Banking Codes and Standards Board mooted

ANNUAL POLICY 2005-06/ THE ROAD AHEAD

The Reserve Bank of India (RBI) in its annual policy statement for 2005-06 has decided to set up an independent Banking Codes and Standards Board of India.

This board will draw up a comprehensive code of conduct for fair treatment of customers. It has been set up on the lines of the Banking Code of the British Bankers' Association (BBA) which is a voluntary code, that sets standards of good banking practices for 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.

For better redressal of customer problems, the role of banking ombudsman has been expanded to cover all individual cases/ grievances relating to non-adherence to the fair practices code evolved by Indian Banks Association and adopted by individual banks.

The policy has emphasised the obligations of banks to provide banking services to all segments of the population on an equitable basis. Against this backdrop, it has asked the banks to review their existing policies.

The review will concentrate on monitoring the nature, scope and cost of services to assess whether there is any denial, implicit or explicit, of basic banking services to the common person.

In order to enhance the population under banking, the RBI will implement policies to encourage banks which provide extensive services while discouraging those which are not responsive to the banking needs of the community, including the underprivileged.

The RBI pointed out that there are legitimate concerns with regard to banking practices that tend to exclude rather than attract vast sections of the population, in particular pensioners, self employed and those employed in unorganised sector ""- it terms this as financial exclusion.