Bank­ing Codes are Here, Don’t Let Banks Take You For a Ride

Ex­perts think that with the bur­den of guilt likely to shift to the seller, cus­tomers should make the most of the code of com­mit­ment, which can quickly re­dress their grievances, says Preeti Kulka­rni

The Economic Times - - Markets & Finance -

Tak­ing your bank to task for mis-sell­ing prod­ucts and de­fi­ciency in ser­vices is go­ing to be a lit­tle eas­ier. If the Re­serve Bank of In­dia (RBI) has its way, your bank’s ser­vices frame­work will make the tran­si­tion from ‘caveat emp­tor’ to the ‘caveat ven­di­tor’ prin­ci­ple. In other words, ‘let the seller be­ware’ con­cept could take cen­trestage in bank­ing in com­ing days.

“It is a counter to caveat emp­tor and sug­gests that seller can also be de­ceived in a mar­ket trans­ac­tion. This forces the seller to take re­spon­si­bil­ity for the prod­uct and dis­cour­ages sell­ers from pur­vey­ing prod­ucts of in­fe­rior qual­ity. The prin­ci­ple vests the bur­den of ef­fort of prov­ing that the short­com­ing de­fi­ciency of ser­vice was ab­sent on the seller of the prod­uct,” said Deepali Pant Joshi, ex­ec­u­tive di­rec­tor, RBI, in a Bank­ing Codes and Stan­dards Board of In­dia (BCSBI) con­fer­ence last week. Mis-sell­ing fi­nan­cial prod­ucts, par­tic­u­larly life in­sur­ance poli­cies, is a com­mon griev­ance among cus­tomers. While the onus could shift to sell­ers or dis­trib­u­tor banks, a cus­tomer should also be aware of her rights and the re­course avail­able. Keep yourself up­dated of the mea­sures taken by RBI and BCSBI to pro­tect cus­tomer in­ter­ests.

Ac­cord­ing to BCSBI chair­man AC Ma­ha­jan, aware­ness of the code of com­mit­ment to cus­tomers is low even among the com­pli­ance of­fi­cers at many bank branches. The new BSCBI code of com­mit­ment has al­ready in­cor­po­rated a clause that re­quires banks to sell ‘suit­able’ and ‘ap­pro­pri­ate’ prod­ucts. More­over, banks can­not force you to buy in­sur­ance poli­cies in re­turn for the bank­ing ser­vice you may have ap­plied for. If you feel its of­fi­cials have vi­o­lated the code, you can file a com­plaint against your bank.

Re­lief from Elec­tronic Frauds

Banks have to take the re­spon­si­bil­ity for elec­tronic frauds, un­less they can prove that the cus­tomer was neg­li­gent. This has been a prime cause of con­cern for many card­hold­ers, with re­ports of ATM and In­ter­net frauds on the rise. As long as you in­form your bank about any sus­pected fraud im­me­di­ately, you need not worry. Your li­a­bil­ity ceases the mo­ment you no­tify the bank. Also, if the fraud has oc­curred due to a se­cu­rity breach in the bank’s sys­tem, you can claim a com­pen­sa­tion.

Sim­i­larly, in case of card-re­lated frauds, where there is a dis­pute over the cus­tomer com­pro­mis­ing the sen­si­tive in­for­ma­tion, it’s the bank’s re­spon­si­bil­ity to prove that the cus­tomer was in­deed at fault.

Up­dated Credit In­for­ma­tion

Many bor­row­ers com­plain that their credit re­ports are looked upon as ‘un­favourable’ de­spite clear­ing all dues, par­tic­u­larly if they have re­paid the loan un­der a one-time, com­pro­mise set­tle­ment with the bank or the credit card is­suer. The code of com­mit­ment specif­i­cally as­signs the re­spon­si­bil­ity of up­dat­ing credit in­for­ma­tion records of bor­row­ers to the banks. “If your loan ac­count has been in de­fault, but there­after reg­u­larised, we will up­date this in­for­ma­tion,” the code says. Keep­ing yourself abreast of these codes and RBI’s mea­sures on cus­tomer ser­vice, will help you raise and es­ca­late your com­plaint in time. The first stop is al­ways at the cus­tomer ser­vice cells, fol­lowed by the griev­ance re­dres­sal of­fi­cer. “If you do not re­ceive a sat­is­fac­tory re­sponse, you should ap­proach the bank’s nodal of­fi­cer. Many com­plaints get re­solved at this level,” says VN Kulka­rni, chief credit coun­sel­lor with the Bank of In­di­a­backed Ab­hay Credit Coun­selling Cen­tre. If it doesn’t, how­ever, you can es­ca­late the mat­ter to the Bank­ing om­buds­man’s of­fice.

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