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Vol. 5 Issue : 2 December 2013 – February 2014

BCSBI News

With the admission of Punjab Gramin Bank Ltd., Kapurthala and the Dena Gujarat Gramin Bank Ltd., Gandhinagar as members of the BCSBI, the number of member Regional Rural Banks (RRBs) stands at 45. Thus the total number of member banks of BCSBI stands at 127.

Meeting between RBI (CSD) and BCSBI

A structured meeting of Customer Service Department (CSD), Reserve Bank of India and BCSBI was held on December 11, 2013 at Mumbai to discuss various aspects relating to Codes and customer service. The issues discussed included BCSBI Rating of Banks on Code Compliance, Steps to increase awareness of the Codes, Participation of BCSBI officials in Awareness Programmes of Banking Ombudsmen, Resolution of Systemic Issues – Receipt of Awards of BOs etc. This meeting was attended by the Chief General Manager & the General Manager of CSD; Chief General Manager & Banking Ombudsman for Maharashtra & Goa from RBI and other senior officials of CSD. From BCSBI, Chief Executive Officer and other senior officials participated.

Seated (L to R) Smt. Rosemary Sebastian, Banking Ombudsman (BO) for Maharashtra and Goa; Smt. Supriya Pattnaik, CGM, CSD, RBI and Shri N. Raja, CEO, BCSBI. Standing (L to R) Smt. G.J. Roberts, VP, BCSBI; S/Shri R.C. Arora, SVP, BCSBI; P.J. Mathkar, AGM, CSD; Shankar Suman, DGM, CSD; D.G. Kale, GM, CSD; P.K.K. Krishnan and H.S. Shetty, SVPs, BCSBI at the Meeting held at BCSBI, Mumbai with Senior Officials of CSD, RBI and B O for Maharashtra and Goa.

Other awareness events

BCSBI continued its efforts to spread awareness of the Codes amongst bank officials and customers –

BCSBI organized a meeting of Controlling Heads of Banks in Hyderabad on December 12, 2013 to increase awareness amongst the controllers, officers and frontline staff about Banks’ commitments as enshrined in the Code. The Banking Ombudsman of Andhra Pradesh, the Chairman, BCSBI and the Chief Executive Officer, BCSBI addressed the participants from 32 member banks having their presence in Andhra Pradesh and explained the importance of

better customer service for achieving business growth. They also interacted with the participants and advised them to spread awareness regarding various provisions of Codes amongst their officers and staff during various in-house meetings, trainings and visits to branches in order to provide service to customers in the same spirit as enumerated in the Codes.

Shri A.C. Mahajan, Chairman, BCSBI addressing the participants at the meeting of the Controlling Heads of Banks in Hyderabad. Shri N. Raja, CEO, BCSBI and Dr. N. Krishna Mohan, BO, Hyderabad are seated at 2nd and 3rd from left.

BCSBI organized a “MSE Customer Meet” at Chennai on February 20, 2014. The Chairman and the Chief Executive Officer (CEO), BCSBI as well as Dr. J. Sadakkadulla, Regional Director (RD), RBI, Chennai addressed the participants. The Chairman, BCSBI gave a brief account of the purpose and objective of BCSBI, the Codes evolved by it and exhorted the customers to be aware of their rights contained in the Codes. The RD, RBI gave a brief account of the importance of the Micro and Small Enterprises in the economy, their contribution to GDP and Exports. The CEO, BCSBI gave a detailed account of the important provisions of the Code of Bank’s Commitment to MSEs. They also interacted with the participants. The meet was attended by some bank officials and over 400 MSE Customers of Chennai.

Shri A.C. Mahajan, Chairman, BCSBI addressing the participants at the MSE Customers’ Meet at Chennai. Also seen in the photograph (L to R) Dr. J. Sadakkadulla, Regional Director, RBI, Chennai and Shri N. Raja, CEO, BCSBI.

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CUSTOMER MATTERS December 2013 – February 2014

A senior official of BCSBI participated in an awareness programme organized by RBI, Mumbai at Kudal (Sindhudurg Dist), Maharashtra on February 13, 2014. The RD, Mumbai explained the initiatives taken by RBI for Financial Inclusion and Financial Literacy. The BCSBI official explained the role of BCSBI, the Codes evolved by BCSBI and also mentioned that it is bank’s own commitment to be fair and transparent in their everyday transactions with the customers. The programme was attended by about 450 customers of various banks, Chairmen / Representatives from Chambers of Commerce & Industries and other associations, Branch Managers of banks etc.A senior official from BCSBI participated in the High Level meeting on Inclusive Financial Services - Leveraging Accessible Technologies hosted by IBA on February 21, 2014 in collaboration with the Xavier’s Resource Centre for the Visually Challenged (XRCVC) established by St. Xavier’s College, Mumbai to work for upliftment of Visually Impaired Persons.CEO, BCSBI participated in an awareness programme organized by Syndicate Bank at Delhi on February 28, 2014.A senior official from BCSBI participated in the customer awareness programme conducted by Banking Ombudsmen at Dimapur in Nagaland.

CODE OF BANK’s COMMITMENT TO CUSTOMERS, 2014 – HIGHLIGHTS OF IMPROVEMENTS OVER THE CODE, 2009

Code lays renewed emphasis on transparency and provision of information on all products and services to customers.

Products to be sold should be appropriate to the customer. Key Commitments of the bank towards their customers modified

to include a commitment that bank will compensate the customer for any financial loss that customer may have incurred due to bank’s mistake.

Commitments also contain bank’s responsibility to increase awareness of the customers about the Code and its provisions.

Banks shall endeavour to organize meetings of customers at periodic intervals as a regular channel for exchange of ideas and suggestions.

Banks will also display in their branches the date of monthly Branch Level Customer Service Committee meeting, which the customers may attend.

The revised Code, contains specific chapters on – Electronic Banking, including Internet and Mobile Sale of Third Party products Financial Inclusion Senior Citizens and differently-abled persons

AREA-WISE IMPROVEMENTS OF THE REVISED CODE DEPOSITS Revised Code contains a commitment by the bank to make

available Basic Savings Bank Deposit Account to all customers, without the requirement of minimum balance.

Banks are also required to display prominently at their branches the documents required to open Basic Savings Bank Deposit Accounts as also display the relaxed requirements for opening “Small Accounts”.

The Code also requires the customers to submit KYC documents at periodic intervals to enable banks to update their records.

A new provision included in the Code requires banks to give Most Important Terms and Conditions (MITCs) for the products sought by the customer.

Term Deposit: Banks should obtain clear instruction from the customers on disposal of the term deposit at maturity.

If disposal instructions are not given by the customer at the time of opening Term Deposit or later, then bank should inform the customer through letter / mail / SMS about the impending date of maturity.

Information about procedure for withdrawal of term deposit before maturity will have to be made available in the account opening form / MITC / FDR.

Bank will indicate in the pass book / statement of account tax deducted, if any, on interest on term deposits credited to Savings or Current account.

RETAIL LENDING New provision provides for time limit for conveying decision

on loan application for a limit up to `20 lakh within 30 working days from the date of receipt of the application and within a reasonable time frame on applications beyond `20 lakh.

The bank will endeavour to send the customer a communication on the status of his loan account before it becomes an NPA.

The bank will also give the borrowing customer a notice if it decides to recall / accelerate payment or performance or seek additional securities.

In the event of the bank losing the securities / documents that the customer has provided to them when the customer had availed of a loan, the bank will compensate customer for the loss. The bank will also issue a certificate indicating the securities / documents lost and extend all assistance to the customer for obtaining duplicate documents etc.

When the customer avails of a loan facility involving immoveable property as primary or collateral security, the bank will advise the customer the functioning of the Central Registry and the fact that their records will be available for search by any lender or any other person desirous of dealing with the property.

Securitisation / selling of Loans: In case the bank securitises (sells) loans / dues to another entity, they will advise the customer the name and contact details of the buyer of loans / dues along with the amount of the loan / dues transferred to them.

A view of the audience at the MSE Customers’ Meet at Chennai.

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CUSTOMER MATTERS December 2013 – February 2014

ELECTRONIC BANKING

There are specific provisions on : Internet Banking Mobile Banking ATM / Debit and Credit Cards

The revised Code gives a detailed list of Do’s and Don’ts including choice of PIN and Password for Customers, as well as other security precautions to be taken.

The Code also lists various security and safety aspects of internet banking, mobile banking and card transactions.

The bank will take all necessary steps to put in place security systems to enable the customer to have safe access to internet banking.

The customer will not be liable for losses caused by transactions before his access to Internet Banking facility is activated / made operational.

Liability of customers for any unauthorised transaction after the customer has received the means to access Internet Banking, has been limited and capped at `10,000/-.

If the customer advises the bank promptly that the Password or any other security information is known to another person or there has been an unauthorised access to the Internet Banking information or accounts, the customer will not be held responsible for any loss, from the time the customer has notified the bank, unless he has acted fraudulently or negligently or has contributed to such disclosure or unauthorised access.

The customer may opt out of Internet Banking Services at any point of time. However, customer must keep the bank informed of his / her decision and ensure that he / she completes the requisite formalities.

As regards card transactions, the bank will provide ‘Online Alerts’ to the customer for all card transactions, irrespective of the amount. While sending an alert every time the card is used, the bank will indicate the telephone number which the customer can contact to deactivate the card, if the transaction has not been initiated by the customer or the card has been misused.

Customer’s responsibility to inform the bank if the card has been lost or stolen or someone else knows the PIN, password or other security information apart from changing them immediately, has been incorporated.

Once the customer advises the bank that the card has been lost or stolen, or the PIN or Password disclosed, he will not be responsible for any unauthorised use of the card after that time; however, protection will not apply if the customer has acted fraudulently or negligently.

Detailed provisions on reporting loss / theft / disputed transaction have been given including responsibilities of the customer and the bank.

In case there is default in payment of card dues by the holder, the bank will adhere to a procedure approved by the Board including issuing of sufficient notice to the card holder before reporting the status to the Credit Information Company.

THIRD PARTY PRODUCTS Banks are responsible to ensure that all investment, mutual

funds and insurance products which banks sell are in accordance with extant rules and regulations.

Bank will not compel a customer to subscribe to or buy a third party product as quid pro quo for sanction of a loan.

Banks will apply appropriate customer due diligence measures before selling investment / insurance products to the customer.

Banks will sell a product to the customer if the bank believes that it is suitable and appropriate for the customer.

FINANCIAL INCLUSION Banks will make available ‘Basic Savings Bank Deposit

Account’ (BSBD Account) without the requirement of any minimum balance subject to compliance with the instructions on KYC / AML for opening of bank accounts.

Banks will also extend facility of opening such accounts on the basis of simplified KYC norms. However, such accounts will be additionally treated as “Small Accounts” and subject to certain restrictions which will be made known to the customer, in an easy to understand manner and in the local language.

Where the bank does not have a branch, it will endeavour to have a Business Correspondent (BC) / Business Facilitator (BF) in unbanked areas as per guidelines and road map agreed to, if any, with Reserve Bank of India.

SENIOR CITIZENS AND DIFFERENTLY ABLED PERSONS Banks will make best efforts to make it easy and convenient

for special customers like senior citizens, differently-abled and illiterate persons to bank with them.

Bank will sensitise the staff interacting with senior citizens and others to assist them in carrying out banking transactions.

Banks will endeavour to provide senior citizens and persons with disability personalized services for banking transactions and redressal of grievances, if any.

Bank will also ensure that all the banking facilities are offered to visually challenged without any discrimination.

EXEMPLARY CASES XYZ filed a complaint against bank ‘C’ regarding non-receipt of cash from the ATM of bank ‘D’ on November 9, 2012 but his account was debited for an amount of `3,000/-. On taking up the complaint with both the banks, bank ‘C’ advised that they had taken up the matter three times with bank ‘D’ but there was no response. Without giving documentary proof, bank ‘D’ informed the Office of Banking Ombudsman that they have reimbursed ̀ 3,000/- to ‘C’ bank on April 3, 2013. Thereupon, the Banking Ombudsman directed bank ‘C’ to pay applicable compensation as per RBI guidelines and to take up the matter with bank ‘D’. Bank ‘C’ complied with the direction by crediting `14,000/- as compensation for the delay in ATM payment. [Source: Annual Report 2012-13, BO, Thiruvananthapuram] ABC stated that he had deposited four cheques for `110/- each which bounced on the ground that the cheques were stale and bank debited `102/- per cheque aggregating `408/- as cheque return charges. He demanded refund of the charges from the bank but the bank conveyed that the charges had been levied as per its instructions / schedule of charges on the subject. In response to the complaint forwarded by BO, the bank repeated its earlier reply and

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CUSTOMER MATTERS December 2013 – February 2014

On behalf of the Banking Codes and Standards Board of India edited, printed & published by P B Vaze. Printed at Alco Corporation, A1/418A, Shah & Nahar Industrial Estate, Lower Parel (W), Mumbai 400 013 and published at Banking Codes and Standards Board of India, C-7, Reserve Bank of India Building, Bandra Kurla Complex, Mumbai 400 051.

forwarded their circular on charges to be levied in case of dishonor of cheque. However, when asked whether bank could present stale cheques in clearing, the bank realized its mistake and refunded the entire amount charged from the customer. [Source: Annual Report 2012-13, BO, Ahmedabad]

DID YOU KNOW?

NEFT – Customer Service and Charges – Adherence to Procedural GuidelinesOver a period of time (April 2008 to July 2012), the RBI has introduced many efficiency enhancement features and customer service requirements in the system so as to meet the expectations of the growing number of users of National Electronic Fund Transfer (NEFT) system, operational since November 2005. In order to overcome non-adherence to instructions by banks, including those on transaction charges, issued by the RBI under the Payment and Settlement Systems Act, 2007, RBI reiterated in January 2014 that the instructions issued by the Reserve Bank should be adhered to by direct as well as sub-member banks in the NEFT, in both letter and spirit. In this context, banks are advised to:

a. Educate all their staff / officials about the NEFT process in general and extension of the facility to walk-in customers and customer charges applicable on NEFT, in particular, as outlined in the Procedural Guidelines for NEFT and instructions issued by the RBI from time to time on NEFT.

b. Ensure NEFT application forms with proper instructions are made available at all branches. The extant charges applicable on NEFT transactions should be displayed at all branches / locations of the bank where NEFT transactions can be conducted. A printed “charges card” in appropriate vernacular language should invariably be carried by agents / business correspondents of the banks.

c. Ensure that the charges levied on customers for inter-bank NEFT transactions at both branch locations and CSP/BC/agent locations are at par. Further, it should be ensured that the customers should not be forcibly diverted to CSP/BC/agent locations from the branches for conducting NEFT transactions.

d. Ensure that positive confirmation of credit to beneficiary account is invariably sent for all inward transactions received by them. Similarly, banks originating the NEFT transactions may ensure that such positive confirmation is relayed to all remitting customers, including walk-in customers who provide their mobile number / e-mail id, in accordance with the guidelines on the matter. Intimation of failed / returned transactions should also be brought to the notice of the remitting customer and funds credited to the account immediately / returned to the remitter at the earliest.

e. Ensure that in case of delayed credits or delayed returns, the penal interest as applicable is paid suo-moto to the customer without necessitating a request for the same by the customer. Banks resorting to back-dating or value-dating such delayed transactions are not excused from paying the penal interest for the delayed period.

READERS’ VOICE

How the banks are required to implement withdrawal of all old series of Banknotes issued prior to 2005?

RBI has been following a policy of phasing out certain series of banknotes from time to time. RBI formulated a plan of action in January 2014 to withdraw completely from circulation all old series of banknotes issued prior to 2005. The action plan contained the following:

All older series of banknotes issued prior to 2005 would be acceptable for all kinds of monetary transactions only till March 31, 2014. Later RBI reviewed the matter in March 2014 and extended the date for exchanging the pre-2005 banknotes to January 01, 2015. Accordingly, the banks were advised :

to facilitate the exchange of such notes for full value without causing any inconvenience to the public, whatsoever.

these notes will retain their legal tender status and the public can continue to use these for any transaction/ payment.

to issue suitable instructions to all the bank branches to provide exchange facilities to members of public.

to stop re-issue of the pre- 2005 series banknotes. ensure that such notes are not dispensed through the ATMs/

over bank’s counters.

RBI also issued certain DOs and DON’Ts for guidance of banks:-

DOs Banks should sensitize the members of public that the pre-2005

notes would continue to be legal tender. Banks should endeavour to organize note exchange melas in semi-urban/rural areas.

All denominations of banknotes issued prior to 2005 series have to be exchanged.

These notes must be freely accepted and exchanged by all bank branches from members of public, whether customers or non-customers.

The process of exchange at bank branches should be started forthwith and undertaken as per the convenience of members of public.

The exchange of notes should be done free of cost. The value of such notes may be credited in customers’ account,

if desired. The value of such notes payable shall be in terms of the RBI

Note Refund Rules, 2009.

DON’T Banks should not place any restriction on the number of

banknotes to be exchanged by a member of the public. Banks should not issue pre-2005 series notes over the counter

or through ATMs. Currency chest branches should not refuse pre -2005 banknotes

from their linked branches.

Would you like to share any information/experience connected with customer service? If so, please feel free to write to us at C-7, RBI Building, Bandra-Kurla Complex, Mumbai-400051 or mail us at ceo.bcsbi@rbi.org.in