LATELY a lot of thought is being given to and action taken in the area of retail banking regulation.

The latest - The Banking Codes and Standards Board of India has introduced new rules for banks to increase transparency and customer services. Let’s look at these new rules:

1. Interest rate information: In case if a customer has borrowed against a floating rate of interest, then he/she has to be informed about any change in rate through given means such as letter, email, SMS etc. The Interest rate change information should also be available on the banks’ website.
2. Return of loan document: Bank has to return property and other document within 15 days of closure of loan whether such demand has been made or not by the customer. If a bank fails to return documents in the stipulated time, the customer should be adequately compensated in cash.
3. Information to joint account holders: Banks must inform all joint holders before classifying an account as dormant/ inoperative.
4. Insurance for securities: Bank can’t force customers to take insurance cover (for the securities lodged) from a particular insurance company. The customer is free to select any insurance company.
5. Restriction on pre-sanctioned loan: Banks can’t pre-sanction loans to any customer based on telephonic confirmation. The bank has to get a written consent letter from customer.
6. Account closure time limit: In the event of account closure request, the bank has to close the account within 3 days from receipt of the request.
7. Handling complaints: Banks have to address customer complaints in 30 days, failing which they have to compensate the customer.
8. Recovery agent details on website: Banks must publish details of all recovery agents on their website so a customer can check whether an agent is authorized or not.

All these rules are applicable to member banks of Banking Codes and Standards Board of India. As of now 79 banks are members. Click here for the list of member banks.

Also read: Now, don't scratch that cheque

Ketul H Shah is a Chartered Accountant and an MBA. He has specialized in banking, finance and insurance. He is passionate about consumer rights and actively offers professional advice on consumer-related matters. Ketul maintains a blog on www.askketul.com .

e-mail: Ketul Shah

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