Banking Ombudsman Place of BO’s office…………………………..
Dear Sir, Sub: Complaint against …………………….(Name of the bank’s branch) of
…………………………………………………………………………………(Name of the Bank)
Details of the complaint are as under:
1. Name of the Complainant …………………..
2.FullAddress of the Complainant ……………………………………………………………… Pin
Code ……………….. Phone No/ Fax No. .…………………… Email …………………….
3.Complaint against (Name and full address of the branch/bank) ………………………….
Pin Code ……………………. Phone No. / Fax No. …………………….
4. Particulars of Bank or Credit cardAccount (If any)
…………………………………………………………………………
5.(a) Date of representation already made by the complainant to the bank (Please enclose a
copy of the representation) ……………………….
(b) Whether any reminder was sent by the complainant? YES/NO ( Please enclose a copy of
the reminder ) ……………………….
6. Subject matter of the complaint (Please refer to Clause 8 of the Scheme)
…………………………………………………………………………………………
7. Details of the complaint: (If space is not sufficient, please enclose separate sheet)
………………………………………………………………………………………………
8.Whether any reply (Within a period of one month after the bank concerned received the
representation) has been received from the bank? Yes/ No ( if yes, please enclose a copy of
the reply )
49
49. 9. Nature of Relief sought from the Banking Ombudsman
……………………………………………………………………………… ( Please enclose a copy of documentary
proof, if any, in support of your claim )
10.Nature and extent of monetary loss, if any, claimed by the complainant by way of compensation (please
refer to clauses 12 (5) & 12 (6) of the Scheme) Rs.……………….
11. List of documents enclosed: (Please enclose a copy of all the documents )
12.Declaration: (i) I/ We, the complainant/s herein declare that: a) the information furnished herein above is
true and correct; and b) I/We have not concealed or misrepresented any fact stated in the above columns
and in the documents submitted herewith.
(ii)The complaint is filed before expiry of period of one year reckoned in accordance with the provisions of
Clause 9(3)(a) and (b) of the Scheme.
(iii)The subject matter of the present complaint has never been brought before the Office of the Banking
Ombudsman by me/ us or by any of the parties concerned with the subject matter to the best of my/ our
knowledge.
(iv)The subject matter of the present complaint has not been decided by/pending with any
forum/court/arbitrator.
(v)I/We authorise the bank to disclose any such information/ documents furnished by us to the Banking
Ombudsman and disclosure whereof in the opinion of the Banking Ombudsman is necessary and is required
for redressal of our complaint.
(vi) I/We have noted the contents of the Banking Ombudsman Scheme, 2006.
Yours faithfully, (Signature of Complainant)
NOMINATION – (If the complainant wants to nominate his representative to appear and make submissions
on his behalf before the Banking Ombudsman or to the Office of the Banking Ombudsman, the following
declaration should be submitted.)
I/We the above named complainant/s hereby nominate Shri/Smt………………………………………….. who is
not anAdvocate and whose address is
……………………………………………………………………………………………………………… ………
……… as my/our REPRESENTATIVE in all proceedings of this complaint and confirm that any statement,
acceptance or rejection made by him/her shall be binding on me/us. He/She has signed below in my
presence.
ACCEPTED
(Signature of Representative) (Signature of Complainant) Note: If submitted online, the complaint need not
be signed. 50
