Banks told to come clean on retail lending policies

 
Retail loan applicants who avail floating rate home loans henceforth will have to be informed of the reference rate to which the floating rate will be anchored. In effect, banks will also have to be transparent and disclose on their websites of changes in such reference rate as and when they take place on a real-time basis.
An indication to this effect was made by K J Udeshi, chairperson of BCSBI— a joint initiative of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) — while unveiling revision in banking codes here on Tuesday. The revised codes will be applicable to almost all major commercial banks in the country.These banks were also persuaded by the banking regulator to voluntarily accept the banking codes which force banks to announce minimum service standards. This also means that banks will now have to come clean on charges and the pricing mechanism and they can’t charge anything more than what they have put out in public domain.

Credit counselling
Further, customers can also now refer to banks’ websites for policies relating to cheque collection, compensation, collection of dues and grievance redressal. BCSBI will also start its credit counselling services from its premises at Bandra-Kurla Complex in Mumbai, from October 1, 2009.  The services will be free of cost to any retail borrower and micro and small enterprise customers of member banks. However, the cases of wilful defaulters will not be pursued by the Board.
RBI Deputy Governor KC Chakrabarty who was also present on the occasion said the codes would basically help those vulnerable sections of the society which do not have any other platform for redressal. “Going forward, customer services will assume more importance in regulation. As a regulator, we have the responsibility towards customers,” adds he.

The revised code has called for banks to bring greater transparency, further enhancements in systems in banking practices relating to customer service, a more responsive grievance redressal system in banks and provide additional protection to customers.

Accordingly, banks will also have to explain the provisions of the Income Tax Act, applicable to interest income and obtain form 15G/H at the time of opening a term deposit account, besides not insisting on insisting on an insurance cover for securities lodged.
That apart, the banks will also be directed to dispose customer complaints in 30 days, among other things. This envisages that banks will now have to come out with the most important terms and conditions (MITC) for credit cards and loans that are more simple and concise.

Liked the story?

  • 0

    Happy
  • 0

    Amused
  • 0

    Sad
  • 0

    Frustrated
  • 0

    Angry