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This Master Circular consolidates instructions on the above matters issued up to June 30, Banks are also advised to ensure that copies of the circular are available in all their branches so that the customers can peruse the same. Customer service has great significance in the banking industry. The banking system in India today has perhaps the largest outreach for delivery of financial services and is also serving as an important conduit for delivery of financial services.
While the coverage has been expanding day by day, the quality and content of dispensation of customer service has come under tremendous pressure mainly owing to the failure to handle the soaring demands and expectations of the customers.
The vast network of branches spread over the entire country with millions of customers, a complex variety of products and services offered, the varied institutional framework — all these add to the enormity and complexity of banking operations in India giving rise to complaints for deficiencies in services.
This is evidenced by a series of studies conducted by various committees such as the Talwar Committee, Goiporia Committee, Tarapore Committee, etc. Reserve Bank, as the regulator of the banking sector, has been actively engaged from the very beginning in the review, examination and evaluation of customer service in banks. Depositors' interest forms the focal point of the regulatory framework for banking in India.
There is a widespread feeling that the customer does not get satisfactory service even after demanding it and there has been a total disenfranchisement of the depositor. There is, therefore, a need to reverse this trend and start a process of empowering the depositor. Broadly, a customer can be defined as a user or a potential user of bank services.
Banks' systems should be oriented towards providing better customer service and they should periodically study their systems and their impact on customer service.
Banks should have a Board approved policy for general management of the branches which may include the following aspects: Business posters at semi-urban and rural branches of banks should also be in the concerned regional languages. Training in Technical areas of banking to the staff at delivery points. Matters relating to customer service should be deliberated by the Board to ensure that the instructions are implemented meaningfully.
Commitment to hassle-free service to the customer at large and the Common Person in particular under the oversight of the Board should be the major responsibility of the Board. Banks are required to constitute a Customer Service Committee of the Board and include experts and representatives of customers as invitees to enable the bank to formulate policies and assess the compliance thereof internally with a view to strengthening the corporate governance structure in the banking system and also to bring about ongoing improvements in the quality of customer service provided by the banks.
Besides, the Committee could also examine any other issues having a bearing on the quality of customer service rendered. The Scheme of Banking Ombudsman was introduced with the object of enabling resolution of complaints relating to provision of banking services and resolving disputes between a bank and its constituent through the process of conciliation, mediation and arbitration in respect of deficiencies in customer service. Banks should ensure that the Awards of the Banking Ombudsmen are implemented expeditiously and with active involvement of Top Management.
Further, with a view to enhancing the effectiveness of the Customer Service Committee, banks should also:. The Committee on Procedures and Performance Audit of Public Services CPPAPS examined the issues relating to the continuance or otherwise of the Ad hoc Committees and observed that there should be a dedicated focal point for customer service in banks, which should have sufficient powers to evaluate the functioning in various departments. On the basis of the above recommendation, banks are required to convert the existing Ad hoc Committees into a Standing Committee on Customer Service.
Thus the two Committees would be mutually reinforcing with one feeding into the other. The Standing Committee may be chaired by the CMD or the ED and include non-officials as its members to enable an independent feedback on the quality of customer service rendered by the bank.
The Standing Committee may be entrusted not only with the task of ensuring timely and effective compliance of the RBI instructions on customer service, but also that of receiving the necessary feedback to determine that the action taken by various departments of the bank is in tune with the spirit and intent of such instructions. The Standing Committee may review the practice and procedures prevalent in the bank and take necessary corrective action, on an ongoing basis as the intent is translated into action only through procedures and practices.
Banks were advised to establish Customer Service Committees at branch level. In order to encourage a formal channel of communication between the customers and the bank at the branch level, banks should take necessary steps for strengthening the branch level committees with greater involvement of customers.
It is desirable that branch level committees include their customers too. Further, as senior citizens usually form an important constituent in banks, a senior citizen may preferably be included therein. Customer service should be projected as a priority objective of banks along with profit, growth and fulfilment of social obligations. Banks should have a Board approved policy for the following:.
Banks should formulate a transparent and comprehensive policy setting out the rights of the depositors in general and small depositors in particular. The policy would also be required to cover all aspects of operations of deposit accounts, charges leviable and other related issues to facilitate interaction of depositors at branch levels.
Such a policy should also be explicit in regard to secrecy and confidentiality of the customers. Providing other facilities by "tying-up" with placement of deposits is clearly a restrictive practice.
Banks should formulate a comprehensive and transparent policy taking into account their technological capabilities, systems and processes adopted for clearing arrangements and other internal arrangements for collection through correspondents.
The policy should cover the following three aspects:. Broad principles enumerated in paragraph Banks must have a well documented Customer Compensation Policy duly approved by their Boards. They could use the model policy formulated by the Indian Banks' Association IBA in this regard in formulating their own policy. Banks policy should, at a minimum, incorporate the following aspects: The Policy should be framed based on the broad principles enumerated in paragraph 16 of this Circular.
Banks are advised to offer a 'Basic Savings Bank Deposit Account' which will offer following minimum common facilities to all their customers:.
The 'Basic Savings Bank Deposit Account' should be considered a normal banking service available to all. While there will be no limit on the number of deposits that can be made in a month, account holders will be allowed a maximum of four withdrawals in a month, including ATM withdrawals.
The above facilities will be provided without any charges. Banks would be free to evolve other requirements including pricing structure for additional value-added services beyond the stipulated basic minimum services on reasonable and transparent basis and applied in a non-discriminatory manner. If such account is opened on the basis of simplified KYC norms, the account would additionally be treated as a 'Small Account' and would be subject to conditions stipulated for such accounts as indicated in paragraph 3.
Holders of 'Basic Savings Bank Deposit Account' will not be eligible for opening any other savings bank deposit account in that bank. The existing basic banking 'no-frills' accounts should be converted to 'Basic Savings Bank Deposit Account' as per the instructions contained above.
Though the banks make available a Basic Savings Bank Deposit Account so as to achieve the objective of greater financial inclusion, yet financial inclusion objectives would not be fully met if the banks do not increase the banking outreach to the remote corners of the country. This has to be done with affordable infrastructure and low operational costs with the use of appropriate technology.
This would enable banks to lower the transaction costs to make small ticket transactions viable. Banks are, therefore, urged to scale up their financial inclusion efforts by utilizing appropriate technology. Care may be taken to ensure that the solutions developed are:. In order to ensure that banking facilities percolate to the vast sections of the population, banks should make available all printed material used by retail customers including account opening forms, pay-in-slips, passbooks, etc.
It has been brought to our notice that transgender persons face difficulties in opening accounts as there is no provision for them in the account opening and other forms. In this connection, banks are advised to refer to the judgement dated April 15, of the Supreme Court in the case of National Legal Services Authority v.
Banks are advised that KYC once done by one branch of the bank should be valid for transfer of the account within the bank as long as full KYC has been done for the concerned account.
Periodical updation of KYC data would continue to be done by bank as per prescribed periodicity. As many banks are now issuing statement of accounts in lieu of pass books, the Savings Bank Rules must be annexed as a tear-off portion to the account opening form so that the account holder can retain the rules. Only banks, Local Authorities and Government Departments excluding public sector undertakings or quasi-Government bodies will be exempt from the requirement of photographs.
The banks should pay 'self' or 'bearer' cheques taking usual precautions. The applications for different types of deposit accounts should be properly referenced. Savings Bank and Current accounts, photographs of persons authorised to operate them should be obtained. In case of other deposits, viz. At the time of opening the accounts, banks should inform their customers in a transparent manner the requirement of maintaining minimum balance and levying of charges, etc. The banks should inform, at least one month in advance, the existing account holders of any change in the prescribed minimum balance and the charges that may be levied if the prescribed minimum balance is not maintained.
With effect from May 6, , banks are not permitted to levy penal charges for non-maintenance of minimum balances in any inoperative account.
With effect from April 1, , while levying charges for non-maintenance of minimum balance in savings bank accounts, banks shall adhere to the following additional guidelines:.
In other words, the charges should be a fixed percentage levied on the amount of difference between the actual balance maintained and the minimum balance as agreed upon at the time of opening of account.
A suitable slab structure for recovery of charges may be finalized. These guidelines should be brought to the notice of all customers apart from being disclosed on the bank's website.
There may be occasions when Clearing House operations may have to be temporarily suspended for reasons beyond the control of the authorities concerned. Such suspension entails hardship to the constituents of the banks because of their inability to realize promptly the proceeds of cheques, drafts, etc. Some remedial action has to be taken during such contingencies to minimise, as far as possible, the inconvenience and hardship to banks' constituents as also to maintain good customer service.
Thus, whenever clearing is suspended and it is apprehended that the suspension may be prolonged, banks may temporarily accommodate their constituents, both borrowers and depositors, to the extent possible by purchasing the local cheques, drafts, etc. While extending this facility, banks would no doubt take into consideration such factors as creditworthiness, integrity, past dealings and occupation of the constituents, so as to guard themselves against any possibility of such instruments being dishonoured subsequently.
Use of statements has some inherent difficulties viz. As such, non-issuance of pass-books to such small customers would indirectly lead to their financial exclusion. Banks are therefore advised to invariably offer pass book facility to all its savings bank account holders individuals and in case the bank offers the facility of sending statement of account and the customer chooses to get statement of account, the banks must issue monthly statement of accounts.
The cost of providing such Pass Book or Statements should not be charged to the customer. Banks are, therefore, advised to strictly adhere to the extant instructions. Customers may be made conscious of the need on their part to get the pass-books updated regularly and employees may be exhorted to attach importance to this area.
Wherever pass-books are held back for updating, because of large number of entries, paper tokens indicating the date of its receipt and also the date when it is to be collected should be issued. It is sometimes observed that customers submit their passbooks for updation after a very long time.
In addition to the instructions printed in the passbook, whenever a passbook is tendered for posting after a long interval of time or after very large number of transactions, a printed slip requesting the depositor to tender it periodically should be given.
Banks should give constant attention to ensure entry of correct and legible particulars in the pass books and statement of accounts. In some cases, computerized entries use codes which just cannot be deciphered. Negligence in taking adequate care in the custody of savings bank pass books facilitates fraudulent withdrawals from the relative accounts.
A few precautions in this regard are given below:. Pass books remaining with the branches should be held in the custody of named responsible officials. Banks may ensure that they adhere to the monthly periodicity while sending statement of accounts.
The statements of accounts for current account holders may be sent to the depositors in a staggered manner instead of sending by a target date every month. The customers may be informed about staggering of the preparation of these statements.