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Annual Report 2014-15 Annual Report 2014-15 BANKING CODES AND STANDARDS BOARD OF INDIA www.bcsbi.org.in PUBLISHED BY Narayanan Raja Chief Executive Officer Banking Codes and Standards Board of India C-7, Reserve Bank of India Building Bandra Kurla Complex Mumbai- 400051 Banking Codes and Standards Board of India Governing Council Chairman A C Mahajan Members M M Chitale C Krishnan H N Sinor Rama Bijapurkar Narayanan Raja Chief Executive Officer Banking Codes and Standards Board of India Banking Codes and Standards Board of India Annual Report 2014-15 ANNUAL REPORT OF THE BANKING CODES AND STANDARDS BOARD OF INDIA 2014-15 Banking Codes and Standards Board of India (BCSBI) set up by Reserve Bank of India (RBI) in 2006 continued to discharge its mandate of reviewing and evolving codes and standards for fair treatment of individual & micro and small enterprise customers by banks. While the Code of Bank’s Commitment to Customers was reviewed and updated during the last year, the task of updation of the Code of Bank’s Commitment to Micro and Small Enterprises has been taken on hand and is likely to be completed shortly. As part of its mandate of monitoring Code implementation, BCSBI authorized persons undertook visits to over 2100 branches and 59 centralized processing centres of banks. In addition more than 4000 customers were also interviewed to obtain their feedback on adherence by banks to the provisions of the Codes. BCSBI also undertook Code Monitoring Studies in the areas of retail loans, small deposit accounts and charge levied by banks on commonly used services. BCSBI also participated in Customer Awareness Meets organized by Banking Ombudsmen or by banks. In addition, BCSBI organized a few customer meets and meetings of controlling heads of banks to spread awareness and the need to adhere to Code provisions to enhance the level of customer satisfaction. Governing Council The term of the present Governing Council which was last reconstituted on December 14, 2011 for a period of three years ended on December 13, 2014. RBI had requested the members of the Governing Council to continue until the new Governing Council is reconstituted. Accordingly, the members continued till March 31, 2015. The Governing Council has since been reconstituted. The Governing Council which is vested with the powers of general superintendence, direction and control of the affairs and funds of BCSBI, held ten meetings during the year 2014-15. As per the directions of the Governing Council, BCSBI undertook certain special studies relating to service charges levied by members to their customers for common services and also conducted visits to bank branches and Central Processing Centres to ascertain the actual level of implementation of Codes. Membership During the year under review, one scheduled commercial bank (viz. Bharatiya Mahila Bank Ltd), one Urban Co-operative Bank (viz. Nasik Merchants Co-operative Bank Ltd) and two Regional Rural Banks (viz. Madhya Bihar Gramin Bank and Mizoram Rural Bank) have been enrolled as members of BCSBI. With these additions and merger of two members viz. Marudhara Gramin Bank and Mewar Aanchalik Gramin Bank into Rajasthan Marudhara Gramin Bank, total number of members stood at 130 as on March 31, 2015. BCSBI will continue its efforts to enlist eligible banks as members so that all bank customers benefit from the Codes. During the year under review an amount of `361.00 lakh was collected from members towards their annual membership fees. Names of member banks as on March 31, 2015 are listed in Annex I. 1 Banking Codes and Standards Board of India Annual Report 2014-15 Monitoring of Code Implementation and visits to bank branches to assess implementation BCSBI has been set up as an independent and autonomous body with the twin objective of framing of Codes and Standards for fair treatment of customers as also monitoring implementation of the Code provisions by member banks. The two Codes - Code of Bank’s Commitment to Customers and Code of Bank’s Commitment to Micro and Small Enterprises - brought out are periodically reviewed and revised. Monitoring of Code implementation is done in two modes – one, by obtaining an Annual Statement of Compliance (ASC) from banks on a structured format, signed by a senior official, known as Principal Code Compliance Officer and two, by visiting sample of branches selected at random to look into grass-root level implementation. The ASCs are self-certified statements by the bank on Code implementation. These statements are scrutinised and where required, followed up with banks. As regards visits to branches, these are undertaken by authorized representatives, who record their observations in a structured questionnaire. They also interview a few customers from each branch to obtain their feedback. Branches for the purpose are selected keeping in view geographic locations of banks and also ensuring a mix of metro/urban and semi-urban/rural branches. The findings of branch visits and responses from customers obtained in the structured questionnaire are analysed and studied. The output of branch visits and customer responses are used for arriving at a Rating of Banks on Code implementation. The findings of Branch Visits and Rating awarded are conveyed to Banks for further action and in the case of banks, whose performance is comparatively below par, the Governing Council of BCSBI has held discussions with Top Management of such Banks. BCSBI Rating of Member Banks During the year, 2107 branches of 47 banks located in 47 cities / towns and 59 Central Processing Centres were visited by BCSBI representatives. In addition, around 4300 customers of banks were interviewed to obtain their responses on implementation of the Codes. As in the previous year, the Branch Visit findings and Customer Responses obtained will be used to rate banks. Accordingly, banks will be awarded a rating out of four categories, viz. High level of compliance, Above Average level of compliance, Average level of compliance and Below Average level of compliance. BCSBI has engaged the services of rating agency CRISIL for assisting in developing the rating model. Code of Bank’s Commitment to Micro and Small Enterprises The Code of Bank’s Commitment to Micro and Small Enterprises, which was first released in May 2008 and revised in August 2012, has again been taken up for further review. Sug- gestions have been sought from banks, industry associations and individuals. Suggestions received and observations of Reserve Bank of India have been studied. It is proposed to bring out a revised MSE Code during the first quarter of 2015-16. Code Monitoring Studies As part of the Plan under Strategic Thrust areas identified for action, BCSBI undertook certain studies around select themes relating to Code provisions and also certain other important customer service related areas. During the year 2014-15, BCSBI conducted the 2 Banking Codes and Standards Board of India Annual Report 2014-15 following studies: Study of implementation of Code Provisions relating to Retail Loans: The study covered 79 branches / processing centres of 39 banks comprising all public sector banks, major private and foreign banks having significant retail loan business. The study was carried out by BCSBI officials by visiting one branch/ processing centre of each of the banks in Mumbai and another one at an outside centre. The study highlighted that in a large number of banks there is no formal system laid down for providing important information in the form of properly documented product specific Most Important Terms and Conditions (MITC) as part of loan application to the customers as required under Para 8.11.1.a of the Code. The study also highlighted that a large number of banks were providing authenticated copies of loan documents executed by the customer only on receipt of specific request from the borrower even though they are required to provide them to all customers. Study of charges levied by banks for commonly used services by individual customers: The study was carried out by BCSBI officials on perusal of tariff schedules of 47 banks, viz. 26 public sector, 18 private sector and 3 foreign banks, available on their websites. The study has revealed certain shortcomings in display of tariff schedule on websites of some banks, lack of clarity on some of the services and related charges in the tariff schedule which were communicated to banks for their necessary action. Display of information on opening of Small Accounts: BCSBI, keeping in mind importance of financial inclusion, undertook quick visits to 2 branches each in Mumbai of 48 major banks, comprising 26 public sector, 19 private sector and 3 foreign banks with the objective of verifying whether the bank branches declare in clear terms that they open ‘Small Accounts’ with simplified documentation, i.e. on the basis of self attested photograph. The visiting officials also collected additional information on Basic Saving Bank Deposit Account (BSBDA) and display of Comprehensive Notice Board. The study revealed that a large number of banks have not implemented the relevant Code provision regarding display of information on opening of Small Accounts and documents required for the same. The matter has been taken up with the banks. Feedback from Micro and Small Enterprises Customers of banks: A study of Lending to Micro and Small Enterprises (MSEs) covering the commitments of member banks as contained in the Code of Bank’s Commitment to MSEs was undertaken during November-December 2013. Additionally, BCSBI for the first
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