BCSBI to come out with re­vised Code

Banking Frontiers - - News - Mo­han@bank­ingfron­tiers.com

The Bank­ing Codes and Stan­dards Board of In­dia (BCSBI) will bring for­ward the re­vised Code of Bank’s Com­mit­ment to Cus­tomers early next year to take care of the changed na­ture of bank­ing op­er­a­tions

The Bank­ing Codes and Stan­dards Board of In­dia (BCSBI) will bring for­ward the re­vised Code of Bank’s Com­mit­ment to Cus­tomers early next year to take care of the changed na­ture of bank­ing op­er­a­tions

The Bank­ing Codes and Stan­dards Board of In­dia (BCSBI) is com­ing out with a re­vised Code of Banks’ Com­mit­ment to Cus­tomers some­time early next year, up­dat­ing the ex­ist­ing one to take care of the re­cent de­vel­op­ments in bank­ing, es­pe­cially the im­pact of dig­i­ti­za­tion of bank­ing op­er­a­tions. “Since the coun­try is fast mov­ing to­wards dig­i­ti­za­tion and banks have in­creas­ingly de­ployed dig­i­tal mode of trans­ac­tions, we in­tend to ad­dress the is­sues re­lat­ing to th­ese de­vel­op­ments in the re­vised Code.” says A.C. Ma­ha­jan, chair­man, BCSBI.

Ma­ha­jan says the BCSBI has been re­vis­ing the Code pe­ri­od­i­cally - say ev­ery 3 years - be­cause it needs to take into con­sid­er­a­tion the lat­est de­vel­op­ments and prac­tices in the bank­ing sec­tor. “That’s our man­date,” says he.

The re­vised Code will also en­sure that not just the rights and priv­i­leges of the cus­tomers are safe­guarded by the banks, there would be pro­vi­sions to take care of cy­ber frauds, which the banks are be­com­ing in­creas­ingly ex­posed to, says Ma­ha­jan.


Ma­ha­jan re­ferred to the ex­er­cise the BCSBI had un­der­taken in 2016-17 to mon­i­tor com­pli­ance of the Codes by the mem­ber banks and found that over­all it had been en­cour­ag­ing though there is fur­ther scope of im­prove­ment. BCSBI, in con­sul­ta­tion with CRISIL, had de­vel­oped a rat­ing model for the banks, which as­signs a Code com­pli­ance rat­ing of ‘high’ for those banks scor­ing 85 and above, ‘above av­er­age’ for those scor­ing 70 to less than 85, ‘av­er­age’ to those scor­ing 60 to less than 70 and ‘be­low av­er­age’ to those scor­ing be­low 60, in­di­cat­ing thereby the level of Code com­pli­ance in the banks. The scores were based on find­ings of vis­its by BCSBI rep­re­sen­ta­tives to se­lect bank branches of mem­ber banks to ver­ify the po­si­tion re­gard­ing ground level im­ple­men­ta­tion of the im­por­tant pro­vi­sions of the Codes. He says ac­cord­ing to the said Code Com­pli­ance rat­ing model, the pa­ram­e­ters iden­ti­fied for ver­i­fi­ca­tion were grouped into 5 broad seg­ments on the ba­sis of their in­dica­tive fea­ture. Out of to­tal weigh­tage of 100, in­for­ma­tion dis­sem­i­na­tion was given 20, trans­parency 22, cus­tomer cen­tric­ity 30, griev­ance re­dres­sal 15 and cus­tomer feed­back 13 to ar­rive at ag­gre­gate score.

There were 51 banks cov­ered un­der the ex­er­cise - 26 public sec­tor banks (in­clud­ing State Bank of In­dia and its 5 erst­while as­so­ciate banks), 17 pri­vate banks, 3 for­eign banks and 5 sched­uled ur­ban co­op­er­a­tive banks.

“There has been a mar­ginal re­duc­tion from 78% to 77% in over­all score of all banks put to­gether as com­pared with the pre­vi­ous ex­er­cise, which may be at­trib­uted to (i) rephras­ing of pa­ram­e­ters se­lected for ver­i­fi­ca­tion with more em­pha­sis on cus­tomer cen­tric­ity, (ii) in­creased em­pha­sis given to com­plaints re­ceived by Bank­ing Om­buds­man (un­der the cat­e­gory of griev­ance re­dres­sal, and (iii) in­crease in weigh­tage for cus­tomer feed­back as com­pared to the pre­vi­ous ex­er­cise from 10% to 13%,” says Ma­ha­jan.


“It has been found that there is fur­ther need for im­prove­ment in the im­ple­men­ta­tion of pa­ram­e­ters grouped into the seg­ment of ‘in­for­ma­tion dis­sem­i­na­tion’ and ‘trans­parency’, though the av­er­age score un­der th­ese seg­ments was above 70. The rea­sons could vary from bank to bank, but in gen­eral, there is a need for strength­en­ing aware­ness about code com­mit­ments and their im­por­tance among the staff at bank branches,” says Ma­ha­jan.

“Af­ter the Code com­pli­ance rat­ing was an­nounced, we con­ducted a sur­vey of prac­tices be­ing pur­sued by banks which were rated ‘high’. We shared the net re­sults of best prac­tices with all the banks with the in­ten­tion that they may mod­ify their prac­tices to the ex­tent pos­si­ble,” he adds.

Ma­ha­jan ob­serves that the view that the public sec­tor banks in gen­eral had re­ceived lower Code com­pli­ance rat­ing than for­eign banks and pri­vate banks could be be­cause there has been greater use of tech­nol­ogy in for­eign and pri­vate banks for the im­ple­men­ta­tion of the Codes, par­tic­u­larly com­pli­ance with pa­ram­e­ters cov­ered un­der ‘in­for­ma­tion dis­sem­i­na­tion’. Be­sides, they have evolved strong mon­i­tor­ing and train­ing sys­tems cou­pled with an el­e­ment of ac­count­abil­ity, he adds.


Ma­ha­jan re­it­er­ates that the BCSBI is a

stan­dard fram­ing body and is not em­pow­ered to ad­ju­di­cate on com­plaints, ex­cept those re­lat­ing to pol­icy/sys­tem de­fi­cien­cies. “The BCSBI is not em­pow­ered to han­dle in­di­vid­ual com­plaints against banks. Nev­er­the­less, we do re­ceive com­plaints and we in turn ex­am­ine them to iden­tify whether any sys­temic is­sue is in­volved and if so, nec­es­sary ac­tion could be taken so that such gaps in cus­tomer ser­vice are rec­ti­fied and such com­plaints do not re­cur.”


He says the BCSBI is set up with a man­date to (i) pre­pare stan­dards for var­i­ous ser­vices which the banks must ad­here to while pro­vid­ing their ser­vices to the re­tail cus­tomers; and (ii) mon­i­tor the im­ple­men­ta­tion of the same by the banks. “Th­ese are our twin ob­jec­tives and for this pur­pose, we found it nec­es­sary that both the bank staff and the cus­tomers should be aware of the Codes. Th­ese Codes are a com­pen­dium of the rights of banks’ cus­tomers. It was there­fore nec­es­sary that both the re­ceiver as well as the dis­penser of the ser­vices should be aware of th­ese rights. We ob­served that some­time in 2012-13, when the Codes were in ex­is­tence for more than six or seven years, the aware­ness about th­ese Codes was very low not only among the gen­eral public but also among the staff mem­bers of the banks. We were in con­stant touch with the banks on how to im­prove the aware­ness and the im­ple­men­ta­tion of the Codes. Un­for­tu­nately, banks were busy at that time with their own af­fairs and they were not able to pay much at­ten­tion to this. While they were giv­ing all the as­sur­ances that they will en­sure com­pli­ance of the Codes, in ac­tu­al­ity they were not able to cre­ate any aware­ness about the ex­is­tence of the Codes. So, we suo motto de­cided that if banks are not able to do this, we will take it upon our­selves. For the last 5 years or so, we have been con­duct­ing aware­ness pro­grams among the cus­tomers. In­ci­den­tally, the cus­tomer data is not avail­able with the BCSBI. So, we took the help of the banks in a par­tic­u­lar city to in­vite their re­spec­tive cus­tomers to th­ese pro­grams. That is how we started the aware­ness pro­grams,” says he.

To start with the BCSBI launched one meet­ing in a month and later it roped in credit in­for­ma­tion bureau Tran­sUnion CIBIL to hold th­ese aware­ness pro­grams, be­cause it was no­ticed that there were lots of gaps in un­der­stand­ing of the credit scores of in­di­vid­u­als, which is a sig­nif­i­cant yard­stick of the bor­row­ing el­i­gi­bil­ity. While un­der­tak­ing the pro­grams, the BCSBI found that apart from cus­tomers, even the front­line staff in the banks, who were ex­pected to im­ple­ment the Codes, were also not fully con­ver­sant with th­ese, mainly be­cause they were busy with day to day work.

“We then started con­duct­ing meet­ings of the staff of the banks. This was done by ar­rang­ing ses­sions ex­clu­sively for the staff of the banks at var­i­ous lo­ca­tions. This is how we are pro­vid­ing aware­ness about the Codes. As part of cre­at­ing aware­ness among those cus­tomers who had re­cently started bank­ing like those hav­ing Jan Dhan ac­counts, and who are not fully lit­er­ate fi­nan­cially or ed­u­ca­tion­ally, or are not able to un­der­stand the process of bank­ing, we have pre­pared a pic­to­rial book­let that gives them an idea of their rights and how they can over­come dif­fi­cul­ties and prob­lems in con­duct­ing the ba­sic bank­ing busi­ness.” says Ma­ha­jan.

To­day, the BCSBI has cov­ered al­most the en­tire coun­try with th­ese aware­ness pro­grams. It is not a one-time ex­er­cise in a city or town. The ques­tion is to re­fresh the peo­ple’s un­der­stand­ing of bank­ing and their rights and priv­i­leges. “For ex­am­ple, when we were in Bhopal re­cently, we were in­vited by the Bhopal cen­tre of the Corps of Elec­tron­ics and Me­chan­i­cal Engi­neers (EME) of the In­dian Army to hold an aware­ness pro­gram for the jawans,” says Ma­ha­jan.


He men­tions about the BCSBI Code of Banks’ Com­mit­ment to Mi­cro and Small En­ter­prises (MSEs). “This is a Code, re­flect­ing the bank’s pos­i­tive com­mit­ment to its Mi­cro and Small En­ter­prises (MSE) cus­tomers to pro­vide easy, speedy and trans­par­ent ac­cess to bank­ing ser­vices for their day-do-day op­er­a­tions and in times of fi­nan­cial dif­fi­culty. We have a spec­i­fied aware­ness pro­gram for the MSEs as we feel th­ese en­ter­prises are vul­ner­a­ble. We have also been par­tic­i­pat­ing in pro­grams or­ga­nized by var­i­ous fora of MSEs across the coun­try,” says he.

The BCSBI has also started what it calls ‘Know Your Rights’ pro­gram, which is es­sen­tially tar­get­ing self-help groups and mar­ginal bor­row­ers. “We are do­ing so as we feel th­ese peo­ple may not be able to un­der­stand what are their rights and how best they can get the bank­ing ser­vices. What we of­fer in th­ese pro­grams is a shorter ver­sion of our pic­to­rial book­let com­mu­ni­cated to them through skits and pup­pet plays,” says Ma­ha­jan.


For the first time, the BCSBI had in­cluded five sched­uled ur­ban co­op­er­a­tive banks in the sur­vey of banks on Code com­pli­ance con­ducted in 2016-17. “We found through the sur­vey that co­op­er­a­tive banks are im­ple­ment­ing the Codes quite sat­is­fac­to­rily. There are about 1500 ur­ban co­op­er­a­tive banks (UCBs) in In­dia, most of them con­fined to a town or a city and at the most the state. As once a bank be­comes a mem­ber, it is our re­spon­si­bil­ity to en­sure that it im­ple­ments the Codes scrupu­lously and mon­i­tor­ing such a large num­ber of UCBs would be dif­fi­cult. Thus, we de­cided to ad­mit only multi-state sched­uled ur­ban co­op­er­a­tive banks, which have a sub­stan­tial book size and branch net­work as mem­bers,” says Ma­ha­jan.

A.C. Ma­ha­jan hints that the re­vised Code will have pro­vi­sions to take care of cy­ber frauds

A pup­pet play in progress to cre­ate aware­ness about bank­ing rights among the dis­d­van­taged sec­tion of the pop­u­la­tion

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