Customer services body mulled

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The body will have judicial powers; RBI may relax bank funding for NBFCs.

The Reserve Bank of India (RBI) is considering a proposal to set up a banking codes and services board in the country to supervise customer services.

This is in line with the recommendations of the Tarapore Committee. A redressal mechanism for customer complaints already exists, but this does not have judicial status. The board, sources said, would have the authority to take action against banks, if required.

Further, the central bank may, in the annual credit policy to be announced this week, relax bank funding for non-banking finance companies (NBFCs).

A committee will be set up to work out norms to help banks finance these entities. At present, bank finance is a big issue with NBFCs as individual bank boards have stringent guidelines for lending to NBFCs. The RBI is of the view that the NBFC sector has been cleaned up and only companies genuinely interested in the business exist today.

The RBI also seems to be in favour of revising its directive to the cooperative sector in regard to tightening prudential norms.

Under the vision document released by the central bank some time ago, urban cooperative banks with a capital base of Rs 50 crore could continue to classify their assets as non-performing assets (NPAs) if they remain due for more than 180 days.

All other banks in the cooperative sector (with a higher capital base) will have to comply with the 90-day NPA norm, on the lines of commercial banks. This had put pressure on a large number of cooperative banks, which had to make excess provisioning to take care of their rising NPAs.

The RBI may raise the capital base to Rs 100 crore to bring in more urban cooperative banks under the 180-day norm for classification of NPAs.

Finally, well-rated and healthy commercial banks may get to see RBI auditors less frequently "" perhaps once in three years against the usual mandatory annual inspection. There will be supervision on the basis of select parameters that are perceived to be risky as per risk-based supervision norms.