In accordance
with the proposal contained in the Annual Policy
Statement for the year 2005-06, The Banking Codes
and Standards Board of India (BCSBI) was set up
on 18th February 2006 as a collaborative effort
of RBI and Banks, on the lines of a similar set
up in UK to oversee the "Banking Code",
a voluntary Code, evolved by the British Bankers
Association (BBA), which is adopted by all banks
in UK. The proposal for setting up the BCSBI was
based on the recommendation made by the Committee
on Procedures and Performance Audit on Public
Services (Tarapore Committee), in its Report No.6
dealing with Benchmarking, ISO Certification and
Performance Audit.
The "Banking Code" of the BBA
sets standards of good banking practices for financial
institutions to follow when they are dealing with
personal customers in the UK. It provides valuable
protection for customers on a day-to-day basis
as also in the times of financial difficulty.
The code applies to savings deposits and current
accounts, card products and services, loans and
overdrafts and payment services including foreign
exchange.
A Governing Council of the BCSBI has been constituted
to look after its financial affairs and managerial
policies. The Governing Council would consist
of members drawn from different disciplines such
as banking, law and accountancy. The following
is the composition of the first Governing Council
of the BCSBI appointed by the Reserve Bank of
India:
1. Ms.
K.J. Udeshi, Former Deputy Governor, RBI - Chairperson
2. Mr. M.G. Bhide, Former Chairman & Managing
Director, Bank of India - Member
3. Mr. M.M. Chitale, Chartered Accountant -
Member
4. Mr. S. Divakara, Director General of Forum
of Free Enterprise Mumbai & Jt. Hon. Secretary,
All India Bank Depositors Association - Member
5. Mr. R.K. Krishna Kumar, Vice Chairman, Indian
Hotels Company Ltd. - Member
6. Shri S.R. Kolarkar, Legal Adviser, Reserve
Bank of India - Member
7. Mr. V. Baijal, Chief General Manager, Reserve
Bank of India - Chief Executive Officer &
Member
The tenure of the Governing Council would be
five years and the appointment of the Governing
Council after five years would be with the concurrence
of the RBI. The RBI will fully meet the budgetary
requirements of the BCSBI for the first five
years while the banks would, during this period,
contribute to building its corpus to enable
it to eventually become a self-sustaining organisation.
The BCSBI would plan, evolve, prepare, develop,
promote and publish voluntary comprehensive
codes and standards for banks for providing
fair treatment to their customers.
The BCSBI
would function as an independent and autonomous
watch dog to monitor and to ensure that the
banking codes and standards voluntarily adopted
by banks are adhered to, in true spirit by banks
in delivering the services, as promised, to
their customers. The Board will not handle individual
cases of complaints and grievances (all such
cases will continue to be handled by Banking
Ombudsman).
The IBA had brought out its "Bankers'
Fair Practice" code in June 2004 and
all member banks had adopted it voluntarily.
The code was essentially a commitment to be
fair and transparent in dealing with individual
customers. The IBA had also separately come
out 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.
The Reserve Bank of India, while announcing
the formation of the BCSBI in the Annual Policy
Statement, had requested Indian Banks' Association
to set up a Working Group to draft a comprehensive
fair practice code covering all the areas of
customer service for uniform adoption by banks.
Accordingly, the IBA had set up a Working Group
to study the international practices and review
the existing codes. The Working Group had examined
fair practice codes adopted by Bankers in other
domains like UK, Canada, Hong Kong, Singapore
and Australia and prepared a draft Bankers'
Fair Practice Code, duly incorporating some
of the finer points from those documents. The
Working Group further refined the draft Code
incorporating the suggestions from our member
banks and submitted it to the BCSBI. BCSBI had
made certain further refinements to the Code
and the "Code of Bank's Commitment to
Customers" was brought out. The Code
sets minimum standards of banking practices
for banks to follow when they deal with individual
customers.
The "Code
of Bank's Commitment to Customers"
was released by Dr. Y.V. Reddy, Governor, Reserve
Bank of India in an inaugural function held
at RBI on 1st July 2006.
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.
The banks would also be required to make necessary
changes in certain policy and procedural aspects
around their products and services. With the
adoption of "Code of Bank's Commitment
to Customers" by member banks who are
members of BCSBI, the following voluntary Codes
of IBA would not be applicable to them:
(1) Bankers'
Fair Practice Code - effective June 2004
(2) Fair Practice Code for Credit Card Operations
(3) Model Code for Collection of Dues and
Repossession of Security
However,
member banks who are not members of BCSBI or
eligible to become members of BCSBI would continue
to follow these Codes.
Grievance
Redressal
Member
banks of BCSBI would put in place the following
grievance redressal mechanism in their banks:
