PRINCIPAL CODE COMPLIANCE OFFICERS (PCCOS) CONFERENCE 2011-12 Issues raised during discussions at the Annual Conference of Principal Code Compliance Officers along with BCSBI s clarifications are furnished below. Sl. Issues No. 1 The gist of the Codes may be given to the customers instead of the whole document. 2 Obtaining introduction by existing account holder is continued to be insisted upon to obtain protection under Section 131 of NI Act relating to collection of instruments. 3 In terms of para 8.1.6 (a) of the Code of Bank s Commitment to Customers the account holder is required to be informed three months before his account is classified as dormant / inoperative. This is difficult to implement. Response Condensing the contents of the Codes may lead to distortion. It is hence preferable to give the full text of the Code to customers. Documents that may be obtained for establishment of identity and residence of the customer have already been spelt out. An introduction from a KYC compliant customer may be necessary for opening of No Frills accounts where prescribed KYC documents are not available. The legal implications regarding availability of protection under Section 131 of NI Act may be separately examined. Existing regulatory instructions require a periodical review of such accounts. Efforts have to be made to trace the customer. The provision in the Code that requires an intimation to be sent three months in advance is only an extension of the prescribed regulatory process. The process of identification of such accounts and issue of advices may be system driven to ensure
4 As advising customers of changes in interest rates, rules and regulations etc., is cumbersome, a Customer Notice Board on the bank s website conveying such information could be introduced. 5 i. Customers do not follow the grievance redressal procedure as prescribed by banks. ii. Tech savvy customers should be encouraged to use the bank s complaint portal. iii. Banks receive complaints from multiple agencies accuracy and promptness. One of the recommendations of the Committee on Customer Service in Banks (Damodaran Committee) is that banks, before marking the account inoperative, must intimate the account holder by SMS. The Code of Bank s Commitment to Customers provides for various channels of communication notice in the branch; letters; e-mail; website; newspaper. It cannot be presumed that all customers have access to banks websites. The bank should ensure that the channel of communication is appropriate for the customer concerned. As consumers have recourse to various agencies, reference to multiple agencies by them cannot be avoided in case they choose to do so. BCSBI takes up grievances with the bank concerned only if a systemic issue seems likely. Customers are not aware of the escalation levels in the grievance redressal mechanism of banks. Banks should, therefore, step up efforts to educate their customers about their grievance redressal procedure including use of bank s portal. Banks should work to resolve complaints at the point of contact so that customers are not compelled to approach higher authorities and /or 2
6 Formation of Branch Level Customer Service Committees (BLCC) and conduct of monthly meetings is mandatory. A reference to this aspect in the Code will make customers aware of the availability of such forum for giving suggestions /feedback. 7 Branch Level Customer Committee meetings could be scheduled to be held once a quarter instead of once a month, as the monthly exercise loses out on quality. 8 Just as time frames have been prescribed for collection of instruments, cannot a turnaround time be prescribed for the paying bank to avoid delays? other agencies for redressal of their grievances. This suggestion has been noted for inclusion in the Code of Bank s Commitment to Customers at the time of its review. The formation of the BLCC and the periodicity of their meetings have been prescribed by RBI. (DBOD.No.Leg.BC.30 /09.07.005/2007-08 dated September 3, 2007) The Branch Level Customer Service Committee may meet at least once a month to study complaints/ suggestions, cases of delay; difficulties faced / reported by customers / members of the Committee and evolve ways and means of improving customer service. It is a legitimate point. The issue including laying down turnaround time for paying bank may be discussed with IBA. The matter will also be considered for inclusion in the Code at the time of its review. It is, however, clarified that the collecting bank is liable to pay compensation for any delay in collection of instruments beyond the prescribed 3
9 A unique platform may be set up at the level of IBA to settle interbank disputes in respect of settlement of claims relating to customer transactions. 10 Instructions to recover rent by sale of contents of locker have been issued. However, there is no laid down procedure to deal with unclaimed articles. 11 There should be standardized MITC for various products / services as also a common Citizen s Charter. time. If the delay is on part of the paying bank, the collecting bank may take up the matter with them and claim reimbursement of compensation paid. The same logic is applicable to failed ATM transactions. The bank, which has issued the card, is liable to compensate its customer. Interbank claims may be taken up separately. The matter may be taken up with IBA. It must, however, be ensured that the customer is not made to suffer as a result of interbank issues. Banks should have clear procedures drawn up in consultation with their legal advisers for breaking open lockers and taking stock of inventory. At the Banking Ombudsman Conference held in September 2011, it was proposed that IBA would bring out standardized MITC for ten important banking transactions. As regards a common Citizen s Charter, Customer Service Department (CSD), RBI clarified that the Citizen s Charter is larger than the Codes and they have requested the Government to examine the issue keeping in view the legal aspects of a banker-customer relationship and a citizen-state relationship which cannot be equated. 4
12 Observations of BCSBI representatives visiting branches may be shared with branch officials. 13 Many banks are moving towards a centralized environment. Information about many issues are, therefore, not available at branches. 14 The name of the branch where a deficiency was observed by the BCSBI representative should be conveyed to the bank. This is invariably done and in many a case Branch Managers have set right / introduced improvements during the visits based on the observations of BCSBI officials / representatives. BCSBI is aware that many banks have set up centralized processing centres. While verifying compliance with the provisions of the Codes, where the processes have moved from branches to the processing centres, BCSBI officials visit such processing centres and verify compliance at such centres. Verification of compliance at branches is confined to those functions which are still carried out at branches. It is further clarified that where some activities have migrated to centralized processing centres, BCSBI does not seek such information from branches nor does it categorise the related aspects as noncompliance. For the purpose of verification of implementation of the Codes, only a small percentage of branches is selected at random, and visited by BCSBI officials or authorized representatives. The list of such branches is sent to the member banks as a part of our response to the Annual Statement of Compliance submitted by the banks. Branch visit findings are fed into computer and only percentages 5
15 During branch visits by BCSBI officials, reporting of the position regarding implementation of the Codes at branches has, on occasion, not been factual. 16 Soft copies of the BCSBI newsletter Customer Matters should be sent to all member banks. of the branches which have not implemented are generated. It is, therefore, practically difficult to give names of such branches where deficiencies are observed. Though only a small percentage of branches is visited for verification by BCSBI, it is expected that provisions of the Codes are implemented in all branches, and not merely in the branches visited. No such instance has so far been brought to our notice. Nevertheless, steps will be taken to strengthen the reporting mechanism. This is being done. Further copies of all issues of the newsletters are available on BCSBI s website www.bcsbi.org.in from where they can be downloaded. ********************* 6
BANKING CODES AND STANDARDS BOARD OF INDIA The Annual Conference of Principal Code Compliance Officers of member banks (excluding RRBs and UCBs) was held on February 24, 2012. Issues emanating during discussions are listed below with BCSBI s clarifications thereto. 7