Bcsbi PDF

IIBF & NISM Adda
Certificate Examination in
Customer Service & Banking Codes and Standards
(IIBF & Other Exams)
Compiled by
Srinivas Kante B.Tech, CAIIB
Compiled by Srinivas Kante Email: [email protected]

About Certificate Examination in Customer Service & Banking Codes and Standards
IIBF Certificate Examination
INTRODUCTION
Banking being a service industry has to keep quality of the services to their customers at the top of their priorities. The expectations of customers about the service
offered by banks are different in different locations and geographies of our vast country. With the changing times, the expectations at all levels about the quality of
customer service have undergone significant changes over last 3-4 decades.
These higher expectations have been more pronounced after the opening of new private sector banks as a consequence of financial sector reforms in our
country. Indian Banks especially the Public Sector ones have seen huge increase in their branch network during the last four decades. The unprecedented
increase in branch net work has impacted the customer service due to varied demands on the banking industry from different sections of the society.
Though banks have been taking needed steps for improving the customer service standards, looking to the need to retain existing ones and to attract new
customers, there is always a scope for improvement. Due to the different levels of standards that are available there is also a need for bringing uniform
standards of service across the branches / banks. This would enable all bank customers to enjoy standard levels of customer service in any bank or branch
of their choice.
SUPPORT FROM BCSBI
In order to meet the expectations of the customers and to render quality service by bank employees, the Institute has launched a certificate course in customer service
in association with Banking Codes and Standards Board of India (BCSBI).The Board has agreed to lend its name and provide any assistance required by the Institute
to make this a successful initiative. BCSBI is a society and is an independent organization promoted by RBI. Main objective of this society, as per its memorandum, is
to formulate standards of service and also ensure that the same are maintained by all its members. There are a total of 132 banks as members of this society, who
have voluntarily agreed to abide by the standards of service prescribed by BCSBI.
OBJECTIVES
To enhance knowledge of banking professionals in the field of Customer Services and to fulfill the increasing need of such professionals.
ELIGIBILITY
1. Members and Non-Members of the Institute
2. Candidates must have passed the 12th standard examination in any discipline or its equivalent.
PASSING CRITERIA:
Minimum marks for pass in the subject is 50 out of 100.
DELIVERY
Candidates will have access to -
• Specially prepared courseware
• Finance Quotient - on the entry level knowledge of the candidate to be hosted on the Institute’s portal
• Simulation program on Customer Service developed in association with Tata

Interactive System (Candidate will be given a separate login id and password for this purpose)
• Case studies on Customer Service / grievances periodically uploaded in the
Institute’s portal
EXAMINATION For Members For Non-Members
FEES* : Particulars
First attempt Rs.1,000/- * Rs.1,500/- *
Subsequent each Rs.1,000/- * Rs.1,500/- *
attempt
Cut-off Date of Guidelines /Important Developments for Examinations

The Institute has a practice of asking questions in each exam about the recent developments / guidelines issued by the regulator(s) in order to test if the
candidates keep themselves abreast of the current developments. However, there could be changes in the developments / guidelines from the date the
question papers are prepared and the dates of the actual examinations.
In order to address these issues effectively, it has been decided that:
(i) In respect of the examinations to be conducted by the Institute for the period
February to July of a calendar year, instructions / guidelines issued by the regulator(s) and important developments in banking and finance up to 31st
December will only be considered for the purpose of inclusion in the question papers".
(ii) In respect of the examinations to be conducted by the Institute for the period August to January of a calendar year, instructions / guidelines issued by the
regulator(s) and important developments in banking and finance up to 30th June will only be considered for the purpose of inclusion in the question papers.
The table given below further Cut-off Date of Guidelines / Important

clarifies the situation. Particulars
Developments for Examination/s Developments for Examination/s
For the examinations to be conducted by 31st December 2017
the Institute for the period February 2018
to July 2018
For the examinations to be conducted by 30th June 2018
the Institute for the period August 2018 to
January 2019

Syllabus
Module - A
Definition of a customer – Banker- Customer relationship – Points of contact – Types of customers – Types of relationships,
such as individuals, corporates, etc. and their peculiarities – Need for building up customer relationships and Importance of
Customer Service in a country like India - Changing Expectations and Perceptions

– Termination of relationship
Module - B
Modern day banking – Core Banking / Electronic Payments – phone banking – mobile banking – internet banking – How
business is sourced – Different retail products – Home Loans – Vehicle Loans – Consumer durables – Credit Cards –
Bancassurance – Demat services – Selling through agents – Recovery process, etc. This Module should also deal with
general areas of grievances - pass book, account statement, unsolicited business, different charges, etc.
Module - C
Efforts made by banks, association of banks and Reserve Bank of India to improve customer service – Regulations,
Instructions, KYC / AML guidelines-Banks’ duties and rights – Customer Service Committees – Grievance Redressal
Mechanism including Banking Ombudsman – Importance of Developing Skills and Attitudes –
Use of IT in improving customer service.
Module - D
Genesis of Banking Codes and Standards Board of India – its set up and functions – Code of Bank’s Commitment to
Customers and Code of Bank’s Commitment to Micro and Small Enterprises.
BANKING IN INDIA
Role of Reserve Bank of India
The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India
Act, 1934. Though originally owned privately, it was nationalised in 1949 and now the Reserve Bank is fully owned by the

Government of India. The Central Office of the Reserve Bank was initially established in Calcutta but in 1937 it was moved to
Mumbai where the Governor presently sits and policies are formulated.
Preamble: According to the Preamble of the RBI Act, the basic functions of the Reserve Bank are - to regulate the issue of
Bank Notes and keeping of reserves with a view to secure monetary stability in India and generally to operate the currency
and credit system of the country to its advantage.
Central Board: The Reserve Bank's affairs are governed by a Central Board of directors members of which are appointed by
the Government of India in keeping with the Reserve Bank of India Act for a period of four years. The functions of the Central
Board are General superintendence and direction of the Bank's affairs.
The Central Board constitutes of:
Official Directors - One full-time Governor and not more than four Deputy Governors,
Non-Official Directors -Nominated by Government: ten Directors from various fields and two government Officials
Others: four Directors - one each from four local boards Directors, Central Board,
RBI
1. Dr. Urjit R. Patel - 7. Shri Bharat
Governor Narotam Doshi
2. Shri N. S. 8. Shri Sudhir
Vishwanathan- Mankad
Deputy Governor
3. Dr. Viral V. 9. Dr. Ashok Gulati
Acharya - Deputy
Governor
4. Shri B.P. Kanungo 10. Shri Manish
- Deputy Governor Sabharwal
5. Dr. Nachiket M. 11. Shri Subhash
Mor Chandra Garg
6. Shri Natarajan 12. Shri Rajiv Kum
Chandrasekaran
ssuer of currency:
Issues and exchanges or destroys currency and coins not fit for circulation.
Objective: to give the public adequate quantity of supplies of currency notes and coins and of good quality.
Developmental role
Performs a wide range of promotional functions to support national objectives.
Related Functions
Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their
banker.
Banker to banks: maintains banking accounts of all scheduled banks.
Offices and Training Establishments
Reserve Bank of India has 22 regional offices, most of them in state capitals.
It has six training establishments: Three, namely, College of Agricultural Banking, Bankers Training College and Reserve
Bank of India Staff College are part of the Reserve Bank. Others are autonomous, such as, National Institute for Bank
Management (NIBM, Pune), Indira Gandhi Institute for Development Research (IGIDR, Goregaon), Institute for Development
and Research in Banking Technology (IDRBT, Hyderabad)
Functions of Commercial Banks
INTRODUCTION
Though the main functions of the Commercial Banks have been accepting deposits from the public and lending to the public,
it may be of interest to you now to know about the various services or functions performed by commercial banks for its
clientele - the business community and the public in general.
FUNCTIONS OF COMMERCIAL BANKS
The functions of commercial banks are divided into two categories:
i. Primary functions, and
ii. Secondary functions including agency functions.
i) Primary functions:
The primary functions of a commercial bank include:
a) Accepting deposits; and
b) Granting loans and advances;
a) Accepting deposits
The most important activity of a commercial bank is to mobilize deposits from the public. People who have surplus income
and savings find it convenient to deposit the amounts with banks. Depending upon the nature of deposits, funds deposited
with bank also earn interest. Thus, deposits with the bank grow along with the interest earned. If the rate of interest is higher,
public are motivated to deposit more funds with the bank. There is also safety of funds deposited with the bank.
b) Granting loans and advances: The second important function of a commercial bank is to grant loans and advances. Such
loans and advances are given to members of the public and to the business community at a higher rate of interest than
allowed by banks on various deposit accounts. The rate of interest charged on loans and advances varies depending upon

the purpose, period and the mode of repayment. The difference between the rate of interest allowed on deposits and the rate
charged on the Loans is the main source of a bank’s income.
A loan is granted for a specific time period. Generally, commercial banks grant short-term loans. But term loans, that is, loan
for more than a year, may also be granted. The borrower may withdraw the entire amount in lump sum or in installments
subject to appropriate documentation to the satisfaction of the Bank. However, interest is charged on the full amount of loan
withdrawn or outstanding. Loans are generally granted against the security of certain assets. A loan may be repaid either in
lump sum or in installments.
An advance is a credit facility provided by the bank to its customers. It differs from loan in the sense that loans may be
granted for longer period, but advances are normally granted for a short period of time. Further the purpose of granting
advances is to meet the day to day requirements of business. The rate of interest charged on advances varies from bank to
bank. Interest is charged only on the amount withdrawn and not on the sanctioned amount.
ii) Secondary functions

Besides the primary functions of accepting deposits and lending money, banks perform a number of other functions which
are called secondary functions. These services supplement the main activities of the banks. These are as follows -
a.Issuing letters of credit, travellers cheques etc.
b.Undertaking safe custody of valuables, important documents, and securities by providing safe deposit vaults or lockers;
c.Providing customers with facilities of foreign exchange.
d.Remittance i.e. transferring money on behalf of its clientele from one place to another; and from one branch to another
branch of the bank.
e.Standing guarantee on behalf of its customers, for making payments for purchase of goods, machinery, vehicles etc.
f.Issuing demand drafts and pay orders; and,
g.Providing reports on the credit worthiness of customers.
h.Collection and payment of cheques and bills on behalf of the customers;
i. Collection of dividends, interest and rent, etc. on behalf of customers, if so instructed by them;
j. Purchase and sale of shares and securities on behalf of customers;
k.Payment of rent, interest, insurance premium, subscriptions etc. on behalf of customers, if so instructed;
l.Acting as a trustee or executor;
m.Acting as agents or correspondents on behalf of customers for other banks and financial institutions at home and abroad.
n.Underwriting of shares, debentures, etc.;
o.Underwriting loans floated by government and public bodies.
p.Sale of Gold
q.Sale of Life Insurance, general Insurance and Mutual Funds products.
AGENCY AND GENERAL UTILITY SERVICES PROVIDED BY MODERN COMMERCIAL BANKS
Besides primary activities of accepting deposits and lending activities, commercial banks also render number of ancillary
services. These services supplement the main activities of the banks. They are essentially non-banking in nature and broadly
fall under two categories:
i. Agency services, and
ii.General utility services.
i) Agency Services
Agency services are those services which are rendered by commercial banks as agents of their customers. They include:
a.Collection and payment of cheques and bills on behalf of the customers;
b.Collection of dividends, interest and rent etc. on behalf of customers, if so instructed by them;
c.Purchase and sale of shares and securities on behalf of customers;
d.Payment of rent, interest, insurance premium, subscriptions etc. on behalf of customers, if so instructed;
e. Acting as a trustee or executor;
f. Acting as agents or correspondents on behalf of customers for other banks and financial institutions at home and abroad.
ii) General utility services
General utility services are those services which are rendered by commercial banks not only to the customers but also to the
general public. These are available to the public on payment of a fee or charge. They include:
a. Issuing letters of credit and travellers’ cheques;
b. Underwriting of shares, debentures, etc.;
c. Safe-keeping of valuables in safe deposit locker;
d. Underwriting loans floated by government and public bodies.
e. Supplying trade information and statistical data useful to customers;
f. Acting as a referee regarding the financial status of customers;
g. Undertaking foreign exchange business.

Type of Customers
INTRODUCTION
In course of their usual banking activities, Banks come across with various type of customers. The customers of a Bank may
be Individuals, Partnership Firms, Hindu Undivided Family, Companies and the other Corporate Entities.
TYPE OF CUSTOMERS
In this Chapter, for the convenience of study, types of Borrowers have been classified as under:
1. Individual
2. Partnership firm.
3. Hindu Undivided Family
4. Companies
5. Statutory Corporations
6. Trusts and Co-op Societies
One of the essential elements of a contract is “capacity of the parties to Contract”.
The Bank while dealing with an individual should ensure that he is competent to enter into contract. An individual is not
competent to contract and money lent to him cannot be recovered in the following circumstances:
a) If an individual is a minor:
A person is minor in the eyes of the law if has not attained the age of 18 years under Indian Majority Act and the age of 21
years, if he/she is a ward, under the Guardians and Wards Act. The money lent to a minor cannot be recovered, if the minor
fails to repay. Exception to this is a contract with a minor for supply of necessaries to the minor. If a Bank lends money to a
minor to meet expenses for purchasing necessaries of life, then bank can recover the money from the estate of the minor.
b) If an individual is not of sound mind:
According to the Contract Act, if a person is not of sound mind, then he is incompetent to enter into a contract. The Act says
that a person at the time when he makes the contract, he is not capable of understanding it and of forming a rational
judgment as to its effect upon his interests, will be considered that he is ‘not of sound mind’. Hence, a contract would be
invalid if it is proved that the time of entering into contract, the person was not in sound state of mind and could not
understand what he was doing and could not understand the implications of entering into the contract.
c) Disqualified persons:
If a person is disqualified by the law in respect of his capacity to contract, then the contract entered into by such a person
cannot be enforced. For example, a person might have been declared as insolvent under the Insolvency law. As long as the
person continues to be undischarged insolvent, he cannot enter into contract.
2. PARTNERSHIP FIRM
‘Partnership Firm’ is another entity with which a Banker deals with in the course of his business. Partnership firm is governed
by Indian Partnership Act 1932. A partnership is the relation between persons who have agreed to share the profits of a
business, carried on by all or any of them acting for all. The relationship between partners is governed by partnership deed
which can be written or unwritten.
Legal Position of a partnership:
A partnership is not distinct from its partners. The liability is joint and several. It means that they responsible for the act of the
partnership firm in their capacity as partner as well as individual. The Indian Partnership Act 1932, provides for registration of
the partnership and it is necessary that a Banker dealing with partnership firm, should verify as to whether the firm is
registered or not. This would help him to know all the names of the partners and their relationship.
Authority of the Partners:
Section 19 of the Indian Partnership Act 1932 deals with the implied authority of a partner as an agent of the firm; and
Section 22 deals with the mode of doing act to bind the firm. In view of the provisions of Section 19 and 22, it should be
noted that the act of a partner shall be binding on the firm if done:
a) in the usual business of the partnership;
b) in the usual way of the business; and
c) as a partner, i.e. on behalf of the firm and not solely on his own behalf.
Business of partnership firm: Mode of Operation
Rights and duties of the partners are determined by Partnership Deed. It provides for opening of bank accounts, borrowing
powers, signing of cheques etc. Generally there may be a managing partner, who conducts business on behalf of other
partners. While dealing with partnership firms it should be ensured that business is conducted as per partnership deed. If the
Managing Partner does not have power to conduct certain transaction, then it should be ensured that consent of all partners
is obtained.

Partnership firm and transaction in immovable property:
Section 19 of the Indian Partnership Act 1932 states that a partner cannot effect transfer of immovable property of the firm
unless expressly authorized. While taking mortgage security of firm’s immovable property, it should be ensured that the
partner creating mortgage is expressly authorized to create mortgage. If the partner has no authority to create mortgage,
then the banker should ensure that all the partners jointly create the mortgage.
Insolvency of the firm:
The banker on receiving notice of insolvency of the firm must immediately stop further transaction in the account irrespective
of the fact that the account is in credit or debit. In case there is a credit balance, and the banker does not intend to set off the
same against the dues in any other account, then the balance has to be handed over to the official receiver appointed by the
Court or as directed by the Court. In case the account is in debit then the banker would be required to prove his debt before
the Court and thereafter will be entitled to receive the same from the Official Receiver either in full or as per the dividend
declared by the Court.
Insolvency of the Partner:
If at the time of insolvency of one of the partners the firms account is in credit then the same can be operated by the other
partners, but the banker should obtain a fresh mandate and all previous cheques issued by the insolvent partner may be paid
provided the other partners confirm the same. In case the account is in debit then further transactions in the account should
be stopped.
Death of a partner:
In case of death, the principles, as stated* in the case of Insolvency of a partner, applies.
3. JOINT HINDU FAMILY (JHF) or HINDU UNDIVIDED FAMILY (HUF)
Joint Hindu Family is an entity of customary law among Hindus. This is governed by personal laws. In Bengal and other parts
of erstwhile Bangal province, a Hindu Undivided Family is governed by Dayabhaga Law. In other parts of India, it is governed
by Mitakshara Law.
Constitution of a Joint Hindu Family:
A Joint Hindu Family consists of male members descended lineally from a common male ancestor, together with their
mothers, wives or widows and unmarried daughters bound together by fundamental principle of family relationship. The Joint
Hindu Family is purely a creature of Law and cannot be created by act of parties.
Management of Business of Joint Hindu Family (JHF):
In a JHF the senior member of the family is entitled to manage the family properties. He is called “Manager” or “Karta. The
Karta or Manager occupies a position superior to that of the other members
n so far as he manages the family property or business or looks after the family interests on behalf of the other members.
The Managership of the JHF property comes to a person by birth and he does not owe his position as Manager on consent
of the other co-parceners. The liability of the Karta is unlimited, whereas the liability of the co-parceners is limited to their
shares in the Joint Family Estate.
Powers and Duties of the Manager
A Manager or Karta of a Joint Hindu Family has the following powers and duties:
Powers:
i. Right to possession and management of the joint family property.
ii. Right to income from the joint family property
iii. Right to represent the joint family
iv. Right to sell the joint family property for family purpose.
Duties:
v. Duty to run the family business and manage the property for the benefit of the family
vi. Duty to account the income from the joint family business and property.
Banker and his dealings with Joint Hindu Family
i. A banker dealing with JHF, should know the Karta of the family.
ii. Banker should ensure that Karta of the Joint Hindu Family deals with the Bank and borrows only for the benefit of Joint
Family Business.
iii. The application to open the account must be signed by all the members and all adult members should be made jointly and
severally liable for any borrowings or if the account gets overdrawn.
4. COMPANIES
A Company is another type of customer, which a banker deals with. A company is a juristic person created by law, having a
perpetual succession and Common Seal distinct from its members. A Company depending upon its constitution is governed
by various laws.
Basic Law Governing Company:
In India Companies are governed by Companies Act, 1956. All the companies are required to be registered under
Companies Act, 1956.
The Business and objectives of a company are known by two important documents called Memorandum of Association and
Article of Association. Therefore for the formation of company these documents are essential.
Memorandum of Association

The Memorandum of Association is charter of a company. Its purpose is to enable the shareholders, creditors and those
dealing with the company to know its permitted range of business.
Memorandum of Association of a company contains the following details among others:
i. Name of the company
ii. Place of the business of the company
iii. Objects of the Company
iv. Name of the first Directors of the company
v. Share capital of the company
Articles of Association
Articles of Association are rules and regulations governing the internal management of the company. They define the powers
of the officers of the company. Articles of Association are subordinate to Memorandum of Association and it contains the
following details among other things:
i. Number of Directors of the company
ii. Procedure for conducting meeting of shareholders, Board of Directors etc.
iii. Procedure for transfer and transmission of shares.
iv. Borrowing powers of the company
v. Officers of the company and other details
Types of Companies:
A. Private Company:
According to Section 3 (1) (iii), a Private Company is one which contains following provisions in its Articles of Association:
i. Restriction on the right to transfer its shares.
ii. Limitation on number of members to fifty excluding the people, who are employees and ex-employees of the company.
iii. Prohibition as to participation by General public in its capital requirements.
B. Public Company:
A Public Company is one which is not a Private Company i.e. a Public Company does not have any restrictions of the Private
Company and its main features are as follows:
i. Shares are freely transferable.
ii. No restriction on number of members
iii. Public at large can participate in its share capital.
The Public Company can be further classified as
(a) Limited Liability Company – Liability is limited to the share in capital.
(b) Unlimited Liability Company – Liability of the members is unlimited
(c) Limited by Guarantee - liability is limited to the amount guaranteed
C. Government Company:
A company in which Central Government or State Government or both has not less than 51 % of share capital.
D. Statutory Companies:
There are some companies established by an act of Parliament. These are called Statutory Corporations. For example, State
Bank of India is established under State Bank of India Act, 1955. Nationalised Banks are established under Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1970.
E. Other Companies:
Besides the above, Companies Act, 1956 classifies companies on the basis of time, place of incorporation and nature of
working into the following categories:
i.Existing Company:A company existing already before the coming into force of Companies Act, 1956.
ii.Foreign Company: A company registered in a Foreign Country.
iii.Holding Company: A company owning more than 50 % of share capital in another company or a company which can
appoint majority of Directors in another company.
iv. Subsidiary Company: it can be seen that when there is a holding company the other company is called Subsidiary
Company.
5. OTHER TYPE OF CUSTOMERS
(i) Clubs, Societies, Schools:
These bodies are usually governed by Companies Act or co-operative Societies Act and function within the ambit of those
laws. For example clubs can be registered either under the Companies Act, 1956 or under Societies Registration Act or Co-
operative Societies Act. In the case of lending to these bodies a Banker should study the bye-laws, rules and regulations
applicable to them and ascertain the legality of lending to them.
(ii) Trusts:
These are governed by Indian Trusts Act, 1882, if they are Private Trusts and if they are public trust, they are governed by
Public Trusts Act or Religious and Charitable Endowments Act, if they are Trusts of Hindus and in the case of Muslims they
are governed by Wakf Act.
A Banker dealing with Trusts should acquaint himself with the respective laws applicable to them and shall ensure that his
lending is within the ambit of those laws.

(iii) Trustee:
The Trusts are managed by Trustees. The powers and duties of the Trustees are either provided in Trust deed or regulated
by the respective laws applicable to such Trusts. For example in the case of Public Trusts, Charity Commissioners, or
Commissioner of Endowments appointed by Government has power to supervise the activities of the Trusts. The Trustee of
Muslim Wakf is called Mutawali and his conduct and function is regulated by Wakf Board. Therefore a Banker dealing with a
Trust should ensure that all the permissions required for taking a loan is obtained from the respective Government authorities.
Know Your Customer (KYC) Guidelines
The objective of KYC guidelines is to prevent banks from being used, intentionally or unintentionally, by criminal elements for
money laundering activities. KYC procedures also enable banks to know/understand their customers and their financial
dealings better which in turn help them manage their risks prudently. KYC, the principal means of identifying the customer, is
the platform on which banking system operates to control financial frauds, identify money laundering and suspicious activities,
and for scrutiny and monitoring of large value transactions. The guidelines are also applicable to foreign currency
accounts/transactions.
Banks should frame their KYC policies incorporating the following four key elements:
i. Customer Acceptance Policy
ii. Customer Identification Procedures
iii. Monitoring of Transactions and
iv. Risk Management.
Objectives:
•To establish procedures to verify the bonafide identification of individuals/corporates opening and account
•To establish processes and procedures to monitor high value transactions and transactions of suspicious nature in accounts
• To establish systems for conducting due diligence and reporting of such transactions.
KYC Policy
“Know Your Customer” (KYC) procedure should be the key principle for identification of an individual/corporate opening an
account with regard to their photo identity and address proof. Regarding this the prospective customers have to submit
necessary prescribed documents. If any customer finds it difficult in providing the said documents, accounts can be opened
in genuine cases subject to fixing the ceilings on the maximum amount of balances to be kept in all his accounts at any point
of time and total credits into all accounts put together in a year. This applies to accounts to be opened basing on verification
through an introductory reference from an existing account holder/a person known to the bank. For existing accounts
thorough KYC should have been fulfilled. And the banks should have in place policies that establish processes and
procedures to monitor transactions of suspicious nature in accounts and have systems of conducting due diligence and
reporting of such transactions.
Ceiling and Monitoring of Transactions
• The banks are required to keep a close watch of cash withdrawals and deposits for Rs 10 lakhs and above in deposit, cash
credit or overdraft accounts and keep record of details of these large cash transactions in a separate register.
• Issuance of travellers cheques, demand drafts and telegraphic transfers for Rs 50,000 and above only by debit to
customers’ accounts or against cheques and not against cash. The applicants for these transactions for amount exceeding
Rs 50,000 should affix their PAN on the application forms.
• Repayment of deposits of Rs 20,000 and above should be through the accounts or crossed DD/cheques.
• In case of foreign organizations, among other documents, a certificate to the effect that the organization is registered with
the GOI to adhere to Foreign Contributions Regulation Act (FCRA, 1976) has to be obtained at the time of opening of
accounts.
• In some cases, those belonging to low income group both in urban and rural areas are not able to produce such documents
to satisfy the bank about their identity and address and address. This would lead to their inability to access the banking
services and result in their financial exclusion. Accordingly, the KYC procedure also provides for opening accounts for those
persons who intend to keep balances not exceeding Rs 50,000/- in all their accounts taken together and the total credit in all
the accounts taken together is not expected to exceed Rs.1,00,000/- in a year. In such cases, if a person who wants to open
an account and is not able to produce necessary mandated documents, banks should open an account for them, subject to
introduction from another account holder who has been subjected to full KYC procedure. The introducer’s account with the
bank should be at least six months old and should show satisfactory transactions. Photograph of the customer who proposes
to open the account and also this address need to be certified by the introducer. Or any other evidence as to the identity and
address of the customer to the satisfaction of the bank. As a measure of good customer service we can alert the customer
when he crosses the limit of Rs.40,000/- balance in all accounts put together or Rs.80,000/- credit summations in all
accounts put together to comply with the full KYC norms by submitting the necessary documents or otherwise the operations
in the account shall have to be stopped.
Transactions of Suspicious Nature and Reporting
Branches of banks are required to report all cash transactions of Rs 10 lakhs and above as well as transactions of suspicious
nature with full details in fortnightly statements to their controlling offices. Besides, controlling offices are also required to
appraise their Head Offices regarding transactions of suspicious nature. The guidelines apart from laying emphasis on record
keeping, training of staff and

management for strict adherence to KYC norms also stipulates banks to lay down a policy for adherence to the above
requirements comprising:
a. Internal Control Systems
b. Terrorism Finance
c. Internal Audit/Inspection
d. Identification and Reporting of Suspicious Transactions
e. Adherence to Foreign Contribution Regulation Act (FCRA), 1976
Threshold Limit
At the time of opening the account based on customer’s profile, a threshold limit of transactions is to be determined. As it is
proposed to report all the transactions of Rs. 10 lakhs and above to the controlling authorities under no circumstances, their
threshold limit should exceed the limit of Rs.10 lakhs. The threshold limit should be 25% of the annual income in case of
individuals and one month turnover in the case
of business enterprise.
Record Keeping
All financial records, which have been reported to the controlling authorities under suspicious transactions list, should be
retained for at least 10 years after the date of transaction.
Internal Control System
• Ensure to train all the staff of KYC norms
• Strengthening the internal audit system
• Controllers should periodically monitor the implementation of KYC norms.
Closure of accounts
Where the bank is unable to apply appropriate KYC measures due to non-furnishing of information and/or non-cooperation
by the customer, the bank should consider closing the account or terminating the banking/business relationship after issuing
due notice to the customer explaining the reasons for taking such a decision. Such decisions need to be taken at a
reasonably senior level.
Conclusion
The KYC guidelines impose greater responsibility on different functionaries in the bank. Money laundering done through
bank would not only affect its image but also the officials who were used as instruments in the process. Properly followed,
KYC guidelines would provide sufficient protection to banks against financial frauds and money laundering. However, we
need to ensure adherence to KYC guidelines without inconveniencing the customer and by convincing them that these are
well intended in their long-term interests

Banker Customer POSITION OF BANK POSITION OF CUSTOMER
Relationship TYPE OF
TRANSACTION
1 Deposit Accounts, Debtor Creditor
CC (with Credit
Balance)
2 O.D, CC, Loan Creditor Debtor
Accounts (with
Debit)
3 Collection of Agent Principal
Cheques
4 Sale of Purchase of Agent Principal
Securities
5 Issuing/Purchase of Debtor Creditor
Draft by purchaser
6 Payee of Drafts at Trustee Beneficiary
Paying Branch
7 Mail Transfers, TT c Agent Principal
8 Complying with SI Agent Principal
9 Providing Various Agent Principal
Services to non
Account Holders
10 Cheques deposited Trustee Beneficiary
pending Instructions
for disposal thereof
11 Safe Custody of Bailee Bailor
Articles
12 Leasing of Locker Lessor/Licensor Lessee/Licensee
13 Mortgage of Mortgagee Mortgagor
Immovable Property
14 Pledge of Pledgee Pledgor
Securities/Shares
15 Hypothecation of Hypothecatee Hypothecator
Securities
16 Sale/Purchase of Agent Principal
Shares etc
17 Maintaining Agent Principal
Currency
Chest(RBI’s
property)
18 FDR with Bank after Debtor Creditor
maturity
19 Wrong credit given Beneficiary Trustee
by the bank where
the amount has not
yet been recovered
e) The bank is bound to share information to the public under the provisions of Right to Information Act 2005 except certain
categories of information as mentioned in section 8 of the same act such as information adversely affecting the national
interest, Information barred from publication by courts, Information which would cause a breach of privilege of Parliament,
Information which would impede the investigation/ prosecution, Personal Information etc.
Legal Issues Relevant For Bankers -Important Acts Pertaining to Banking Objectives To list out few important Acts in the
context of banking. Need to know about the Acts. It is necessary for bankers to be aware of legal aspects pertaining to
various activities undertaken by them. Over a period of time various legal issues pertaining to above Acts have been settled
in the court of law.
Relevant Acts
Some important Acts which are relevant for day to day functioning of Banks are:
The Indian Contract Act, 1872 The Companies Act, 1956
The Negotiable Instruments Act, 1881 The Limitation Act, 1963
The Transfer of Property Act, 1882 Bankers Book of Evidence Act 1891
The Indian Stamp Act, 1899 Banking Regulation Act 1949
The Evidence Act, 1872 The Consumer Protection Act 1986
The Indian Registration Act, 1908 Partnership Act 1932
The Sale of Goods Act, 1930 Prevention of corruption Act 1947

Right to information Act
Reserve Bank of India Act 1934
SBI Act 1955

Indian Contract Act: This Act defines as to what a contract is and the conditions it must satisfy to qualify
as a contract. A contract is an agreement enforceable by law. Two important aspects for the formation of
a contract are:
1. An agreement
2. The agreement should be enforceable by law
Negotiable Instruments Act:
This Act defines the law relating to promissory notes, bills of exchange and cheques and it also deals with
‘negotiation, noting and protesting’ etc.
Transfer of Property Act:
This Act defines the law relating to the transfer of property by act of parties, sale, mortgage and lease of
immovable property.
Indian Stamp Act: This Act relates to stamping of documents. It defines documents chargeable with
stamp duty and deals with mode of payment of stamp duty etc.
Indian Evidence Act:
This act is concerned with evidence – oral/ documentary and their admission/ rejection, relevancy of facts,
witnesses etc.
Few Relevant 20th century Acts
Here are few Acts passed between 1908 and 1963 that hold relevance for the bankers.
Registration Act, 1908:
This Act takes care of issues related to ‘registerable documents, place and time of registration, effects of
registration and non-registration, duties and powers of registering officers etc.
Sale of Goods Act, 1930:
This Act deals with contract of sale, contract transfer of property, performance of sale contract, rights of
unpaid seller and suits for breach of security etc.
Companies Act, 1956/2013: This Act deals with all issues pertaining to companies.
Limitation Act, 1963: This Act pertains to limitation of suits, appeals and applications, computation of
period of limitation etc.
Bankers Book of Evidence Act 1891:
Bankers books include ledgers, register, accounts etc., which are used in ordinary course of business of
bank. It now includes data in magnetic tape, CDs, Pen drives, or any form of electronic storage and data
in back up. Legal proceedings include any investigation or enquiry under the criminalprocedure code.
Certified copy means a certified copy of any entry in the books of a bank or photo copy as also printout of
any entry stored in a floppy, disc, tape or any other electromagnetic data storage device.
Banking Regulation Act 1949:

The Act defines Banking and various forms of business which a Bank can transact. It stipulates minimum
paid up capital and resources for Banks. It provides guidelines on lending activities of Banks and also
other statutory obligations vested with the Banks.
The Consumer Protection Act 1986: The Act covers transactions in respect of goods and services.
Banking and Insurance services are also. The objective of the act is to provide better protection to the
interest of consumers and also provide speedy and simple redressal to consumer disputes.
Partnership Act 1932:
The Act provides for various legal aspects pertaining to partnership concerns and the authorities,
responsibilities, liabilities of partnership firms and partners thereof.
Prevention of Corruption Act 1947:
The objective of the Act is effective prevention of bribery and corruption. The Act is applicable to
Government servants and public sector employees.
Right to Information Act:
The constitution has given the citizen the right of freedom of speech and expression and this right can be
effectively exercised only if information is available to him. Hence, the Right to Information Act was
passed in 2005.
Reserve Bank of India Act 1934:
The Act defines Scheduled/Non Scheduled Banks. It stipulates Cash Reserve Ratio to be maintained by
a scheduled Bank with RBI. It decides Bank Rate i.e the rate at which RBI rediscounts bills of

exchange/other commercial papers. Under RBI Act Banks should submit data relating to business every
Friday to RBI. Note refund rules have been framed by RBI under this act.
SBI Act 1955
SBI Act prescribes that SBI can carry on all banking business mentioned in B.R Act. The Act stipulates
that the Bank’s Balance sheet to be produced as at 31st March. As per the Act, SBI conducts
Government business as an agent of RBI & also stipulates that the Bank can not lend against its own
shares.
Negotiable Instruments Act – 1881
The Negotiable Instruments Act was passed in 1881. Some provisions of the Act have become redundant
due to passage of time, change in methods of doing business and technology changes. However, the
basic principles of the Act are still valid and the Act has stood test of time. The Act extends to the whole
of India. There is no doubt that the Act is to regulate commercial transactions and was drafted to suit
requirements of business conditions then prevailing.
The negotiable instruments are easily transferable from person to person and the ownership of the
property is passed either by mere delivery in the case of bearer instrument and by endorsement and
delivery in case of order instrument. Transferability is an essential feature of the negotiable instruments. A
negotiable instrument confers absolute and good title on the transferee who takes it for value and without
notice of the fact that the transferor had defective title thereto.
Local usage prevails unless excluded - The Act does not affect any local usage relating to any instrument
in an oriental language. However, the local usage can be excluded by any words in the body of the
instrument, which indicate an intention that the legal relations of the parties will be governed by provisions
of Negotiable Instruments Act and not by local usage. [Section1]. - - Thus, unless specifically excluded,
local usage prevails, if the instrument is in regional language. Bill of exchange and promissory notes
excluded from information Technology Act - Section (1) (4) (a) of Information Technology Act provides
that the Act will not apply to bill of exchange and Promissory Notes. Thus, a bill of exchange or
Promissory Note cannot be made by electronic means. However, cheque is covered under of Information
Technology Act and hence can be made and/or sent by electronic means.
Changes made by Amendment Act, 2002 – (a) Definition of ‘cheque’ and related provisions in respect of
cheque amended to facilitate electronic submission and/or electronic clearance of cheque. Corresponding
changes were also made in Information Technology Act.
(b) Bouncing of cheque - Provisions amended - Provision for imprisonment up to 2 years against present
one year Period for issuing notice to drawer increased from 15 days to 30 days Government Nominee
Directors excluded from liability Court empowered to take cognizance of offence even if complaint filed
beyond one month Summary trial procedure permitted for imposing punishment up to one year and fine
even exceeding Rs 5,000 Summons can be issued by speed post or courier service Summons refused
will be deemed to have been served Evidence of complainant through affidavit permitted Bank’s slip or
memo indicating dishonour of cheque will be prima facie evidence unless contrary proved Offence can be
compounded. The amendments have been made effective from 6-2-2003.
Transferee can get better title than transferor – Normal principle is that a person cannot transfer better
title to property that he himself has. For example, if a person steals a car and sells the same, the buyer
does not get any legal title to the car as the transferor himself had no title to the car. The real owner of car
can anytime obtain possession from the buyer, even if the buyer had purchased the car in good faith and
even if he had no idea that the seller had no title to the car. This provision is no doubt sound, but would
make free negotiability of instrument difficult, as it would be difficult to verify title of transferor in many
cases. Hence, it is provided that if a person acquires ‘Negotiable Instrument’ in good faith and without
knowledge of defect in title of the transferor, the transferee can get better title to the negotiable instrument,
even if the title of transferor was defective. This is really to ensure free negotiability of instrument so that
persons can deal in the instrument without any fear.
Difference between negotiation and transfer/assignment - Difference between “Negotiation’ and
assignment/transfer is that in case of negotiation, the transferee can get title better than transferor, which
can never happen in assignment/transfer. Statutory definition of Negotiable instrument-A “negotiable
instrument” means a promissory note, bill of exchange or cheque payable either to order or to bearer.
Explanations

(i) A promissory note, bill of exchange or cheque is payable to order which is expressed to be so payable
or which is expressed to be payable to a particular person, and does not contain words prohibiting
transfer or indicating an intention that it shall not be transferable.
(ii) A promissory note, bill of exchange or cheque is payable to bearer which is expressed to be so
payable or on which the only or last endorsement is an endorsement in blank.
(iii) Where a promissory note, bill of exchange or cheque, either originally or by endorsement, is
expressed to be payable to the order of a specified person and not to him or his order, it is nevertheless
payable to him or his order at his option. [section 13(1)]. - - A negotiable instrument may be made
payable to two or more payees jointly, or it may be made payable in the alternative to one of two, or one
or some of several payees. [section 13(2)].
Promissory Note - A “promissory note” is an instrument in writing (not being a bank-note or a currency-
note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only
to, or to the order of, a certain person, or to the bearer of the instrument. [Sec 4].
Bill of Exchange – As per statutory definition, “bill of exchange” is an instrument in writing containing an
unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to,
or to the order of, a certain person or to the bearer of the instrument. [Para 1 of section 5]. A cheque is a
special type of bill of exchange. It is drawn on banker and is required to be made payable on demand.
Drawer, Drawee and payee - The maker of a bill of exchange or cheque is called the “drawer”; the person
thereby directed to pay is called the “drawee” [section 7 Para 1]. - - The person named in the instrument,
to whom, or to whose order the money is by the instrument directed to be paid, is called the “payee”
[section 7 Para 5]. However, a drawer and payee can be one person as he can order to pay the amount
to himself. At sight, On presentment, After sight - In a promissory note or bill of exchange the expressions
“at sight” and “on presentment” mean ‘on demand’. The expression “after sight” means, in a promissory
note, after presentment for sight, and, in a bill of exchange, after acceptance, or noting for non-
acceptance, or protest for non- acceptance. [Section 21]. - Thus, in case of document ‘after sight’, the
countdown starts only after document is ‘sighted’ by the concerned party. Stamp duty on Negotiable
Instrument – A negotiable instrument is required to be stamped. Stamp duty on Bill of Exchange and
Promissory Note is a Union Subject. Hence, stamp duty is same all over India.
Hundi – a local instrument – Hundi is an indigenous instrument similar to Negotiable Instrument. The term
is derived from Sanskrit word ‘hundi’ which means ‘to collect’. If it is drawn in local language, it is
governed by local usage and customs.
Provisions in respect of Cheques - A “cheque” is a bill of exchange drawn on a specified banker and not
expressed to be payable otherwise than on demand. ‘Cheque’ includes electronic image of a truncated
cheque and a cheque in electronic form [Section 6]. The definition is amended by Amendment Act, 2002,
making provision for electronic submission and clearance of cheque. The cheque is one form of Bill of
Exchange. It is addressed to Banker. It cannot be made payable after some days. It must be made
payable ‘on demand’. Crossing of Cheque – The Act makes specific provisions for crossing of cheques.
Cheque crossed generally - Where a cheque bears across its face
an addition of the words “and company” or any abbreviation thereof, between two parallel transverse lines,
or of two parallel transverse lines simply, either with or without the words “not negotiable”, that addition
shall be deemed a crossing, and the cheque shall be deemed to be crossed generally. [Section 123]
Cheque crossed specially - Where a cheque bears across its face an addition of the name of a banker,
either with or without the words “not negotiable”, that addition shall be deemed a crossing, and the
cheque shall be deemed to be crossed specially, and to be crossed to that banker. [Section 124].
Payment of cheque crossed generally or specially - Where a cheque is crossed generally, the banker on
whom it is drawn shall not pay it otherwise than to a banker. Where a cheque is crossed specially, the
banker on whom it is drawn shall not pay it otherwise than to the banker to whom it is crossed or his
agent for collection. [Section 126].
Cheque bearing “not negotiable” - A person taking a cheque crossed generally or specially, bearing in
either case the words “not negotiable”, shall not have, and shall not be capable of giving, a better title to
the cheque than that which the person form whom he took it had. [Section130]. Thus, mere writing words

‘Not negotiable’ does not mean that the cheque is not transferable. It is still transferable, but the
transferee cannot get title better than what transferor had.
Electronic Cheque - Provisions of electronic cheque has been made by Amendment Act, 2002. As per
Explanation I(a) to section 6, ‘A cheque in the electronic form’ means a cheque which contains the exact
mirror image of a paper cheque, and is generated, written and signed by a secure system ensuring the
minimum safety standards with the use of digital signature (with or without biometrics signature) and
asymmetric crypto system.
Truncated Cheque - Provisions of electronic cheque has been made by Amendment Act, 2002. As per
Explanation I(b) to section 6, ‘A truncated cheque’ means a cheque which is truncated during the clearing
cycle, either by the clearing house during the course of a clearing cycle, either by the clearing house or by
the bank whether paying or receiving payment, immediately on generation of an electronic image for
transmission, substituting the further physical movement of the cheque in writing.
Penalty in case of dishonor of cheques for insufficiency of funds - If a cheque is dishonored even when
presented before expiry of 6 months, the payee or holder in due course is required to give notice to
drawer of cheque within 30 days from receiving information from bank.. The drawer should make
payment within 15 days of receipt of notice. If he does not pay within 15 days, the payee has to lodge a
complaint with Metropolitan Magistrate or Judicial Magistrate of First Class, against drawer within one
month from the last day on which drawer should have paid the amount. The penalty can be up to two
years imprisonment or fine up to twice the amount of cheque or both. The offence can be tried summarily.
Notice can be sent to drawer by speed post or courier. Offence is compoundable.
It must be noted that even if penalty is imposed on drawer, he is still liable to make payment of the
cheque which was dishonoured. Thus, the fine/imprisonment is in addition to his liability to make payment
of the cheque. Return of cheque should be for insufficiency of funds - The offence takes place only when
cheque is dishonoured for insufficiency of funds or where the amount exceeds the arrangement. Section
146 of NI Act only provides that once complainant produces bank’s slip or memo having official mark that
the cheque is dishonoured, the Court will presume dishonor of the cheque, unless and until such fact is
disproved.
Calculation of date of maturity of Bill of Exchange - If the instrument is not payable on demand,
calculation of date of maturity is important. An instrument not payable on demand is entitled to get 3 days
grace period.
Presentment of Negotiable Instrument - The Negotiable Instrument is required to be presented for
payment to the person who is liable to pay. Further, in case of Bill of Exchange payable ‘after sight’, it has
to be presented for acceptance by drawee.
‘Acceptance’ means that drawee agrees to pay the amount as shown in the Bill. This is required as the
maker of bill (drawer) is asking drawee to pay certain amount to payee. The drawee may refuse the
payment as he has not signed the Bill and has not accepted the liability.
In case of Promissory Note, such acceptance is not required, as the maker who has signed the note
himself is liable to make payment. However, if the promissory note is payable certain days ‘after sight’
[say 30 days after sight], it will have to be presented for ‘sight’. If the instrument uses the expressions “on
demand”, “at sight” or “on presentment”, the amount is payable on demand. In such case, presentment
for acceptance is not required. The Negotiable Instrument will be directly presented for payment.
Acceptance and payment for honour and drawee in need - Provisions for acceptance and payment for
honour have been made in case when the negotiable instrument is dishonoured. Bill is accepted for
honour when it is dishonoured when presenting for acceptance, while payment for dishonour is made
when Bill is dishonoured when presented for payment.
Negotiation of Instrument - The most salient feature of the instrument is that it is negotiable. Negotiation
does not mean a mere transfer. After negotiation, the holder in due course can get a better title even if
title of transferor was defective. If the instrument is ‘to order’, it can be negotiated by making endorsement.
If the instrument is ‘to bearer’, it can be negotiated by delivery. As per definition of ‘delivery’, such delivery
is valid only if made by party making, accepting or endorsing the instrument or by a person authorised by
him. An instrument can be negotiated any number of times. As per section 118(e), endorsements
appearing on the negotiable instrument are presumed to have been made in the order in which they
appear on the instrument, unless contrary is proved. [There is no mandatory provision to put date while
signing, though advisable to do so]. Section 118(d) provides that there is presumption that the instrument

was negotiated before its maturity, unless contrary is proved. As per section 60, Bill can be negotiated
even after date of maturity by persons other than maker, drawee or acceptor after maturity. However,
person getting such instrument is not ‘holder in due course’ and does not enjoy protections available to
‘holder in due course’.
Liability of parties - Basic liability of payment is as follows –
(a) Maker in case of Promissory Note or Cheque and
(b) Drawer of Bill till it is accepted by drawee and acceptor after the Bill is accepted. They are liable as
‘principal debtors’ and other parties to instrument are liable as sureties for maker, drawer or acceptor, as
the case may be. When document is endorsed number of times, each prior party is liable to each
subsequent party as principal debtor. In case of dishonour, notice is required to be given to drawer and all
earlier endorsees. Presumptions as to negotiable instruments - Until the contrary is proved, the following
presumptions shall be made :—
(a)of consideration - that every negotiable instrument was made or drawn for consideration, and that
every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted,
indorsed, negotiated or transferred for consideration;
(b)as to date - that every negotiable instrument bearing a date was made or drawn on such date;
(c)as to time of acceptance - that every accepted bill of exchange was accepted within a reasonable time
after its date and before its maturity;
(d)as to time of transfer - that every transfer of a negotiable instrument was made before its maturity;
(e)as to order of endorsements - that the endorsements appearing upon a negotiable instrument were
made in the order in which they appear thereon;
(f)as to stamps - that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course - that the holder of a negotiable instrument is a holder in due
course: provided that, where the instrument has been obtained from its lawful owner, or from any person
in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or
acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that
the holder in due course lies upon him. [Section 118]
Right to Information Act
The Government of India has enacted ‘Right to Information Act 2005” to provide for setting out the
practical regime of right to information for citizens to secure access to information under the control of
Public Authorities in order to promote transparency and accountability in the working of any public
authority.
What is Right to Information?
The right to information includes an access to the information which is held by or under the control of any
public authority and includes the right to inspect the work, document, records, taking notes, extracts or
certified copies of documents/records and certified samples of the materials and obtaining information
which is also stored in electronic form.
The Information which is exempt from disclosure
The Act provides under Sections 8 and 9, certain categories of information that are exempt from
disclosure to the citizens. The public may also refer to the relative sections of the Act before submitting a
request for information.
Recent Developments:
Aadhaar Number and Permanent Account Number (PAN) are mandatory for all
account openings of individuals other than Basic Savings Deposit Account / PMJDY
account. However, account can be opened provided he/she submits Form-60 as
defined in Income Tax Rules 1962. With regard to companies, partnership firms,
trusts and unincorporated associations or bodies of individuals, Bank has to obtain
Aadhaar number and PAN or Form 60 from the managers, officers or employees
holding an attorney to transact on the company/firm/trust/body. This is in addition
to the documents to be obtained from customers, based on their constitution like
Certificate of Incorporation/Memorandum & Articles of Association/Partnership Deed.
In case the customer is not a resident (NRI) or is resident in the states of Jammu &
Kashmir, Assam, Meghalaya and does not submit PAN, the customer to submit copy

of one of the OVD containing details of identity and address, one recent photograph
and such other document including in respect of the nature business and financial
status of the customer as may be required by the Bank.
Similarly, in case the customer is eligible to be enrolled for Aadhaar and obtain a
PAN does not submit the Aadhaar number or PAN at the time of commencement of
account based relationship with the Bank, the customer shall submit the same within
a period of six months from the date of the commencement of the account based
relationship. If the customer fails to submit Aadhaar and PAN within the said period,
the account shall cease to be operational till the time the said requirements are
fulfilled. As per latest guidelines, all the existing customers are required to submit
Aadhaar and PAN on or before 31st March 2018, otherwise the accounts shall lose the
operability.
Central KYC Registry (CKYC-R): Government of India authorized CERSAI to act as
and perform the functions of CKYC records registry which includes receiving, storing,
safeguarding and retrieving the KYC records for all the individual accounts in digital
form. As per the guidelines all reporting entities of Scheduled Commercial Banks
shall furnish the details such as application (for the purpose of signature),
Photograph of the applicant and KYC documents (POI/POA) in electronic format to
CERSAI within 3 days from date of opening of the account. All bank branches are
required to upload the KYC data pertain to all new individual accounts opened on or
after 1st January 2017 with CKYC-R.
Money Laundering: It is the process of transferring illegitimate money into
legitimate money, normally follows from activities like human trafficking, sale of
narcotic drugs, illegal dealings in arms and ammunition etc. It is a threat to the
national security and economic activity as it often associates with the financing of
terrorism and also evasion of taxes. GOI introduced “Prevention of Money Laundering
Act, 2002” with an objective to prevent, combat and control money laundering and
to confiscate/seize the property obtained from the laundered money and to deal with
any other issue connected with money laundering in India. Banks are required to
report the following transactions to the Financial Intelligence Unit (FIU), New Delhi.
Report Nature of Transactions
Cash TransactionReports(CTR)
i)All cash transactions of the value of more than `10 lakhs.

ii) Series of cash transactions integrally connected to each other,
which have been valued below `10 lakhs where such series of
transactions have taken place within a month and aggregating
`10 lakhs. iii) All cash transactions where forged or counterfeit
notes or bank notes have been used as genuine and where any
forgery of a valuable security has taken place.
Suspicious Transaction Report (STR)
_ Large cash transactions

_ Multiple accounts under same name
_ Frequent conversion of currency from small to large denomination notes
_ Placing funds in FD and using them as security for multiple loans
_ Large deposits immediately followed by wire transfers
Counterfeit Currency Report (CCR)
As and when counterfeit currency is found at branch/currency

chest, the same is to be informed to FIU and Reserve Bank of

India immediately.
In order to monitor the implementation of KYC/AML guidelines an on-going basis,
RBI directed banks to introduce a system of employing “Decoy Customers” and
conduct surprise checks to evaluate the extent of compliance with KYC/AML norms at
all points where customer acceptance, risk profiling and updating, simple and
enhanced due diligence of customer accounts etc. Based on such checks, banks may
bring in necessary improvements to existing systems besides sensitizing the
employees to pay required attention to comply the guidelines.
Preservation of Records: As per PML Act 2009, branches are required to preserve
all the transactions for at least 10 years from the date of transaction between the
Bank and the client. With regard to KYC documents obtained at the time of opening
and during the course of business relationship are to be preserved for minimum
period of 5 years after the business relationship ended. Reserve Bank of India
directed all banks to implement KYC guidelines for new accounts in 2002 and
subsequently made it mandatory for all accounts including retail investors with
effective from 1st January 2011.
The Four Pillars of an AML compliance program are as under:
_ Designate a full-time Compliance Officer.
_ Develop systems for transaction monitoring so that unusual transactions are
flagged and evaluated. Bank to conduct risk assessment for its products as
well as customers.
_ Ensure that employees are aware of the Bank’s policies and procedures and
required training is provided to the employees.
_ Conduct independent testing of its AML program and review of its overall
operation.
Non Resident Indians – Products

Non-Resident Accounts can be opened and maintained by Person Resident outside
India, Non-Resident Indians (NRI) and Persons of Indian Origin (PIO). Person
Resident outside India means a person who is not resident in India. It also defined as
a person who has gone out of India, or who stays outside India for the purpose of
employment, carrying on business or vocation or for any other purpose under the
circumstances indicating an uncertain period of stay. Person includes Individual,
HUF, Firm, Company and Association.
Non-Resident Indian means a person resident outside India, who is a citizen of
India or is a person of Indian Origin. Persons who visit India for temporary visit are
treated as Non-Resident Indian. Students going abroad for studies are treated as
Non-Resident Indians.
Person of Indian Origin: A Foreign Citizen (Other than citizen of Pakistan or
Bangladesh) is deemed to be a person of Indian Origin if, he/she at any time held an
Indian Passport or he/she or either of their Parents or Grand Parents was citizen of
India by virtue of the constitution of India or Indian Citizen Act 1955 or he/she is a
spouse of Indian Citizen or a person referred as above.
N R O – Non Resident Ordinary Account
Who Can Open

Any NRI can open NRO account Singly or Jointly with
Residents. However, individuals / entities of Bangladesh and

Pakistan nationals require prior approval of RBI.
Nomination
Nominee can be a Resident or a Non Resident.
Claim Settlement – Resident Nominees – In INR, NRI
Nominee – Repatriable to that Country as per RBI Norms.
Repatriation
Remittances of Balances held in NRO accounts can be allowed
up to USD one million per financial year, for all bona fide
purposes to the satisfaction of Authorized Dealer(AD)
Foreign Tourists visiting India – the balance amount in the
account (other than local credits) can be repatriated at the
time of departure from India provided the account has been
maintained for a period not exceeding six months.
Type of account Current, Savings, Recurring, Term Deposits.
Period of Deposits As applicable to Domestic Deposits.
Rate of Interest As applicable to Domestic Deposits.
Deposit Loans As applicable to Domestic Deposits.
Foreign Currency Loans Not Permitted.
Margin As applicable to Domestic Deposits.
Interest on Dep. Loans Dep. Rate + 2 %.
Applicability of Local
Taxes
TDS on Int. earned @ 30% + Edn. Cess + Service Tax.,
including Interest on SB Deposits, irrespective of the amount
of Interest. Wealth Tax, as applicable.
Transfer of funds Permitted to NRE account within the overall ceiling of USD one
million per financial year
Premature Cancellation
of Deposits As applicable to Domestic Deposits
N R E – Non Resident External Rupee account
Who Can Open

NRI can open NRE account Singly or Jointly with their resident
close relatives. With regard to joint account with resident, the
operation of the account should invariably be “Former or
Survivor” and the former should be NRI. However, individuals /
entities of Bangladesh and Pakistan nationals require prior
approval of RBI.
Nomination
Nominee can be a resident or a Non Resident.
Claim Settlement – Resident Nominees – In Indian Rupee
Non Resident Nominee – Repatriable as per RBI Norms.
Repatriation Balances in the account are Fully Repatriable.
Type of account Current, Savings, Recurring, Term Deposits.
Period of Deposits Term Deposits – Minimum one year and Maximum 10 years.
Rate of Interest Saving Deposits – Deregulated – At present 4.0 %
Term Deposit – As applicable to Domestic Deposits
Deposit Loans Rupee loans to be allowed to depositor / third party without
any ceiling.

Margin 15%
Interest on Loans Dep. Rate + 2 %.
Applicability of Local
Taxes
No TDS on Int. earned.
No Wealth Tax. Free from all Taxes
Transfer of amount
to other types Permitted to NRO / FCNR
Premature
Cancellation
Penalty 1% on premature cancellation is applicable. No Interest
is payable, in case of cancellation before 1 year. Conversion
from NRE to FCNR or vice versa, before maturity is subject to
Penalty. No penalty in case the amount is placed in RFC.
The recent RBI guidelines allowed Non-Resident Indians (NRIs) to operate resident
bank accounts on “either or survivor” basis. Banks may include an NRI close relative
in existing/new resident bank accounts as joint holder with the resident account
holder on “either or survivor” basis, subject to fulfillment of a few conditions. An NRI
can be a joint holder in more than one account. Cheques, instruments, remittances,
cash, card or any other proceeds belonging to the NRI relative shall not be eligible for
credit to this account. Besides, the NRI relative shall operate such account only for
and on behalf of the resident for domestic payment and not for creating any beneficial
interest for himself. Due to any eventuality, if the NRI becomes the survivor of such
an account, it shall be categorized as Non-Resident Ordinary Rupee (NRO) account.
The joint account holder facility may be extended to all types of resident accounts
including savings bank accounts. While extending this facility, the banks should
satisfy itself about the actual need for such a facility and also obtain a declaration,
duly signed by the NRI account holder.
Foreign Currency Non Resident account – F C N R (B)
Who Can Open

Any Non Resident Indian (Individuals of Bangladesh /
Pakistan Nationality require approval from RBI) Singly or
jointly with another Non Resident only.
Nomination
Claim Settlement – Resident Nominees – In Indian rupees
Designated Currency Account can be opened in any freely convertible currency.
Repatriation Fully Repatriable without any limits.
Foreign Currency
Exchange Risk
No Exchange Risk to the customer, in case of repatriation,
as account is maintained in Foreign Currency only.
Type of account Term Deposits only (FDR / Reinvestment)
Period of Deposits Minimum one year and Maximum 5 years
Rate of Interest Linked to LIBOR. Not exceeding LIBOR/SWAP + 200 & 300
basis points for one year and less than 3 years & 3 years and above and 5 years deposits respectively.
360 days is taken for a year for the purpose of interest calculation.
Simple interest is paid for one year deposit. However,

compound interest (half-yearly, 180 days) is paid for
deposits beyond one year.
Deposit Loans Foreign Currency loans to be allowed to depositor / third

party without any ceiling.
Applicability of Taxes No TDS on Interest earned and No Wealth Tax.
Amount Transfer Permitted to NRO and NRE accounts
A/c can be opened at Designated branches. (C Category Branches)
Premature Cancellation
No interest payable and no SWAP cost to be recovered for
the deposits up to USD 10000 or equivalent, where the
deposit is cancelled before the expiry of one year. However,
SWAP cost to be recovered in case of deposits above USD
10000 or its equivalent. Cancellation of the deposit for the
purpose of renewal in the same currency, same type of
deposit/RFC, no SWAP cost is to be recovered. If the
deposit is cancelled after one year, applicable rate is to be
paid without Penalty. If the withdrawal for any other reason
applicable interest with 1% penalty is to be levied.
Note: All branches are authorized to accept FCNR (B) deposits. Since the exchange
risk is borne by the bank, branches are required to report all FCNR transactions
(openings, closures, interest payments, transfers etc.,) to Investment & International
Banking Division (IIB), Mumbai on the same day.
R F C – Resident Foreign Currency Accounts
Who Can Open

Non Resident Indians (NRI) returning to India who have been
NRIs for a continuous period of not less than one year.
NRIs returning to India for permanent stay in India.
Sources of funds
Foreign Exchange received as pension / superannuation /
other benefits from employers abroad. Realization of assets
held abroad. Foreign Exchange acquired as gift or inheritance
from person who was a NRI. Foreign Exchange acquired or
received or any income arising or accruing there on which is
held outside India by any person in terms of general or
specific permission granted by RBI.
Joint Accounts Allowed with another eligible person/s or with resident close
relative (Former or Survivor)
Types of accounts Savings, Current, Term Deposits.
Period of Term Dep. As applicable to FCNR B Accounts. Min 1 year Max 5 years
Currency Pound Sterling, US Dollar, Euro, Australian Dollar, Canadian
Dollar
Nomination
Claim Settlement – Resident Nominees – In Indian rupees
RFC Domestic Account
Who Can Open Any person resident in India

Sources of funds
Foreign Exchange acquired in the form of currency notes, bank
notes, cheques, drafts, and traveller cheques. Payment /
honorarium / gift for services rendered in India / abroad.
Unspent amount of foreign exchange acquired by him from an
authorized person for travel abroad. Gift from close relatives as

defined in sec. 6 of the company act 1956. Proceeds of
Insurance policy claims / maturity / surrender values settled in
foreign currencies.
Joint Accounts Not permitted
Types of accounts Current Account / Savings Bank
Period of Term Dep. Term Deposits are not permitted to be opened

Currency Pound Sterling, US Dollar, Euro, Australian Dollar, Canadian
Dollar
Interest No Interest on Current Account. Banks have discretion to fix
their own interest rates on Savings Deposits
Loan & Over drafts Not permitted.
Exchange Earner’s Foreign Currency Accounts (EEFC)
Who Can Open

All Categories of Foreign Exchange Earners such as Individuals,
Companies etc., who are resident in India, may open EEFC account
with 100% of their Forex earnings. Resident Individuals are permitted
to include his close relative as a joint holder, however, the joint
holder is not allowed to operate the account during the life time of
Purpose
Authorized Dealers (AD) are allowed to open, hold and maintain
foreign currency denominated accounts for the purpose of transacting
foreign exchange business and other matters of the account holder.
The accounts can be maintained with one or more Ads.
Currency The account may be maintained in the currency of the remittance or
any other permitted currency at the option of the depositor.
Credit facility No credit facility, either fund or non-fund based should be permitted
against the security of the balances held in the EEFC accounts.
Type of
account
EEFC accounts should be in the form of non-interest bearing current
accounts only. Cheque book facility is permitted.
Interest No Interest is payable
Nomination Nomination facility is permitted like any domestic account. Nominee
can be Resident Indian only
Limit up to
which foreign
currency may
be credited
A person resident in India may credit to the EEFC account 100% from
out of the foreign exchange earnings
Permissible
credits to
EEFC accounts
Inward remittance through normal banking channels, other than the
remittance received pursuant to any undertaking given to the
Reserve Bank or which represents foreign currency loan raised or
investment received from outside India, or those received for meeting

specific obligations by the account holder.
Payment received in foreign exchange by a unit in Domestic Tariff
Area (DTA) for supplying goods to a unit in Special Economic Zone
out of its foreign currency account.
Payment received by an exporter from an account maintained with
AD for the purpose of counter trade, in accordance with the approval
granted in terms of regulation 14 of FEMA (Export of goods &
Services) Regulations 2000.
Advance remittances received towards export of goods / services.
Payments received towards export of goods/ services from India, out
of funds representing repayment of state credit in USD held in the
account of Bank for foreign economic affairs, Moscow with an AD in
India.
Professional Earnings including Director’s fees, consultancy fees,
lecture fees, honorarium and similar other earnings received by a
professional by rendering services in his individual capacity.
Interest earned on the funds in the account.
Re credit of unutilized foreign currency earlier withdrawn. However,
the amount withdrawn in rupees shall not be eligible for conversion
into foreign currency and for re-credit to the account.
Amount representing repayment of loans/ advances granted to the
account holder’s importer customer. Representing the disinvestments proceeds received by the resident
account holder on conversion of shares held by him to ADRs / GDRs

under the sponsored ADR / GDR scheme approved by the Foreign
Investment Promotion Board of Govt. of India.
Permissible
debits to EEFC account Payment outside India towards any current account transactions in
terms of FEMA Current Account Transaction Rules 2000 and towards a
capital account transaction Permissible under FEMA (Permissible
Capital Account Transactions) Regulations 2000.
Payment in foreign exchange towards cost of goods purchased from
100% EOU or a Unit in EPZ/STP/Electronic Hardware Technology
Park.
Payment of Customs Duty in accordance within the provisions of
Export Import Policy of Central Government.
Trade related loans/ advances, by an exporter holding such account
to his importer customer outside India subject to compliance with
FEMA (Borrowing & Lending in Foreign Exchange) Regulations 2000.
Payment in foreign exchange to resident Indian for supply of goods /
services including payment for airfare and hotel expenditure.
Branches may permit their export constituents to extend trade
related loans / advances to overseas importers out of their EEFC
balance without any ceiling subject to compliance of provisions of
Notification no. FEMA 3 / 2000 as amended from time to time.
Branches may permit exporters to repay packing credit advances
whether availed in rupee or in foreign currency from balances in their
EEFC accounts and / or rupee resources to the extent exports have
actually taken place.
The balances in EEFC accounts may be allowed to be credited to NRE
/ FCNR – B account at the option / request of the account holders
consequent upon change of their residential status to Non – Resident.
Conversion
into Rupee
Funds
There is no restriction on withdrawal in rupees of funds held in EEFC

account. Branches should send the request to Investment &
International Banking (IIB), Mumbai by e-mail / fax, for conversion
of rupee funds and can take the conversion rate along with reference
no.
Loans to NRIs – Against Deposits: Advances against FCNR/NRE deposit to the
depositor himself should be granted only under his specific request for any purpose,
except for the purpose of relending or carrying on agriculture/plantation activities or
for investment in real estate business including direct investment by way of capital
contribution to Indian firm/companies and for acquisition of residential flats/houses
on non-repatriable basis. In case of loans to third parties against NRI deposits,
normally the relative documentation should be done at the branch from where the
loan is being sought by the NRI depositor. The loan should be granted only when the
depositor himself executes the loan documents in the presence of the bank officials
and witness acceptable to the bank. Advances to third parties against such deposits
should not be granted on the basis of Power of Attorney. Banks are allowed to
sanction Rupee loans in India or Foreign currency loans in India/outside India to the
depositors or to third parties against NRE/FCNR (B) deposits without any ceiling
subject to usual margin requirements. Further, the facility of premature withdrawal
of NRE/FCNR deposits shall not be available where loans against such deposits are
availed. The loan amount is to be credited only to NRO account of the depositor but
not to any other account. Advances granted can be repaid by foreign inward
remittances, or transfer from NRE/FCNR accounts, or maturity proceeds of the
deposit, or local rupee sources held in NRO account. The interest rates to be levied
on such loans are as under:
No Category Interest Rate

1
Loan to depositor and repayment through
inward remittance or adjustment of deposit or
transfer of funds from NRE/FCNR deposits
Deposit Rate + 2%
2 Loans to depositor – Repayment by rupee
funds in NRO accounts Deposit Rate + 3%
3 Loans to third parties – Repayment by rupee
funds (less than one year) MCLR + 5%
4 Loans to third parties – Repayment by rupee
funds (one year & above and up to 3 years) MCLR + 5.75%
In case the rate of interest payable on NRE/FCNR deposit held as security is Nil due
to premature closure before the expiry of minimum period i.e. one year, the rate of
interest on the loans against such deposit is Base Rate + 7%.
Diamond Dollar Account Scheme in terms of which firms and companies dealing
in purchase/sale of rough or cut and polished diamonds/precious metal jewellery
plain, minakari and/or studded with/without diamond and/or other stones, with a
track record of at least 2 years in import/export of diamonds/coloured gemstones/
diamond and coloured gemstones studded jewellery/plain gold jewellery, and having
an average annual turnover of `3 crore & above during preceding three licensing
years, are allowed to open Diamond Dollar Accounts (DDA). RBI issue DDA on a
case-to-case basis, subject to the following terms and conditions:
_ Opened in the name of the exporter and maintained in US Dollars only.
_ It should be in the form of current account and no interest should be paid on the
balance held in the account.
_ No intra-account transfer should be allowed between the DDAs.

_ Not permitted to open and maintain more than 5 DDAs.
_ The balances held in the accounts shall be subject to CRR / SLR requirements.
_ Exporter firms and companies maintaining foreign currency accounts (excluding
EEFC accounts) are not eligible to open Diamond Dollar Accounts.
The permissible credits in the accounts are amount of pre-shipment and postshipment
finance availed in US Dollars; Realization of export proceeds from
shipments of rough, cut, polished diamonds and diamond studded jewellery; and
Realization in US Dollars from local sale of rough, cut and polished diamonds. The
permissible debits in the accounts are Payment for import/purchase of rough
diamonds from overseas/local sources; Payment for purchase of cut and polished
diamonds, coloured gemstones and plain gold jewellery from local sources; Payment
for import/purchase of gold from overseas / nominated agencies and repayment of
USD loans availed from the bank. Transfer to rupee account of the exporter.
Investment opportunities to NRIs: The permitted investment opportunities to
NRIs in India are Government Securities, Company Deposits, Units of Mutual Funds,
Company Shares/Debentures, Registered Chit Funds, Immovable property and Loans
to residents. The investment can be under repatriation or non-repatriation basis.
However, NRIs are prohibited from making investments in any entity, which is
engaged in the activities such as Agricultural or Plantation activities, Real Estate
business, Construction of Farm Houses without RBI`s permission. Whenever the
investments are allowed with repatriation benefits, the funds for the purpose should
be received by inward remittances from abroad or from investor’s NRE/FCNR
accounts. While funds in NRO accounts could be used in respect of investments on
non-repatriation basis
Banking Related Laws
Introduction to SARFAESI Act, 2002

1. Banks and Financial institutions lend money by obtaining security, except for the category
of clean loans. The security obtained is to act as a protection for the money advanced and in
the case of need, the money can be realised by the sale of securities.
2. The lender's rights over the securities, both moveable and immoveable, for realisation of
the amount advanced, were limited and less effective since they were required to take help of
the legal system which was taking unduly long time to complete prior to the passing of the
SARFAESI Act, 2002. This Act introduced major changes in the legal framework for the
recovery of dues by laying hands on the securities.
3. The Act is a major step in financial sector reforms. It has brought a legal framework for the
following important activities in the credit market:
(a) Securitisation of financial assets.
(b) Reconstruction of financial assets.
(c) Recognition of any 'interest' created in the security for due repayment of a loan as a
'security interest', irrespective of its form and nature but when it is not in the possession of
the creditor.
(d) Power to enforce such a security for the realisation of money due to banks and the
financial institutes in the event of a default, without the intervention of the Courts.
(e) Enabling provisions for the setting up a central registry for the purpose of registration of
transactions of securitisation, reconstruction and the creation of the security interest.
4. The Act extends to whole of India including the State of Jammu & Kashmir. It is effective
from 21 June, 2002. The Act is applicable also to housing finance companies whose names
are notified by the Central Government for such applicability.
5. The provisions of the Act, relating to enforcement of the security interest, applies to cases
in which the security interests are created for due repayment of financial assistance. The Act
has presupposed a simple thing, that there is an obligation on the part of the borrowers to

repay loans and if they are unable to repay, then the securities for the loans are liable to be
sold for the recovery of loans. The Act has retrospective application, i.e., it applies for loans
and securities created prior to the Act coming into operation of the Act.
Definitions at SARFAESI ACT, 2002
1. Preamble – An act to regulate Securitisation and reconstruction of financial assets and

enforcement of security interest and for matters connected therewith or incidental thereto
2. Appellate Tribunal – Any person aggrieved by the order passed by DRT can file an appeal
to the authority called as Appellate Tribunal.
3. Asset Reconstruction -
4. Bank – All the banking companies, Nationalised banks, Cooperative banks and RRBs
5. Board – SEBI under SEBI Act 1992.
6. Borrower – granted financial assistance, given guarantee, has
7. Central Registry – All the transactions of asset Securitisation, reconstruction as well as
transactions of creating security interest will have to be registered with this authority.
8. Debt Recovery Tribunal – these tribunals deal with the cases of recovery of debts. Above
Rs. 10 Lakh due to banks and financial institutions.
9. Default
10. Financial Assistance
11. Financial Asset - a claim to any debt or receivables and includes :
1. A claim to any debt or receivables or part thereof whether secured or unsecured, or
2. Any debt or receivable secured by mortgage of or charge on immovable property or
3. A mortgage, charge, hypothecation or pledge of moveable property, or
4. Any right of interest in the security, whether full or part, securing debt, or
12. Financial Institution
13. Hypothecation
14. Non-Performing Asset
15. Originator
16. Obligor – Borrower or any other person liable to pay to the bank
17. Property
18. Qualified Institutional Buyer
19. Reconstruction Company
20. Scheme
21. Securitisation
22. Securitisation Company : The minimum capital requirement is Rs.200 Crore at the time of
registration, and these companies are required to maintain minimum capital adequacy ratio of
15% of total asset acquired or Rs.100 crore whichever is less. It is company registered under
companies act 1956 for the purpose of securitisation. The company also needs registration
with
RBI.
23. Security Agreement means an agreement, instrument or any other document under which
security interest is created.
24. Secured Asset means property on which security interest is created. The powers given by
SARFAESI Act for enforcement of securities are against secured assets only.
25. Secured Creditor
26. Secured Debt means a debt which is secured by any security interest.
27. Secured Interest – Any right, title and interest of any kind whatsoever upon the property
created in favour of any secured creditor is called as secured Interest.
28. Security Receipt
29. Sponsor is a person holding not less than 10% of the paid up equity capital of
securitisation company.

1. When any bank or financial institutions creates a charge against property, with which
authority the transaction will have to be registered under the SARFAESI Act, 2002 – With the
Central Registry
2. When the provisions of SARFAESI Act, 2002 can be invoked for proceeding against the
charged property – When there is default in repayment and the bank declares the account as
NPA.
3. Acquisition of financial asset from the originator is the main function of securitisation
company.
4. If the borrower does not pay within 60 days after notice by the secured creditor the
creditor can take possession of the security.
5. Enforcement of SARFAESI Act only if security is not in possession of the bank and financial
institution.
Regulation of Securitisation and Reconstruction of Financial Assets of

Banks and Financial Institutions
Registration of Securitisation Company Or Reconstruction Company

- can commence or carry business if
1. Obtain certification of registration from RBI
2. It has the owned funds not less than 2 Crores
Cancellation of Certificate of Incorporation
1. The company ceases to carry on the business
2. The company ceases to receive or hold any investment from a qualified institutional buyer.
3. The company fails to comply with any of the conditions subject to which the certificate of
registration was granted
4. Fails to comply with RBI directions.
5. Fails to maintain accounts in accordance with directions issued by RBI.
6. Fails to give accounts and documents to RBI for inspection.
Asset Reconstruction means acquisition of any right or interest of any bank of financial
institution in any financial asset for the purpose of realisation.
Securitisation Company needs registration from RBI for commencement of business.
Right of acquisition of financial asset by Securitisation Company/RC is subject to the prior
agreements or contracts about the asset. (False)
Acquisition of financial asset by Securitisation Company/RC is with the liability also over such
asset. (False)
The four documents involved in the Securitisation Transaction
Offer Document – Full details of financial asset, loan details of bank etc.
Debenture – A debenture for payment of consideration to be paid to the bank or financial
institution for acquisition asset from it.
Agreement – it is with originator to continue to service the assets.
Security Receipt – It is in favour of investors.
Any direction issued by the RBI under SARFAESI Act has Statutory effect and is binding on
the parties concerned.
After application of SARFAESI Act existing companies have to get registered within six months
from commencement of the Act
Enforcement of Security Interest

When Immoveable property is obtained as security by way of Mortgage, for its sale and
realization of money court intervention is required. Similarly in case of moveable property
, except the pledged security, court intervention is required.
The SARFAESI Act empowers bank and financial institutions to enforce securities in the
event of default of borrower without intervention of either civil court or the DRT.Manner and
Effect of Takeover of Management
No Compensation to the directors for loss of office
Right to Prefer Application to DRT

Any person, including borrower, aggrieved by the any of the measures taken by the SC or his
authorised officer for taking possession of the security may apply to the DRT with prescribed
fees within 45 Days.
If application by borrower, he has to deposit 50% of the amount claimed in the notice under
Section 13(2) of the SARFAESI Act.
The DRT has to dispose of the application within 60 Days. If not possible, then DRT has to
record reasons for delay but such delay should not be beyond 4 Months. If any such
application is not disposed within 4 Months, the aggrieved party can prefer an application to
the Appellate Tribunal for seeking early disposal of the application.
Appeal to Appellate Authority
Any person aggrieved by any order by the DRT under can prefer appeal along with the
prescribed fees to the Appellate Tribunal within 30 Days from the date of the receipt of the
order of the DRT. Different fees for borrower’s appeal and appeal by any other than borrower.
The borrower has to deposit 50% of the debt claimed by the SC. The Tribunal has power to
reduce this amount up to 25%.
Right of Borrower for Compensation and Costs
1. If the DRT /AT as the case may be, on the appeal holds that
The possession of secured asset by the SC is not in accordance with the provisions of the Acts
or Rules
The SC should return such secured asset to the concerned borrower, with compensation and
cost as may be determined by DRT/AT.
2. No pecuniary limit is fixed by the Act for the Appellate Jurisdiction.
If any Person contravenes or attempts to contravenes provisions of the SARFAESI Act or rules
there under he shall be punishable with imprisonment for a term which may extend to one
year or with fine or with both.
Section 12 : RBI is statutorily empowered to issue directions to the SC/RC. If any such
company fails to comply with any of the directions issued by the RBI then such company is
punishable with fine not exceeding 5 Lakh rupees for the default. In case of further
continuation of the offence additional fine is up to Rs. 10 thousand per day of default can be
imposed.
Section 31 : Exclusions of possessory securities to which act is NOT APPLICABLE
1. A Lien on any goods, money or security given by or under the Indian Contract Act, 1872.
2. A pledge of moveable within meaning of Section 172 of the Indian Contract Act, 1872.
3. Any conditional sale, hire-purchase or lease or any other contract in which security interest
has been created.
4. Any rights of unpaid seller.
5. Any security interest for securing repayment of any financial asset not exceeding Rs. 1
Lakh rupees.
6. Any security interest created on agricultural land.
Section 20, 21 to 27 that provide for registration of security interest created, satisfaction of
charge created.
Central Registry
Besides the SARFAESI Act following other laws require registration of charge created in the
property.
1. Registration Act, 1908
2. Companies Act, 1956
3. Merchant Shipping Act, 1958
4. Patents Act, 1970
5. Designs Act, 2000
A record shall be maintained at the central register at the head office of the central register in
which transactions relating to
1. Securitisation of Financial Assets
2. Reconstruction of Financial Assets
3. Creation of security interests shall be maintained.

Under the SARFAESI act filing of details of transactions of securitisation, reconstruction and
creation of security interest is required to be filed with the Central Register is 30 days after
the date after the date of transaction or creation of security.
Modification also have to be filled within 30 days
Satisfaction of Charge 30 days
Offences and Penalties OFFENCES
If any person:
1. contravenes, or
2. attempts to contravene, or
3. abets the contravention of the provisions of the SARFAESI Act or rules made thereunder,
he shall be punishable with imprisonment for a term, which may extend to one year or with a
fine
or both.
COGNISANCE OF OFFENCES
Section 30 provides that cognisance of the offence under the SARFAESI Act shall be taken by
the Metropolitan Magistrate or the Judicial Magistrate of First Class only. No Court below rank
than this can take cognisance of such offences.
PENALTIES
Section 23 of the Act provides for filing of the particulars of charge created. Section 24 has
provides for modification of the charge filed and the Section 25 has provides that the
satisfaction of the charge has to be intimated to the central registrar. If the securitisation or
reconstruction company or the secured creditor fails to perform any of the duties as stated
above, the company and the officers concerned for the default, as per provisions of this
section, are punishable with a fine that may extend to five thousand rupees for each day
during which the default continues.
PENALTIES FOR NON-COMPLIANCE OF DIRECTIONS OF RESERVE BANK OF INDIA
Under the Section 12 of the SARFAESI Act, the Reserve Bank of India is statutorily
empowered to issue directions to the securitisation or reconstruction company. If any such
company fails to comply with any of the directions issued by the Reserve Bank of India, then
such company is punishable with a fine not exceeding Rs. 5 lakh for the default. In case of
further continuation of the offence, an additional fine up to Rs. 10,000 per day of the default
can be imposed.
Miscellaneous Provisions
Non-applicability of SARFAESI Act
(i) A lien, on any goods, money or security given by or under the Indian Contract Act, 1872 or
the Sale of Goods Act, 1930 or any other law for the time being in force.
(ii) A pledge of movable, within the meaning of Section 172 of the Indian Contract Act, 1872.
(iii) Creation of security interest in any vessel as defined within the meaning of Section 3(55)
of the Merchant Shipping Act, 1958.
(iv) Creation of security in any aircraft as defined in Section 2 of Aircraft Act 1934.
(v) Any conditional sale, hire-purchase or lease or any other contract in which no security
Interest has been created.
(vi) Any rights of unpaid seller under Section 47 of the Sale of Goods Act, 1930.
(vii) Any properties not liable for attachment or sale under the first proviso to Section 60(1) of
the Civil Procedure Code, 1908.
(viii) Any security interest for securing repayment of any financial asset not exceeding one
lakh rupees
(ix) Any security interest created in agricultural land
(x) Any case, in which the amount due is less than twenty per cent of the principal amount
and
interest thereunder.
 Securities not in possession of the bank or financial institutions are only covered by this act.
 Civil courts not to have jurisdiction, jurisdiction has conferred to DRT and AT.
 Section 36 SARFAESI Act :The action has to be taken within 3 years from date on which a cause o

Purpose, Extent, Definitions, Establishment and Powers
Award means an award passed by the Banking Ombudsman in accordance with this
scheme.
Authorised Representative means a person duly appointed and authorised by a
complainant or a party to an arbitration proceeding, as the case may be, to act on his
behalf and represent him, before Banking Ombudsman.
Banking Ombudsman means any person appointed under the scheme.
Review Authority is the Dy. Governor in charge of Rural Planning and Credit
Department of the RBI, who shall review the award of the Banking Ombudsman and shall
be responsible for implementing any such award as per the scheme.
Settlement means an agreement reached by the parties either by conciliation or
mediation by the Banking Ombudsman
Banking Ombudsman
1. Minimum age of the person 65 years.

2. Appointment may be made for period of 3 years but the same is extendable for 2
years.
3. May be removed by giving three months notice/by paying three months emoluments.
4. Banking Ombudsman is appointed by a committee of 3 Dy. Governers of RBI and the
additional secretary, Finance.
5. The object of introducing the Banking Ombudsman Scheme, 2002 to enable resolution
of complaints relating to banking services.
6. Banking ombudsman resolve the dispute between banks or between bank and its
customer by arbitration reference if both the parties to the complaint agree for such
reference for arbitration and ifvalue of the claim does not exceed Rs. 10 lakhs.
 Procedure For Redressal Of Grievance
Grounds of Complaint
 A Complaint on any of the following grounds alleging deficiency in banking service may
be filed with the Banking Ombudsman having the jurisdiction:
 1. non-payment/inordinate delay in the payment/collection of cheques
2. non-acceptance, without sufficient cause, of small denomination notes
3. non-issue of drafts
4. non-adherence to prescribed working hours
5. failure to honour guarantee/LC commitments by banks.
6. claims in respect of unauthorized/fraudulent withdrawals.
7. complaints from exporters in India.
8. Complaints from NRI having account in India.
Loans and Advances
9. non-observance of RBI directives on interest rates
10. delay in sanction. disbursement of Loan
11. non-acceptance of application for loans without giving valid reasons.

Procedure For Filing Complaint
 1. before making complaint to the BO, must be made written representation to the bank
and either the bank rejected the complaint or the complainant had not received any reply
within one month after the bank recd. the complaint.
2. The complaint should be made before one year after the cause of action has arisen.


Power To Call For Information

Settlement Of Complaint By Agreement Award by the Banking Ombudsman
 1. If the complaint is not settled by agreement within one month from the date of the
receipt of the complaint or such further period, He may pass an award after giving the
parties reasonable opportunity to present their case.
2. A copy of the award shall be sent to the complainant and the bank named in the
complaint. An award shall not be binding on bank unless complainant gives its letter of
acceptance within 15 days from the date of the receipt of the award. If the complainant
does not accept the award and fails to furnish the letter of acceptance within such time
without making any request for extension of time to comply with m the Banking
Ombudsman shall reject such requests.
3. The bank shall within one month from the date of receipt by it, of the acceptance in
writing of the award by the complainant comply with award and intimate the compliance
to the BO.
4. If the bank disagree, bank must intimate BO within one month from the date of the
receipt of copy of the Award to file the review petition.
5. The BO shall report to the RBI, review authority, about the non-compliance by any
bank of an Award. On receipt of such reports Review Authority will pass necessary
orders.
6. The maximum amount BO can award for compesation is Rs.10 lakhs.

Rejection Of the Complaint
 1. The banking ombudsman may reject the complaint at any stage if it appears to him
that the complaint made is:
 (i) frivolous, vexatious, mala-fide; or
(ii) without any sufficient cause; or
(iii) that it is not pursued by the complainant with reasonable diligence; or
(iv) prima facie, there is no loss or damage or inconvenience caused to the complainant;
or
(v) beyond the pecuniary jurisdiction of the banking ombudsman under the scheme
 2. The banking ombudsman may reject a complaint at any stage, if after consideration of
the complaint and evidence produced before him the banking ombudsman is of the
opinion that the complicated nature of the complaint requires consideration of elaborate
documentary and oral evidence and the proceedings before the banking ombudsman are
not appropriate for adjudication of such a complaint.
 The decision of the banking ombudsman in this regard shall be final and binding on the
complainant of the bank.

Review Authority
 1. Any person aggrieved by the award has the right to prefer an appeal against the
award before the appellate authority within forty-five days form the date of receipt of the
award. The appellate authority is empowered to allow a further period not exceeding
thirty days on his being satisfied that the appellant had sufficient cause for not preferring
the appeal in time. In case the appeal is by the bank, the filing of appeal should have
been with the previous sanction of the Chairman or in his absence the Managing Director
or Executive Director or the Chief Executive Officer or any other officer of equal rank.
 2. The appellate authority after giving the parties a reasonable opportunity of being
heard, may pass the following orders:
 (a) dismiss the appeal; or
(b) allow the appeal and set aside the award; or
(c) remand the matter to the banking ombudsman for fresh disposal in accordance with
such directions as the appellate authority may consider necessary or proper; or
(d) modify the award and pass such directions as may be necessary to give effect to the
award so modified; or

(e) pass any other order as it may deem fit.
 The order of the appellate authority has also the same effect as that of the award of the
banking ombudsman.
Preliminary

1. The Preamble to the DRT act describes the act as, ‘An act to provide the
establishment of tribunals for expeditious adjudication and recovery of debts due to
banks and financial institutions and for matters connected therewith .
 2. The act is applicable to whole of India except J&K
 3. Appellate Tribunal is established for the purpose of preferring appeal against the order
passed by the Tribunal.
 4. Application
 5. Appointed Day
 6. Chairperson
 7. Debt
 8. Financial Institution
 9. Presiding Officer means the presiding officer of the DRT appointed under subsection(1)
of Section 4
 10. Recovery Officer appointed by the Government
Establishment of Tribunal and Appellate Tribunal

The central government is empowered to establish one or more tribunal to be known
as Debt Recovery Tribunal.

Composition of Tribunal
 The tribunal consists of one person called as Presiding Officer and the appointment is
done by the central govt. by issuing notification.
Debt Recovery Tribunal Appellate Tribunal
Presiding Officer : District Judge Chairperson : High Court Judge, Presiding
officer of a DRT for at least 3 years.
Presiding officer holds officer for a term of
5 years or until he attains the age of 62 years
whichever is earlier.
Chairperson holds officer for a term of 5
years or until he attains age of 65 whichever is
earlier.
Recovery Officer
The staff so appointed shall work under the
general superintendence of the presiding
officer.

 ………………………………………………………………………………………………………
……
Jurisdiction, Powers and Authority of Tribunals

1. Whenever the Tribunal or the Appellate Tribunal is established from its appointed day,
i.e., date from which they function is declared in the notification, they exercise
jurisdiction, powers and authority to entertain and decide applications or appeals, as the
case may be, from the banks and financial institutions for and about recovery of debts
due to them.
 2. Chairperson of Appellate Tribunal is given general power of superintendence and
control over the Tribunals under his jurisdiction. The chairperson can transfer any
application from any

Presiding Officer within his jurisdiction to any other Presiding Officer within his
jurisdiction, on Receiving application for transfer of case or even on his own motion.
However before such transfer, he has to give notice to the parties and hear them. He
also has power of appraising work of presiding officers, under his control.

BAR OF JURISDICTION OF CIVIL COURTS
 1. From the date of establishing the Tribunal, i.e., the appointed day, no court or other
authority shall have any jurisdiction, powers or authority to deal within any way in
recovery cases above Rupees ten lakh. Thus the Civil Courts or any other authority will
loose and will not have the jurisdiction for cases where due amount recoverable is above
Rupees ten lakh by banks and financial institutions.
 However, this is not applicable to High Courts and Supreme Courts exercising jurisdiction
under Articles 226 and 227 of the Constitution.
 2. The relevant date of bar of jurisdiction by the court or other authority is not the date
when this Act came into application. The date is since when the Tribunal is established
having jurisdiction in that particular area. In Bhanu Construction Company Ltd. vs Andhra
Bank [2002] 37 SCL 769, a question came whether the order passed by a Civil Court after
coming into force of the DRT Act but before establishing the Tribunal is valid on
jurisdiction point or not. The Supreme Court held that order passed by the Civil Court
prior to establishment of a Tribunal but after commencement of DRT Act was well within
the jurisdiction of the Civil Court.
Procedure Of Tribunals

 A person who has to file appeal before the Appellate Tribunal has to pay 75% of the debt
ordered by the DRT.
 Bank has to file application for recovery of loan taking into consideration jurisdiction and
cause of action.
DRT
Act
Description
19(1) Application for recovery to Tribunal within local limits of whose jurisdiction
19(2) Recovery of the debt is from same person, any other bank also has to recover
debt,
they may join.
19(3) No need to pay the fee, if Case is transferred from Civil Court to Tribunal
19(4) On receipt of application under sub-section(1) or (2) the Tribunal has to issue
summons to the defendant requiring him to show cause within 30 days of the
service of summons as to why the relief prayed for should not be granted
19(5) The Defendant has to present written statement at or before first hearing or
within such time as the Tribunal may permit.
19(6) defendant has to claims any amount on first hearing from the applicant and to
have
setoff against the applicant’s demand with ascertained sum of money
19(7) When written statement contains claim and set off, the written statement has
the same effect as a plaint in a cross-suit.
19(8) Counter claim
19(9) Counter claim has the same effect as a plaint in cross-suit so as to enable the
Tribunal to pass a final order in respect of both the original and Counter Claim.
19(10) The applicant is at liberty to file a written statement to the counter claim of the
defendant within such period may be fixed by the Tribunal
19(11) Counter Claim to be disposed as an Independent action.
19(12) The Tribunal may pass interim order against the defendant to debar him from
transferring, alienating, or otherwise dealing with or disposing of any
property/asset

without the permission of the Tribunal
19(13
A and
B)
Tribunal Dispose of the property, Damage to the property, remove/whole any
part of the property
19(14) When the applicant wants that the properties of the defendant should be
attached.
19(15) The Tribunal can pass conditional attachment order.
19(16) If any attachment order is passed without complying the requirements of
Subsection (13), then such order is void.
19(17) The Tribunal has power to pass interim orders, attachment orders etc. If there
is any
breach of the orders, the Tribunal may order that the properties of the person
guilty
of the breach of the order be attached and person be detained in civil prison for
a term not exceeding 3 months.
19(18) appoint a receiver of any property
- remove any person from the custody/possession of property
- confer powers to receiver.
- appoint a commissioner for preparation of an inventory of the property of the
defendant or for sale thereof
19(19) If the recovery certificate is granted against a company, the Tribunal may order
that
the sale proceeds of such company be distributed among the Secured Creditors
as provided in Section 529A of the Companies Act.
19(20) Pass interim or final order for payment of amount including interest thereon
19(21) The tribunal is required to send copy of every order by it to the applicant and
the defendant.
19(22) Issue a Certificate of Recovery to the recovery officer for recovery of the
amount of
debts.
19(23) Sending Certificate of Recovery to other tribunals if it is local limits of other
jurisdiction
19(24) Application received by the tribunal for recovery of debt shall be disposed of
finally
within 180 days
19(25) The tribunal may make such orders and give such directions as may be
necessary

Appeal to the Appellate Tribunal
 1. Any person aggrieved by the order passed by DRT, may appeal to an Appellate
Tribunal.
 2. The appeal is required to be filed within 45 days from the date on which copy of the
order is received. At the time of filing appeal Section 21 of the DRT Act 75% of the
amount shown as due in the order required to be deposited by the appellant.
3. Appellate Tribunal should disposed off the appeal within 6 months.

 ………………………………………………………………………………………………………
……
Recovery Of Debts Determined By Tribunal and Miscellaneous
Provisions

Review of the Order/Recovery Certificate – within 60 days of passing the order or issuing

the certificate.
 A company is under winding up process. Whether High Court permission is required to a
Bank to proceed against it before DRT - No, as the DRT Act being a special Law having
overriding effect over other laws.
 Recovery Officers appointed under DRT Act can attach and sale movable as well as
immovable property of the person against whom order is passed even it the property is
not charged to the creditor.
 If the recovery certificate has clerical / arithmetical mistake Presiding Officer of the
Tribunal can correct the same.
Unit – 33 : The Bankers’ Books Evidence Act 1891
Certified Copy means when the books of the bank
Maintained in Written Form, a copy of any entry in such books together with a certificate
written at the foot of such copy mentioning that
1. it is true copy of such entry
2. that such entry made in ordinary course of business
 maintained in Electronic Form
 maintained in Mechanical Form
 Unit – 34 : Lok Adalats

LOK ADALATS

Lok Adalt is similar to a civil court which can be organized by the State Authority, the
Distt. Authority, the Supreme Court Legal Service Committee or High Court Legal Services
Committee, at such intervals and places as deemed appropriate. The Lok Adalts are
created under Legal Services Authority Act 1987.
 Jurisdiction and types of case : A Lok Adalt has jurisdiction to determine and arrive at a
compromise or settlement between the parties to the dispute. It deals with the cases
where (a) the parties to the dispute agree to refer the issue to Lok Adalt; (b) one of the
parties approaches the Lok Adalt and Lok Adalt is satisfied that there are chances of
settlement. In such case, the Adalt issues notice to the other party; (c) in the opinion of
the Lok Adalt, the cognizance of the dispute can be taken. Cases that cannot be taken
up: The offences, which are compoundable under any Law, cannot be brought within the
purview of the Lok Adalt.
 This means that the Lok Adalt has no authority of its own to pass judgements.
 Awards of Lok Adalt: Their awards are in the form of consent decrees. NO appeal lies
against such Awards which is binding on all parties.
 Procedure and powers: Civil Procedure Code is applicable which means the Lok Adalt can
send summons, take evidence on oath, initiate exparte proceedings, and determine court
procedures. Where compromise is not reached: The case shall be returned back to the
court from which the reference was received for continuing with the case, there.
 1. RBI GUIDELINES ON LOK ADALTS With a view to making increasing use ;of the forum
of Lok Adalats to settle banking disputes involving smaller amounts, RBI during April
2001 advised banks and financial institutions to follow the following guidelines for
implementation: Amount - Cases involving an amount up to Rs.20 lakh (RBI enhanced it
from Rs.5 lac, Aug 03, 2004) may be referred to Lok Adalats.
 2. Borrowers : All NPA accounts (other than time barred), both suit filed and non-suit
filed, which are in "doubtful" and "loss" category. No cut off date is suggested since Lok
Adalat is an on-going process.
 3. Settlement Formula : The settlement formula would be flexible. Certain essential
parameters, as under, should be kept in view:
a. A decree should be sought from the Lok Adalat for the principal amount and interest
claimed in the suit, and after full payment of decree amount, a discharge certificate
should be issued by the bank / financial institution.
 b. The repayment period should be within one to three years.
 c. The negotiated agreement with the borrower should contain a default clause in terms

of which if borrower does not pay installments due regularly, within the repayment
period, entire debt will fall due for payment & bank may initiate legal proceedings.
 d. The Officers representing the institutions should have sufficient powers to accept the
compromises worked out within the policy framework laid down by the Board of Directors
of each institution, while attending Lok Adalat and should respond pro-actively to the
suggestion of the Presiding Officer of the Lok Adalat.

DRT LOKADALATS

Banks can take up matters where outstanding exceed the ceiling of Rs.20 lac, with Lok
Adalats organised by the Debt Recovery Tribunals / Debt Recovery Appellate Tribunals.
 Supreme Court has suggested that personal loan cases up to Rs.10 lac should preferably
settled through Lok Adalats.

Organisational arrangements
 The individual banks and fmancial institutions should be more pro-active and should take
the responsibility of organising Lok Adalats. The institutions should get in touch with
State / District / Taluk level Legal Services Authorities for organising Lok Adalats. The
banks should report the progress to RBI, at quarterly intervals within one month from the
quarters ending March, June, September and December. Reserve Bank of India monitors
the progress made by the institutions in effecting recovery under the scheme.
Preamble, Extent and Definitions
The agencies appointed under Consumer Protection Act are quasi-judicial in nature
 Consumer Protection Act is not enacted to protect the manufacturing conditions of the
Industries.
 Voluntary Consumer association can file a complaint on behalf of consumer.
 A consumer who has purchased goods for resale, cannot file complaint.
 ‘A’ has purchased a draft from a bank favoring ‘B’. The draft is last in transit and for
duplicate draft in lieu for first bank need some formalities to be completed by ‘A’. Can ‘B’
file a consumer case against the formalities as at is delaying payment to him.
No, as he is not consumer of the bank and is not taking any service from the bank.
 “Complainant “ means
 i. a consumer
ii. any voluntary consumer association
iii. the Central Govt / state Govt.
iv. one or more consumers
v. in case of death of parnter, his legal hair or representive.
 Complaint means
 1. an unfair trade practice or a restrictive trade practice.
2. the goods brought are defective
3. the services availed, hired suffer from deficiency
4. over priced
 “Consumer” means any person who,
 1. buys any goods for a consideration which has been paid or promised to be paid
2. under any system of deferred payment
3. includes any user of such goods
4. hires or avails any service
 Consumer Dispute means a dispute where the person against whom complaint has
been made, denies or disputes the allegations contained in the complaint
 Defect means any fault, imperfection, shortcoming or inadequacy in the quality,
quantity, potency, purity or standard.
 Deficiency = Defect

Consumer Protection Councils
District CPC
Chairman – Collector of the district.
Meeting at least once in a year
State CPC
Chairman – Minister in charge of the consumer affairs in state govt.
Members – not exceeding 10 appointed by centre govt.
Meeting at least Twice in a year
National CPC
Chairman – Minister in charge of the consumer affairs in central govt.
Meeting at least Twice in a year
Credit Information Companies, Fair Practices Code for Debt Collection, BCSBI
1. CIBIL is a composite credit bureau which contains the credit history of both commercial and
consumer borrowers.
2. CIBIL provides credit history of borrowers to its members in the form of credit information
reports (CIRs) to assist them in their loan appraisal process.
3. In the matter of recovery of dues, banks / NBFCs may ensure that they, as also their agents,
adhere to the extant instructions on Fair Practice Code for lenders as also IBA’s Code for
Collection of dues and repossession of security. In case banks / NBFCs have their own code for
collection of dues it should, at the minimum, incorporate all the terms of IBA's Code.
4. In particular, in regard to appointment of third party agencies for debt collection, it is essential
that such agents refrain from action that could damage the integrity and reputation of the bank /
NBFC and that they observe strict customer confidentiality.
5. All letters issued by recovery agents must contain the name and address of a responsible
senior officer of the card issuing bank whom the customer can contact at his location.
6. Banks / NBFCs / their agents should not resort to intimidation or harassment of any kind,
either verbal or physical, against any person in their debt collection efforts, including acts
intended to humiliate publicly or intrude the privacy of the credit card holders’ family members,

referees and friends, making threatening and anonymous calls or making false and misleading
representations.
7. The Banking Codes and Standards Board of India (BCSBI) was set up on 18th February 2006
as a collaborative effort of RBI and Banks, on the lines of a similar set up in UK to oversee the
"Banking Code", a voluntary Code, evolved by the British Bankers Association (BBA), which is
adopted by all banks in UK.
8. The proposal for setting up the BCSBI was based on the recommendation made by the
Committee on Procedures and Performance Audit on Public Services (Tarapore Committee).
9. It provides valuable protection for customers on a day-to-day basis as also in the times of
financial difficulty.
10. The code applies to savings deposits and current accounts, card products and services, loans
and overdrafts and payment services including foreign exchange.
11. Member banks of BCSBI would put in place the following grievance redressal mechanism in
their banks:
Have a Help desk / Helpline at the branch
Have a Code Compliance Officer at each Controlling office above the level of the branch
Display at each branch name and contact number of Code Compliance Officer
Display Name and address of the Banking Ombudsman.
Recent Developments in the Indian Financial System
1. Indian Government appointed a committee under the chairmanship of Sukhamoy Chakravarty

in 1984 to review the Indian monetary system. Later, Narayanan Vaghul working group and
Narasimham Committee was also set up. As per the recommendations of these study groups and
with the financial sector reforms initiated in the early 1990s, the government has adopted
following major reforms in the Indian money market.
a. Deregulation of the Interest Rate
b. Money Market Mutual Fund (MMMFs)
c. Liquidity Adjustment Facility (LAF)
d. Electronic Transactions
e. Establishment of the CCIL
f. Development of New Market Instruments : The government has consistently tried to introduce
new short-term investment instruments. Examples: Treasury Bills of various duration,
Commercial papers, Certificates of Deposits, MMMFs, etc. have been introduced in the Indian
Money Market.
2. Commercial paper is an unsecured money market instrument issued in the form of a
promissory note. It enables highly rated corporate borrowers to diversify their sources of shortterm
borrowings and to provide an additional instrument to investors.
3. A certificate of deposit is a negotiable money market instrument which is issued in
dematerialised form or as a Usance Promissory Note, for funds deposited at a bank or other
eligible financial institution for a specified time period.
4. The minimum maturity period of CD is 8 days with effect from 29 Apr 2005.
5. The Reserve Bank has taken many initiatives towards introducing and upgrading safe and
efficient modes of payment systems in the country to meet the requirements of the public at
large.
6. Since paper based payments occupy an important place in the country, Reserve Bank had
introduced Magnetic Ink Character Recognition (MICR) technology for speeding up and
bringing in efficiency in processing of cheques.
7. Later, a separate High Value Clearing was introduced for clearing cheques of value Rupees
one lakh and above. This clearing was available at select large centres in the country (since
discontinued).
8. Recent developments in paper-based instruments include launch of Speed Clearing (for local
clearance of outstation cheques drawn on core-banking enabled branches of banks), introduction
of cheque truncation system (to restrict physical movement of cheques and enable use of images
for payment processing), framing CTS-2010 Standards (for enhancing the security features on
cheque forms) and the like.

Electronic Payments
9. The continued increase in the volume of cheques added pressure on the existing set-up, thus
necessitating following cost-effective alternative systems.
a. Electronic Clearing Service (ECS) Credit
b. Regional ECS (RECS)
c. Electronic Clearing Service (ECS) Debit
d. National Electronic Funds Transfer (NEFT) System
e. Real Time Gross Settlement (RTGS)System
f. Clearing Corporation of India Limited (CCIL)
Other Payment Systems
10. Pre-paid instruments are payment instruments that facilitate purchase of goods and services
against the value stored on these instruments. The value stored on such instruments represents
the value paid for by the holders by cash, by debit to a bank account, or by credit card. The prepaid
payment instruments can be issued in the form of smart cards, magnetic stripe cards,
internet accounts, internet wallets, mobile accounts, mobile wallets, paper vouchers, etc.
11. The use of pre-paid payment instruments for cross border transactions has not been
permitted, except for the payment instruments approved under Foreign Exchange Management
Act,1999 (FEMA).
12. Reserve Bank brought out a set of operating guidelines on mobile banking for banks in
October 2008, according to which only banks which are licensed and supervised in India and
have a physical presence in India are permitted to offer mobile banking after obtaining necessary
permission from Reserve Bank
ATMs / Point of Sale (POS) Terminals / Online Transactions
13. As on Feb, 2014, there are over 1,50,008 ATMs (76836 onsite and 73172 offsite) in India.
Savings Bank customers can withdraw cash from any bank terminal up to 5 times in a month
without being charged for the same (refer RBI circulars for latest changes).
14. Reserve Bank has mandated re-crediting of failed transactions within 7 working day and
mandated compensation for delays beyond the stipulated period.
15. As on Feb, 2014, there are over 10 lakh POS terminals in the country, which enable
customers to make payments for purchases of goods and services by means of credit/debit cards.
16. To facilitate customer convenience the Bank has also permitted cash withdrawal using debit
cards issued by the banks at PoS terminals.
17. Further, to reduce the risks arising out of the use of credit/debit cards over internet/IVR
(technically referred to as card not present (CNP) transactions), Reserve Bank mandated that all
CNP transactions should be additionally authenticated based on information not available on the
card and an online alert should be sent to the cardholders for such transactions.
National Payments Corporation of India
18. The Reserve Bank encouraged the setting up of National Payments Corporation of India
(NPCI) to act as an umbrella organisation for operating various Retail Payment Systems (RPS) in
India. NPCI became functional in early 2009. NPCI has taken over National Financial Switch
(NFS) from Institute for Development and Research in Banking Technology (IDRBT).
19. Oversight of the payment and settlement systems is a central bank function whereby the
objectives of safety and efficiency are promoted by monitoring existing and planned systems,
assessing them against these objectives and, where necessary, inducing change. By overseeing
payment and settlement systems, central banks help to maintain systemic stability and reduce
systemic risk, and to maintain public confidence in payment and settlement systems.
Banker-Customer Relationship
1. A firm consisting of not more than 10 partners or a company incorporated under Indian
Companies Act 1956 can be a bank.
2. The relationship between customer and bank, when the customer deposits money with the
bank, is a lender and a borrower and thus a creditor and a debtor.
3. The relationship between customer and bank, when the bank lends money to the customer, is a

borrower and lender and thus a debtor and a creditor.
4. The relationship between customer and bank, when a customer deposits certain valuables,
bonds, securities etc, with the bank for safe custody, is bailor-bailee and thus customer and
trustee.
5. The relationship between customer and bank, when a bank performs the services of
remittance, collection of cheques, bills, etc on behalf of the customers, is principal and agent.
6. The relationship between customer and bank, when a bank provides safe deposit lockers to the
customer, who hires them on a lease basis, is lessee-lessor.
7. The relationship between customer and bank, when one party promises to save the other from
loss caused to the other by the conduct of promisor, is indemnifier and indemnified (or indemnity
holder).
8. Merchant bankers are financial intermediaries because they transfer capital from investor or
bond subscriber (owner of capital) to government or corporate (user).
9. Lease financing means leasing out the capital purchase of assets to another company against
monthly rents for asset’s consumption or use.
Bankers Special Relationship
1. A mandate (an unstamped agreement) is an authority given by the account holder in favour of
a third person to do certain acts on his behalf.
2. Institutions cannot issue mandate, instead they issue a power of attorney.
3. Power of Attorney is a legal document (as it is a stamped document and is executed in the
presence of a notary public/magistrate of a court/authorized government official) executed by
one person called donor (principal) in favor of another person called donee agent to act on behalf
of the former, as per the authority given in the document.
4. Donee means the person who issues Power of Attorney and donor means the person to whom
Power of Attorney is given.
5. General/universal power of attorney is issued for acting in more than one transaction while
special/limited Power of Attorney is issued for only one transaction.
6. Garnishee order is an order of the court obtained by a judgement creditor attaching the funds
belonging to a judgement debtor (customer) in the hands of his debtors, including a bank, who is
called a garnishee, advising not to release the money until directed by the court to do so.
7. Cheques presented after service of the garnishee order should be returned with the “refer to
drawer” remark.
8. Preliminary proceedings of a court are called garnishee order nisi.
9. Subsequent proceedings of a court are called garnishee absolute.
10. When a bank has a prior right to set-off, the bank is not bound by the garnishee order.
11. When a lien is marked on fixed deposit receipts, it cannot be attached by a garnishee order.
12. Any excess over the lien is attachable by the garnishee order.
13. Orders received from the court for recovery of certain debts are called garnishee order.
14. Orders received from the revenue authorities (income tax/sale tax authority) are called
attachment order.
15. Credits received after garnishee orders are not attachable because debts due or accruing at the
time of receipt of order are only attachable.
16. In "Joint Accounts" with "Either or Survivor" clause, "Garnishee Order" if in a single name,
cannot be attached.
17. In "Joint Accounts" with "Former or Survivor" clause, "Garnishee Order" if in a single name,
can be attached.
18. The personal accounts of a partner can be attached with garnishee order for the firm’s debt.
19. The trust’s account cannot be attached garnishee order.
20. When a customer has more than 1 account and one is in credit and other is in debit, then the
garnishee order can be attached only if the net result is in credit.
21. A lien is a right of the banker to retain possession of the goods and securities owned by the
debtor until the debt due from the latter is paid.
22. The banker’s lien is an implied (understood) pledge (promise/guarantee).
23. In case of lien, the bank can sell the goods and securities in case the debt is not paid under

section 171 of the Indian Contract Act 1872.
24. Lien cannot apply in safe deposit locker.
25. Set-off means adjusting debit balance in one account with an account having credit balance
of the same customer.
26. A deceased credit account and a customer debit account cannot be combined.
Banking Ombudsman Scheme and Consumer Protection Act
1. The Banking Ombudsman Scheme is introduced under Section 35 A of the Banking

Regulation Act, 1949 by RBI with effect from 1995.
2. The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank
customers for resolution of complaints relating to certain services rendered by banks.
3. The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to
redress customer complaints against deficiency in certain banking services.
4. All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Cooperative
Banks are covered under the Scheme.
5. The Banking Ombudsman can receive and consider any complaint relating to the following
deficiency in banking services (including internet banking):
 non-payment or inordinate delay in the payment or collection of cheques, drafts, bills
etc.;
 non-acceptance, without sufficient cause, of small denomination notes tendered for any
purpose, and for charging of commission in respect thereof;
 non-acceptance, without sufficient cause, of coins tendered and for charging of
commission in respect thereof;
 non-payment or delay in payment of inward remittances ;
 failure to issue or delay in issue of drafts, pay orders or bankers’ cheques;
 non-adherence to prescribed working hours ;
 failure to provide or delay in providing a banking facility (other than loans and advances)
promised in writing by a bank or its direct selling agents;
 delays, non-credit of proceeds to parties accounts, non-payment of deposit or nonobservance
of the Reserve Bank directives, if any, applicable to rate of interest on
deposits in any savings,current or other account maintained with a bank ;
 complaints from Non-Resident Indians having accounts in India in relation to their
remittances from abroad, deposits and other bank-related matters;
 refusal to open deposit accounts without any valid reason for refusal;
 levying of charges without adequate prior notice to the customer;
 non-adherence by the bank or its subsidiaries to the instructions of Reserve Bank on
ATM/Debit card operations or credit card operations;
 non-disbursement or delay in disbursement of pension (to the extent the grievance can be
attributed to the action on the part of the bank concerned, but not with regard to its
employees);
 refusal to accept or delay in accepting payment towards taxes, as required by Reserve
Bank/Government;
 refusal to issue or delay in issuing, or failure to service or delay in servicing or
redemption of Government securities;
 forced closure of deposit accounts without due notice or without sufficient reason;
 refusal to close or delay in closing the accounts;
 non-adherence to the fair practices code as adopted by the bank or non-adherence to the
provisions of the Code of Bank s Commitments to Customers issued by Banking Codes
and Standards Board of India and as adopted by the bank ;
 non-observance of Reserve Bank guidelines on engagement of recovery agents by banks;
and
 any other matter relating to the violation of the directives issued by the Reserve Bank in
relation to banking or other services.

6. A customer can also lodge a complaint on the following grounds of deficiency in service with
respect to loans and advances non-observance of Reserve Bank Directives on interest rates;
 delays in sanction, disbursement or non-observance of prescribed time schedule for
disposal of loan applications;
 non-acceptance of application for loans without furnishing valid reasons to the applicant;
and
 non-adherence to the provisions of the fair practices code for lenders as adopted by the
bank or Code of Bank’s Commitment to Customers, as the case may be;
 non-observance of any other direction or instruction of the Reserve Bank as may be
specified by the Reserve Bank for this purpose from time to time.
The Banking Ombudsman may also deal with such other matter as may be specified by the
Reserve Bank from time to time.
7. One can file a complaint before the Banking Ombudsman if the reply is not received from the
bank within a period of one month after the bank concerned has received one s representation, or
the bank rejects the complaint, or if the complainant is not satisfied with the reply given by the
bank.
8. One can file a complaint with the Banking Ombudsman simply by writing on a plain paper.
One can also file it online (at “click here to go to Banking Ombudsman scheme” or by sending
an email to the Banking Ombudsman.
9. The Banking Ombudsman may reject a complaint at any stage if it appears to him that a
complaint made to him is:
 not on the grounds of complaint referred to above
 compensation sought from the Banking Ombudsman is beyond Rs 10 lakh .
 requires consideration of elaborate documentary and oral evidence and the proceedings
before the Banking Ombudsman are not appropriate for adjudication of such complaint
without any sufficient cause
 that it is not pursued by the complainant with reasonable diligence
 in the opinion of the Banking Ombudsman there is no loss or damage or inconvenience
caused to the complainant.
10. If one is aggrieved by the decision, one may, within 30 days of the date of receipt of the
award, appeal against the award before the appellate authority. The appellate authority may, if
he/ she is satisfied that the applicant had sufficient cause for not making an application for appeal
within time, also allow a further period not exceeding 30 days.
11. Consumer Protection Act, 1986
a. It extends to the whole of India except the State of Jammu and Kashmir.
b. It shall come into force on such date as the Central Government may, by notification, appoint
and different dates may be appointed for different States and for different provisions of this Act.
c. Save as otherwise expressly provided by the Central Government by notification, this Act shall
apply to all goods and services.
12. "complaint" means any allegation in writing made by a complainant that—
a. an unfair trade practice or a restrictive trade practice has been adopted by any trader or service
provider.
b. the goods bought by him or agreed to be bought by him; suffer from one or more defects.
c. the services hired or availed of or agreed to be hired or availed of by him suffer from
deficiency in any respect.
d. a trader or service provider, as the case may be, has charged for the goods or for the service
mentioned in the complaint a price in excess of the official/valid price.
e. goods which will be hazardous to life and safety when used or being offered for sale to the
public.
f. services which are hazardous or likely to be hazardous to life and safety of the public when
used, are being offered by the service provider which such person could have known with due
diligence to be injurious to life and safety.
Payment and Collection of Cheques and Other NI

1. In Sans recourse endorsement, liability of the endorser is excluded.

2. In facultative endorsement, the notice of dishonour is waived.
3. The 3 negotiable instruments are promissory notes, bills of exchange and cheque.
4. A paying banker is protected under NI Act in the following cases:
a. Forged endorsement in an
i. order cheque under section 85 (1)
ii. bearer cheque under section 85 (2)
iii. draft under section 85 (A)
b. Material alteration in a cheque under section 89
c. Payment of a crossed cheque under section 128.
Opening Accounts of Various Types of Customers
1. Indian Majority Act 1875 defines the age of majority to be 18 years.

2. Section 26 of the NI Act provides that a minor may draw, endorse, deliver and negotiate a
negotiable instrument and as such, a minor can draw a cheque. The minor’s age should be above
13 years and should be literate. No overdraft is allowed in these accounts.
3. Two minors cannot open a joint account.
4. In an HUF, the members of a family are called coparceners and the eldest male child is called
Karta (Manager), the Karta operates the account.
5. All the adult members have to sign account opening form while opening HUF account.
6. Registration of a partnership is optional (except in states of Gujarat and Maharashtra where it
is compulsory).
7. When there is an addition into the partnership, the old account can be continued ifthe balance
is in credit, else old account should be closed and a new one should be opened. This process
avoids Clayton’s Rule.
8. Death of a partner dissolves the partnership firm.
9. A public limited company – minimum 7 members, maximum unlimited members. Minimum
paid up capital of Rs 5 Lakh.
10. A private limited company – minimum 2 members, maximum 50 members. For banking
business maximum number is 20. Minimum paid up capital of Rs 1 Lakh.
11. A government company – minimum 51% of the shares are held by the government.
12. Internal rules of a company are mentioned in articles.
Ancillary Services
Each bank has two main activities as the sourcing or borrowing of funds ( as deposits and capital
from the market) and the deploying or lending the funds as Loans and Investments): these form
the traditional and core activities of all the banks.
Apart from these basic activities, the banks provide a variety of other services or products.The
most popular ones are listed below.
1) Funds transfer service: Useful for sending and receiving money from all over the world.The
products that cover these services are Demand Drafts, Bankers Checks/Pay orders,
EFT(Electronic Funds Transfer ),etc.
2) Forex service: You can buy the foreign exchange for any purpose of expenditures like travel,
buying merchandise,etc..and sell the same to the bank when you earn or receive from abroad . Of
course, these forex transactions are subject to the rules and regulations prevailing in a country
and they are provided by only those bank branches which are approved by the Banking
Authority or Regulator for this purpose.
3) Custodial Service: You can keep your valuables like jewels, documents, etc.. under this
service which is commonly known as Locker facility(Safe Deposit Vaults in banking parlance.
The bank will collect a nominal fee for the service.
4) Gold sale: You can buy pure gold for self consumption or for trading by the jewelry
businesses. Here also, only a few selected branches of banks or banks are allowed to provide
this. The products usually range from a coin to a 100 gm biscuit or bar.
5) Investment service: Invest your money in the mutual funds run by the banks. The service

comes as Portfolio service( the decision to maximize the returns on your money is left with the
banker or portfolio manager) and as Stand-alone product where the decision to get maximum
returns is borne by you. Both have the plus and minus but these products are offered to suit the
convenience of the investors. Portfolio means a basket of investments and securities in a
combined form. Debt securities will yield interest income and equity investment will yield
dividend income. Portfolio management means management of a combination of securities to get
the most efficient portfolio.
6) Insurance sale: A range of insurance products covering the risk of life, health, assets like
vehicle, credit and debit cards, travel etc. are offered by almost all the banks by themselves or in
collaboration with the leading insurer companies ,which again may be local or multinational
entities.
7) Card services: Primarily intended for safety and convenience purpose but now, has become a
payment mode and a symbol of economic status. The card products usually are called as Debit
card, Credit card .
8) eBanking: also known as Netbanking or Internet banking is the latest and most convenient
facility of the banks .You can get id and password to operate your account online : for transfer of
funds to another account in the same bank or another bank. You can keep the surplus funds in
fixed deposit by using this facility. The best use of this facility is for shopping online.
Cash Management Services and its Importance
1. Cash management is a broad term that refers to the collection, concentration, and
disbursement of cash.
2. It encompasses a company’s level of liquidity, its management of cash balance, and its shortterm
investment strategies
3. The objective of a cash management system is to improve revenue, maximize profits,
minimize costs and establish efficient management systems to assist and accelerate growth.
4. In India, the cash management business primarily involves collections and payments services.
5. Products Offered by Banks Under Collections (Paper and Electronic)
a. Local cheque collections
b. High value (0 Day clearing)
c. Magnetic ink character recognition (MICR)
d. Outstation cheque collections
e. Cheques drawn on branch locations
f. Cheques drawn on correspondent bank locations
g. Cheques drawn on coordinator locations
i. House cheque collections
j. Outside network cheque collections
k. Cash collections
l. ECS-Debit
m. Post dated cheque collection
n. Invoice collections
o. Capital market collections
6. Products Offered by Banks Under Payments (Paper and Electronic)
a. Demand drafts/banker’s cheques
b. Customer cheques
c. Locally payable
d. Payable at par
e. RTGS/NEFT/ECS
f. Cash disbursement
g. Payments within bank
h. Capital market payments
7. In a dynamic economy, markets need to play a key role in guiding the development of
infrastructure, including mechanisms like payments systems.
8. This means that innovation and competition will be central to the future development of the
payments system - as they are in other areas of the economy.
9. Efficient cash management is a must to support an institution’s growth, and therefore,

adopting the best cash management practices is necessary.
Principles of Lending, Working Capital Assessment and Credit Monitoring
1. Stocks procured through L/C are taken under hypothecation.

2. An increase in the ratio of current assets to total assets results in a decline in the profitability
of the firm (because investment in current assets is less profitable than those in fixed assets).
3. Term loans are loans which are repayable after one year and up to 10 years. Short term loan =
1-3 years, medium term loans = 3-7 years, long term loans = 7-10.
4. Difference between term loan and working capital is that term loans are repayable in quarterly
or half yearly installments whereas working capital is generally availed in cash credit
hypothecation accounts with frequent drawings and is payable on demand.
5. For an assessment of the working capital needs of a borrower who requires fund based limits
in excess of Rs 10 crore, the cash budget system (instead of cash flow statement) should be used.
6. Cash flow system deals with both cash and non-cash funds, while the cash budget system
deals with cash transactions only.
7. The ceiling for banks in providing advances/loans to borrowers is 15% of the capital funds in
case of a single borrower and 40% in case of group borrowers.
8. Working capital means the sum total of inventory, receivables and other current assets held by
a business entity.
9. Working capital is computed by the banks through the concept of operating cycle, i.e., the
time taken by a business entity to get the money released from the raw materials, semi-finished
goods, receivables, etc.
Priority Sector Advances
1. RBI has advised the banks to raise the shares of priority sector lending to 40 % of the
aggregate bank advances.
2. Out of this 40 %, 18 % is for agricultural sector (no targets for foreign banks), 10 % is for
weaker sections (no targets for foreign banks), and 1 % of previous year’s total advances are
given under DRI (Differential Rate of Interest Scheme) (no targets for foreign banks).
3. Above mentioned limit is for domestic commercial banks. For foreign banks, 32 % of ANBC
(Adjusted Net Bank Credit) is for priority sector advances.
4. Export credit is not a part of priority sector for domestic commercial banks. However foreign
banks are given target of 12 % of ANBC.
5. Description of Micro, Small and Medium Sectors:
Investment in plant and machinery Investment in Equipment Type of Enterprise
(Manufacturing Sector) - (Services Sector)
Up to 25 lacs - up to 10 lacs Tiny
25 lacs to 5 crore - 10 lacs to 2 crore Small
5 crore to 10 crore - 2 crore to 5 crore Medium
6. Micro credit includes provision of very small amounts up to Rs 50,000 per borrower.
7. The government has decided that the farmers should receive short term credit at 7 % with an
upper limit of 3 lakh on the principal amount. On this amount, the government provides interest
subvention of 2 % p.a. to the banks.
8. This 2 % subvention will be available to banks on condition that they make short term credit
available at the ground level with ROI of 7 % p.a.
Agricultural Finance
1. Loans repayable up to 18 months are short term loans.

2. Medium/long term loans are for more than 36 months.
3. All farmers who require loan for their cultivation expenses are eligible to get loan under KCC
scheme.

4. KCC is valid for a period of 3 years subject to an annual review. Any number of withdrawals
and repayments are permitted under this scheme.
Unit – 22 : Micro, Small and Medium Enterprises in India
1. A credit guarantee scheme was started to provide collateral-free loans to micro and small
entrepreneurs.
2. The exemption limit for relief from payment of Central Excise duty was raised to Rs 1 crore.
3. The MSMED Act (Micro, Small and Medium Enterprise Development Act) 2006 came into
effect from 2 Oct 2006.
4. Credit to MSMEs is part of the priority sector lending policy of the banks. Refer to Lesson 18
(1-3). Any shortfall in the 10 % limit of MSMEs of the 32 % prescribed limit of priority sector
for foreign banks has to be deposited in the SEDF (Small Enterprise Development Fund) set up
by SIDBI.
5. The principal financial institution for promotion, financing and development of the MSME
sector is the SIDBI.
6. If the buyer of the goods fails to make the payment to the supplier within a period of 45 days,
the buyer shall be liable to pay compound interest to the supplier on the amount with monthly
interest at 3 times of the bank rate.
Unit – 23 : Govt Sponsored Schemes
1. The Swarnajayanti Gram Swarojgar Yojna (SGSY) came into effect from 1 April 1999 in the
rural areas of the country.
2. SGSY scheme is funded by the centre and state in the ration of 75:25 and will be implemented
by commercial banks.
3. DRDA (District Rural Development Agencies) provides fund to those self help group who are
in existence for 6 months and have demonstrated the potential of a viable group. This fund is aka
revolving fund.
4. In case of group loan, the group is entitled to a subsidy of 50 % of the project cost, subject to
per capita subsidy of Rs 10,000 or Rs 1.25 lacs whichever is less.
5. Loan applications under the SGSY scheme should be disposed of within the prescribed limit
of 15 days and at any rate, not later than one month.
6. Swarojgaris are covered under the group insurance scheme. The maximum age of Swarojgaris
at the time of sanction has to be kept at 60 years of age.
7. Insurance coverage would be for 5 years or till the loan is repaid.
8. For individual loans up to Rs 50,000 and group loans up to Rs 5 lacs, the assets created out of
the bank loan would be hypothecated to the bank as a primary security.
9. In case of immovable assets (like minor irrigation, dug well, etc), the security created is
mortgage. Where mortgage is also not possible, 3rd party guarantee may be obtained.
10. For all loans (individual or group), in addition to the hypothecation/mortgage/3rd party
guarantee, suitable margin money/other collateral security in the form of an insurance policy;
marketable security/deeds of other property, etc, may be obtained at the discretion of the bank.
11. Project cost includes bank loan plus government security.
12. Subsidy under SGSY scheme will be 30 % subject to a maximum of Rs 7,500.
13. In respect of SC/STs, Subsidy under SGSY scheme will be 50 % subject to a maximum of Rs
10,000 (per capita) or Rs 1.25 lacs whichever is less.
14. Banks should not charge interest on the subsidy portion of the loan amount.
15. All SGSY loans are medium term loans with minimum repayment period 5 years (maximum
9 years).
16. The SJSRY (Swarna Jayanti Shahari Rozgar Yojna) came into effect from 1 April 1997 in all
urban towns in India.
17. The SJSRY scheme is funded by the centre and state in the ration of 75:25.
18. Both urban employed and urban unemployed (no age limit) youth whose annual family
income is below the poverty line and have got education up to 9th standard come under SJSRY
scheme.
19. Project cost up to Rs 50,000 is provided under the SJSRY scheme in case of an individual.
Higher project costs would also be covered in the scheme provided the share of each person in
the project cost is Rs 50,000 or less.
20. In SJSRY scheme, Subsidy would be provided at the rate of 15 % of the project cost, subject

to a ceiling of Rs 7,500 per head.
21. Margin money is 5 % of the project cost in SJSRY scheme.
22. In SJSRY scheme, repayment schedule ranges from 3 to 7 years, after initial moratorium
period of 6 to 18 months (at bank’s discretion).
23. DWCUA (Development of Women and Children in Urban Areas) group shall consists of at
least 10 urban poor women and the subsidy amount would be 50 % of the project cost of
Rs.1,25,000, whichever is less.
24. If in DWCUA, the project cost exceeds Rs 2, 50, 000, the project cost less subsidy
(Rs.1,25,000) and margin money (@ 5 % of the project cost) would be the component of the
bank.
25. The beneficiaries under the SJSRY scheme are identified on the basis of a monthly per capita
income and not by the annual family income (which is the case in SGSY scheme, refer to Point
no 18).
26. The % of women beneficiaries under the SJSRY scheme shall not be less than 30 %.
27. The loans granted under the SJSRY scheme come under priority sector advances and hence
loan applications for amount up to Rs 25, 000 should be disposed of within a fortnight and for
credit limits above Rs 25, 000 within 8-9 weeks.
28. In SJSRY scheme, a loan amount of Rs 50, 000 and group loans up to Rs 3 lacs don’t require
a collateral/guarantee. Besides margin, the borrower would hypothecate/mortgage/pledge to the
bank the assets created out of the bank loan.
29. The PMRY scheme is for unemployed youth between the age of 18-35 years (10 years
relaxation in case of women/PH/SC/ST), who are at least 8th standard pass.
30. PMRY scheme covers those unemployed educated youths whose annual family income is
below 1 lac per annum and the beneficiary should be a permanent resident of the district for 3
years.
31. In case of SHG, PMRY scheme gives subsidy per beneficiary Rs 12,500 subject to a
maximum ceiling of Rs 1.25 lacs.
32. In PMRY scheme, bank’s margin money varies from 5 to 12.5 % of the project cost so that
the total of subsidy and margin money is equal to 20 % of the project cost.
33. The project cost in PMRY scheme is restricted to Rs 2 lacs for business sector and Rs 5 lacs
for industry sector.
34. Margin money in PMRY scheme is 5 to 16.25 % (except in north-eastern states, HP, J&K,
Uttaranchal, where it varies from 5 to 12.5 %) of the project cost so as to make the total of
subsidy and margin money equal to 20 % of the project cost.
35. In PMRY scheme, subsidy eligible is 15 % of the project cost, subject to a maximum of Rs
12,500 per borrower in states other than north-eastern states, HP, J & K, Uttaranchal.
36. In PMRY scheme, the borrower has to hypothecate/mortgage/pledge to the bank assets. The
borrowers will not have to give a collateral security under the industry sector projects with the
cost up to Rs 2 lacs (for business sectors) and up to Rs 1 lac for service sectors.
37. The exemption from collateral is limited to Rs 1 lac per person in case of a partnership in
PMRY scheme.
38. PMRY loans have repayment period from 3 to 7 years after an initial moratorium.
39. In joint ventures/partnerships, the total project cost should not exceed Rs 10 lacs.
40. In SHG, there may be 5-20 educated unemployed youths and there is no upper ceiling on
loan.
41. The exemption from collateral security is Rs 5 lac per borrower in industry sector whereas
the exemption is Rs 1 lac per member in services and industry sector.
42. SLRS (Scheme of Liberation and Rehabilitation of Scavengers) was launched on 22 Mar
1992 and the project cost is limited to Rs 50,000 (the banks would give 32,500, subsidy would be
10,000, and 7,500 would be margin money from Scheduled Caste Development Corporations
aka SCDC) per head. Margin money is up to 15 % of the project cost and rate of interest 4 %.
43. Under the SLRS scheme, the subsidy would be 50 % of the project cost with a ceiling of
Rs.10,000.
44. Loans up to Rs 6,500 are treated as loans under DRI scheme and rate of interest is 4 %. If the
loan sanctioned/disbursed is more than Rs 6,500 such loans will attract a rate of interest
according to the RBI directive.

45. In SLRS scheme, the security for the loan will only be the hypothecation of the assets. The
repayment period is 3-7 years.
46. Loan amount up to Rs 25,000 under SLRS scheme should be disposed of within a fortnight
and for amount exceeding Rs 25,000 within 8-9 weeks.
CUSTOMER SERVICE IN BANKS (Ref RBI circulars)
GUIDELINES
Banks are required to constitute a Customer Service Committee of the Board and
include experts and representatives of customers as invitees. The role of the
Committee includes:
· formulation of a Comprehensive Deposit Policy
· issues such as the treatment of death of a depositor for operations of his account
· product approval process with a view to suitability and appropriateness
· annual survey of depositor satisfaction
· tri-enniel audit of such services,
· Examination/review of the Awards being issued by Banking Ombudsman in respect
of complaints relating to provision of banking services and address issues of
systemic deficiencies existing in banks brought out by the Awards.
Banks are also required to set up Standing Committee to review the practice and
procedures prevalent in the bank and take necessary corrective action on an ongoing
basis. The committee would act as a bridge between the various departments of the
bank and the Board / Customer Service Committee of the Board.
Banks are further required to establish Customer Service Committee at branch level to
encourage a formal channel of communication between the customers and the bank at
the branch level. Besides these, each bank is expected to have a nodal
department/official for customer service at H.O. and each Controlling Office with whom
customers with grievances can approach at first instance and with whom the Banking
Ombudsman and RBI can liaise.
Policies
Along with profit, growth, and fulfilment of social obligations, customer service is treated
as priority objective of banks. Accordingly, banks are required to have in place Board
approved policies in respect of:-
a) Comprehensive Deposit Policy - covering rights of the depositors in general and
small depositors in particular and aspects of operation of deposit accounts,
charges, and other related issues.
b) Cheque collection policy – covering aspects viz. (i) immediate credit for
local/outstation cheques, (ii) Timeframe for collection of local/outstation
instruments, and (iii) Interest payment for delayed collection (Policy dealt
separately).
c) Customer Compensation Policy – covering (i) Erroneous Debits arising on

fraudulent or other transactions, (ii) Payment of interest for Delays in collection, (iii)
.
Payment of interest for delay in issue of duplicate draft, and (iv) Other unauthorised
actions of the bank leading to a financial loss to customer.
d) Customer Grievance Redressal Policy - To be framed based on the broad
principles (dealt separately)
Banks should give adequate publicity of the policies by placing them prominently in their
Websites and also the notice boards of the branches.
Financial Inclusion– Role of Banks
a) “Basic Savings Bank Deposit Account”
Banks have been advised by RBI to offer “Basic Savings Bank Deposit Account” which
will offer the minimum common facilities as under:-
■ The account should be considered as a normal banking service available to all;
■ No requirement of minimum balance;
■ Facilitate deposit and withdrawal of cash at bank branch as well as ATMs;
■ Receipt/credit of money through electronic payment channels or by means of
cheques/ collection of cheques drawn by Central/State Government Agencies and
departments;
■ Account holders are permitted a maximum of four withdrawals in a month including
ATM withdrawals;
■ Facility of ATM card or ATM-cum Debit Card
■ Facilities are free of charge and no charge would be levied for nonoperation/
activation of in-operative ‘Basic Savings Bank Deposit Account’;
■ Holders of ‘Basic Savings Bank Deposit Account’ are not eligible for opening of any
other savings bank accounts and existing such accounts should be closed down within
a period of 30 days from the date of opening of ‘Basic Savings Bank Deposit Account’.
■ Existing ‘no frills’ accounts can be converted to ‘Basic Savings Bank Deposit Account’
■ The account would be subject to RBI instructions on Know Your Customer (KYC) /
Anti-Money Laundering (AML) for opening of bank accounts issued from time to time.
In case the BSBDA is opened on the basis of simplified KYC norms, the account would
additionally be treated as ”Small Account” and further subject to the conditions
applicable thereof.
b) I.T. enables Financial Inclusion
Banks are required to increase their banking outreach to the remote corners of the
country with affordable infrastructure and technology so as to lower the transaction
costs to make small ticket transactions viable. Care should be taken to ensure that the
solutions developed are highly secure, amenable to audit, and follow widely accepted
open standards to allow inter-operability among different systems adopted by different
banks.
.

c) Printed material in trilingual form
Banks are required to make available all printed material used by retail customers
including account opening forms, pay-in-slips, pass books, etc. in trilingual form i.e.
English, Hindi, and concerned Regional Language.
d) Intra-bank deposit account portability
KYC once done by one branch of the bank is valid for transfer of the account within the
bank. Accordingly, customer is allowed to transfer his/her account from one branch to
another branch without insisting on fresh proof of address and on the basis of a selfdeclaration
from the account holder about his / her current address, subject to
submitting proof of address within a period of six months.
Opening/operation of Deposit Accounts
Banks are required to comply with the guidelines on KYC/AML for opening of accounts.
a) Savings bank rules
■ The Savings Bank Rules must be made available to account holders while opening
the accounts.
■ Photographs of all depositors/account holders whether resident or non-resident
should be obtained in respect of all types of deposit accounts including fixed, recurring,
cumulative, etc. except:-
i) Banks, Local Authorities and Govt. Departments (excl. public sector undertakings
or quasi Government bodies);
ii) Accounts of Staff members (single/joint)
■ Banks should obtain photographs of all persons authorised to operate the accounts
viz. Savings Bank and Current Accounts without exception.
■ Banks may obtain two copies of photographs and obtaining photocopies of
driving licence/passport containing photographs in place of photographs would not
suffice.
■ Banks need not insist for the presence of account holder for making cash withdrawal
of ‘self’ or bearer cheques unless circumstance so warrants.
■ Photographs cannot be a substitute for specimen signatures.
■ Only one set of photographs need be obtained and separate photographs need not
be obtained for each category of deposit.
■ Photographs of the ' Pardanishin' women need to be obtained
.
■ For additional accounts, fresh photographs need not be insisted upon.
■ While opening the accounts, the account holders should be informed in transparent
manner the requirement of minimum balance and other charges, etc. Revision in
charges also needs to be advised from to time.
■ Banks may purchase cheques, drafts, etc. deposited in the account for clearing in
case of suspension of clearing operations temporally or apprehension of prolonging the
suspension. This facility is extended to customers upon examining the credit

worthiness, integrity, past dealing, occupation, etc. so as to guard themselves from the
possibilities of such instrument being dishonored subsequently.
■ Savings Bank Pass Books must be provided invariably to all customers. In case of
account statement, the same should be mailed to the customers regularly. These
facilities should be provided at Bank’s cost. Updating the pass book periodically should
also be arranged by the banks.
■ Banks may avoid the usage of inscrutable entries in pass books/statement of account
and ensure that brief, intelligible particulars are invariably entered in pass books /
statement of account with a view to avoiding inconvenience to depositors.
■ Banks are required to ensure that full address / telephone number of the branch
is invariably mentioned in the Pass Books / Statement of Accounts issued to account
holders.
■ All cheque forms should be printed in Hindi and English irrespective of the language
the customer uses including regional language.
■ Cheque books are to be delivered over the counters on request to the depositors or
his authorized representative.
■ Cheques bearing date in Hindi as per the National Calendar (Saka Samvat) can be
accepted by banks for payment, if otherwise in order. Banks can, however, ascertain the
Gregorian calendar date corresponding to the National Saka calendar in order to avoid
payment of stale cheques.
■ Banks are required to make available the Magnetic Ink Character Recognition (MICR)
code and Indian Financial System Code (IFSC), besides cheque leaf, in all passbook/
statement of account holders.
■ All CBS enabled banks are required to issue only “payable at par” / “multi-city” CTS
2010 Standard cheques to all eligible customers without extra charges.
b) Term Deposit Account
■ Banks are required to issue term deposit receipt indicating therein full details, such
as, date of issue, period of deposit, due date, applicable rate of interest, etc.
.
■ Term Deposit Receipts can be freely transferable from one office of bank to another.
■ Advance instructions from depositors for disposal of deposits on maturity may be
obtained in the application form itself. Wherever such instructions are not obtained, banks
should ensure sending of intimation of impending due date of maturity well in advance to
their depositors. Change in rate of interest should be advised well in advance to the
customers.
■ Deposits repayable in less than three months or where the terminal quarter is
incomplete, interest should be paid proportionately for the actual number of days
reckoning the year at 365 days or 366 days in case of leap year.
■ Banks may allow premature withdrawal of Term Deposits at the request of the
depositor and interest on the deposit for the period that it has remained with the bank

will be paid at the rate applicable. Banks have the freedom to fix penal interest on such
withdrawal. No interest need be paid where premature withdrawal takes place before
completion of the minimum period prescribed.
■ Banks will have the discretion to disallow premature withdrawal of bulk term deposits
of Rs. 1 crore and above of all depositors including deposits of individuals and HUFs.
Banks should, however, notify such depositors of its policy of disallowing premature
withdrawal in advance i.e. at the time of accepting such deposits ( w.e.f. 01.04.2013).
■ Bank should not insist for signatures of both the depositors in respect of Fixed/term
deposit accounts opened with operating instructions ‘Either or Survivor’ on maturity.
■ In case the mandate is “Former or Survivor”, the former can operate/withdraw the
matured amount when both are alive. However, the signatures of both the depositors
are required in case of payment before maturity. If the former expires before the
maturity of the fixed/term deposit, the ‘Survivor’ can withdraw the deposit on maturity.
■ In other words, in case of term deposits with "Either or Survivor" or "Former or
Survivor" mandate, banks are permitted to allow premature withdrawal of the deposit by
the surviving joint depositor on the death of the other, only if, there is a joint mandate
from the joint depositors to this effect. The joint deposit holders are permitted to give the
mandate either at the time of placing fixed deposit or anytime subsequently during the
term / tenure of the deposit.
■Bank can permit addition/deletion of name/s of joint account holders. However, the
period and aggregate amount of the deposit should not undergo any change. Banks
may also allow splitting of joint deposit, in the name of each of the joint account holders
provided that the period and the aggregate amount of the deposit do not undergo any
change.
■ Banks may renew the frozen accounts upon obtaining suitable request letter for
renewal. No renewal receipt be issued but suitable noting may be done in the deposit
.
account. Renewal of the deposit may be advised to the concerned Enforcement
Authority by registered post/Speed Post/Courier. Overdue interest may be paid as per
the policy adopted by the banks.
■ No tax should be deducted in case the depositors submit form 15-G/15-H under
Income Tax Rules 1962.
■ Banks are required to ensure that their branches invariably accept cash over the
counters from all their customers who desire to deposit cash at the counters.
■ Notwithstanding the legal provisions, opening of fixed/recurring and savings bank
accounts be permitted in the name of minor with mother as guardian provided bank
take adequate safeguards in allowing operations in the accounts by ensuring that
such accounts are not allowed to be overdrawn and that they always remain in credit.
The facility may be allowed in Recurring Deposit Accounts also.
c) Current Accounts

■ Banks while opening current account must obtain a declaration to the effect that the
account holder is not enjoying any credit facilities with any other bank. Banks must
scrupulously ensure that their branches do not open current accounts of entities which
enjoy credit facilities (fund based or non-fund based) from the banking system
without specifically obtaining a No-Objection Certificate from the lending bank(s).
■ Bank may open account of prospective customer in case no response is received from
its existing bankers upon waiting for a fortnight. The situation may be reviewed with
reference to the information provided by the prospective customer as well as taking
needed due diligence on the customer.
■ For corporate entities enjoying credit facilities from more than one bank, the banks
should exercise due diligence and inform the consortium leader, if under consortium,
and the concerned banks, if under multiple banking arrangement.
Reconciliation of transactions at ATMs failure
■ Banks are required to resolve complaints within 7 working days from the date of
receipt of the complaint. Failure to recredit the amount with the timeframe shall entail
payment of compensation to the customer @100/- per day by the issuing bank. For
compensation, suitable application is to be made within 30 days of date of the transaction.
■ All disputes regarding ATM failed transactions shall be settled by the issuing bank
and the acquiring bank through the ATM System Provider only. No bilateral settlement
arrangement outside the dispute resolution mechanism available with the system
provider is permissible. Non-adherence to the provision attract penalty under the
Payment and Settlement System Act 2007.
■ Banks are required to display prominently at the ATM locations that complaints should
be lodged at the branches where customers maintain accounts to which the ATM is linked
along with telephone numbers of help desk/contact persons of ATM owning bank, etc.
.
■ Each bank should ensure that the process flow is modified to provide for the pin
validation for every transaction including balance enquiry facilitated through ATM.
■ Failure to this attract penalty. Banks are required to have in place a system of online
alerts for all types of transactions irrespective of the amount involving usage of cards at
various channels.
Electronic Payment Systems
The electronic modes of payment like RTGS, NEFT and IMPS have emerged as
channel agnostic modes of funds transfer. In order to ensure these channels safe and
secure, some additional measures are introduced as under:-
(i) Customer induced options may be provided for fixing a cap on the value / mode of
transactions / beneficiaries. In the event of customer wanting to exceed the cap, an
additional authorization may be insisted upon.
(ii) Limit on the number of beneficiaries that may be added in a day per account could
be considered.

(iii) A system of alert may be introduced when a beneficiary is added.
(iv)Banks may put in place mechanism for velocity check on the number of transactions
effected per day / per beneficiary and any suspicious operations should be subjected
to alert within the bank and to the customer.
(v) Introduction of additional factor of authentication (preferably dynamic in nature) for
such payment transactions should be considered.
(vi)The banks may consider implementation of digital signature for large value
payments for all customers, to start with for RTGS transactions.
(vii) Capturing of Internet Protocol (IP) address as an additional validation check
should be considered.
Levy of Service Charges
Banks should ensure that the service charges fixed are reasonable and they are not out
of line with the cost of providing such services. Customers with low volume of
transactions are not penalized.
Foreclosure charges/prepayment penalty – Home Loans
Banks are not permitted to levy/charge prepayment charges/penalties on Home Loans
on floating interest rates, with immediate effect.
RTGS charges for customers
Banks are not permitted to charge their customers for outward RTGS remittances
beyond the amounts as under:-
RTGS transaction Max. charge
Inward transaction Free
Outward – Rs. 2 – 5 Lakh Rs. 25 + applicable time varying
tariff subject to Max. Rs. 30/-
Above Rs. 5 Lakh Rs. 50 + applicable time varying
.
tariff
Subject to Max. Rs. 55/-
Banking hours/working hours/Operation
■ Banks are required to function for public transactions at least for 4 hours on week days
and 2 hours on Saturdays in the larger interest of public and trading community.
Extension counters, satellite offices, one man offices or other special class of branches
may remain open for such shorter hours as may be considered necessary.
■ Banks may fix, after due notice to customers, whatever business hours are
convenient i.e. double shift, weekly holiday other than Sunday, or functioning Sundays
also (7 days working) etc.
■ The banks' branches in rural areas can fix the business hours (i.e., number of hours,
as well as timings) and the weekly holidays to suit local requirements subject to the
guidelines.
■ Commencement of employees’ working hours 15 minutes before commencement of

business hours could be made operative by banks at branches in metropolitan and
urban centres.
■ Banks are required to extend business hours for banking transactions other than cash
till one hour before close of working hours. Banks can have evening counters at the
premises of existing branches in metropolitan/urban centres for providing facilities to the
public beyond normal business hours to bring about improvement in customer service
and the transactions should be merged with the main accounts of the branch where it is
set up.
■ All branches except very small branches should have “Enquiry” or “May I help You”
counters either exclusively or combined with other duties located near the entry point of
the banking hall. Time norms should also be displayed prominently in the banking hall.
■ All Branch branches are required to display the various products and services they
provide along with various key aspects such as service charges, interest rates, time
norms for various banking transactions and grievance redressal mechanism, etc.
grouped in 4 heads viz. “Customer Service Information”, “Service Charges”, “Grievance
redressal” and “Others” as indicators in the ‘Comprehensive Notice Board’ as per the
format provided by RBI. This would enhance the quality of customer service in banks
and level of customer satisfaction.
■ Further, in addition to the above Board, the banks should also display details such
as ‘Name of the bank / branch, Working Days, Working Hours and Weekly Offdays'
outside the branch premises.
■ Banks are further required to make available the detailed information in their Web-site
.
in such a manner that customers are able to easily access the same from the Home
Page of the site, besides in booklet form in the touch screen by placing them in the
information kiosks or Scroll Bars, or Tag Boards. Website should contain the minimum
information such as Policy/Guidelines, Complaints, Opening of accounts/forms, Loans and
Advances, Branches, etc.
Sick/old/incapacitated account holders -- Operational Procedure
■ In case the old/sick/ incapacitated account holder can put his thumb or toe impression,
the same may be accepted for withdrawal of money. It should be identified by two
independent witnesses known to the bank, one of whom should be a responsible bank
official.
■ Where the customer cannot put even his/her thumb impression and also not able to
present in the bank, a mark can be obtained on the cheque/withdrawal form which should
be identified by two independent witnesses, one of whom should be a responsible bank
official.
■ Person to whom the payment is to be made may be indicated by the customer in both
the above cases and he should be identified by two independent witnesses. The person
should be asked to furnish his signature to the bank.

■ As per the opinion obtained by IBA, a toe impression or any mark by a customer who
lost both the hands can be taken for acceptance.
■ Banks are required to take necessary steps to provide all existing ATMs / future
ATMs with ramps so that wheel chair users / persons with disabilities can easily
access them and also make arrangements in such a way that the height of the ATM
does not create an impediment in its use by a wheelchair user.
■ Banks are required to ensure that all the banking facilities such as cheque book facility
including third party cheques, ATM facility, Net banking facility, locker facility, retail
loans, credit cards etc., are invariably offered to the visually challenged without
any discrimination.
■ Banks are required to make at least one third of new ATMs installed as talking ATMs
with Braille keypads and place them strategically in consultation with other banks to
ensure that at least one talking ATM with Braille keypad is generally available in each
locality for catering to needs of visually impaired persons.
■ In respect of disabled persons with autism, cerebral palsy, mental retardation and
multiple disabilities Banks can rely upon the Guardianship Certificate issued either by
the District Court under Mental Health Act or by the Local Level Committees under the
above Act for the purposes of opening / operating bank accounts.
Remittance
■ Remittance (DD/MT/TT, etc.) of Rs. 50000/- and above should be by debit to
customer’s account or against cheques only. DDs of Rs. 20,000/- and above are to
be issued with “Account Payee” crossing only.
.
■ A DD is uniformly valid for a period of three months and procedure for revalidation
after three months should be simplified.
■ Demand Drafts drawn by the branches are to be paid immediately without waiting for
the relative advice of drawing from the respective branches. Passport and postal
identification card could be deemed to be adequate identification for encashment of draft.
Banks may fix ceiling Rs. 25000/-for payment of drafts against the identification.
■ Duplicate Draft in lieu of lost for amount upto and including Rs. 5000/- can be issued
against suitable indemnity without waiting drawing advice within a fortnight from the date of
receipt of the request. Delay beyond the period, penal provision to be invoked.
■ Banks may ensure that both drop box facility and the facility for acknowledgement of
cheques are made available at collection centres (branches) and no branch should refuse
to give acknowledge of cheques if tendered at the counters. Banks should display on the
drop box itself that “Customers can also tender the cheques at the counter and obtain
acknowledgement on the pay-in-slips”.
■ Banks should put in place an appropriate mechanism to confirm successful credit of
funds to the beneficiaries account transferred through NEFT. In case of any delay or
returning the uncredited amount, banks should pay penal interest at the current RBI

LAF Repo Rate plus 2% for the period of delay/till the date of refund as the case may be
to the affected customers suo moto without waiting form customers.
■ Under the NEFT Procedural Guidelines, banks are required to establish dedicated
Customer Facilitation Centres (CFCs) to handle customer queries/complaints regarding
NEFT transactions and the same should be made available in the website of banks as
well as the website of RBI for easy availability to the customers.
■ In order to extend both the National Electronic Clearing System (NECS) and Regional
Electronic Clearing System (RECL), the participating banks are advised to make efforts
in bringing all their branches under NECS/RECS.
NEFT charges for customers
Maximum charges that can be levied by banks for NEFT transactions as under:-
Value Band Max. charges
(incl. Service
Charges
Up to Rs. 10,000/- 2.50
10,001 to 1 Lakh 5.00
Above 1 Lakh up to 2
Lakh
15.00
Above 2 Lakh 25.00
Mobile Banking transaction limits
.
The transaction limit of Rs. 50,000/- per customer per day has been done away and
banks may place per transaction limits based on their own risk perception with the
approval of their Boards.
Domestic Money Transfers
In order to assist migrant population who do not have access to formal banking channel
for want of proof of identity/address, banks are permitted to put in place three schemes
for person to person (P2P) fund transfers viz.
(a) Cash Pay-out scheme which facilitates transfer of funds from the accounts of their
customers to beneficiaries not having bank accounts through the use of ATMs, BCs etc.
up to `Rs. 10,000 per transaction subject to a monthly cap of `Rs. 25,000 with full
details of the beneficiary
(b) Cash Pay-in scheme where a walk-in / non-account holding customer can transfer
funds to a bank account of a beneficiary etc. up to `Rs. 5000/- per transaction with a
monthly cap of ` Rs. 25,000 with minimum details of the remitter.
(c) Card-to-Card transfers up to `Rs. 5000 per transactions subject to a monthly cap of
` Rs 25,000.
Collection of Instruments – Rules relating thereof
■ Factoring the competitive environment, Banks have been permitted to formulate a

comprehensive and transparent cheque collection policy, taking into account their
technological capabilities. The policy may include immediate credit for local/outstation
cheques, time frame for collection of local/outstation instruments, and interest
payment for delayed collection.
■ Banks are also required to comply with the order passed by the National Consumer
Disputes Redressal Commission (Case no. 82 of 2006) which inter alia includes:-
■ For local cheques, credit and debit shall be given on the same day or at the most the
next day of their presentation in clearing.
■ Timeframe for collection of cheques drawn on State Capitals / major cities / other
locations to be 7/10/14 days respectively. If there is any delay in collection beyond this
period, interest at the rate specified in the Cheque Collection Policy (CCP) of the
bank, shall be paid or at rate applicable for Fixed Deposits for corresponding maturity,
etc.
■ Banks are prohibited from crediting 'account payee' cheque to the account of any
person other than the payee named therein. Banks are not permitted to collect account
payee cheques for any person other than the payee constituent. However, in order to
mitigate the difficulties faced by the members of co-operative credit societies in collection
of account payee cheques, the collecting bank may collect ‘account payee’ cheque drawn
.
for an amount not exceeding Rs. 50,000/- to the account of their customers who are cooperative
credit societies, if the payees of such cheques are the constituents of such cooperative
societies.
■ Banks need not make payment of cheques/drafts/pay orders/ banker’s cheques
bearing that date or any subsequent date, if they are presented beyond the
period of three months from the date of such instrument (w.e.f. 01.04.12)
■ For loss of cheque in transit or in clearing process or at the paying bank’s branch, the
banks are required to reimburse the accountholder related expenses for
obtaining duplicate instruments and also interest for reasonable delays occurred in
obtaining the same. The onus rests with the collecting banker and not the account
holder.
Bills for collection
■ Bills for collection including bills discounted are required to be collected by the
collecting bank through another bank at the realising centre. The bills are to be
forwarded directly by the collecting bank to the bank at the realising centre.
■ The delayed period is reckoned after the normal transit period based on 2 days each
for:-
(i) Despatch of bills; (ii) Presentation of bills of drawees. (iii) Remittance of proceeds to
the Lodger’s bank. (iv) Crediting the proceeds to drawer's account; the lodger’s bank
(collecting bank) should pay interest to the lodger of the bill at 2% over SB accounts
rate. In case the delay is attributing to the drawee's bank, the lodger's bank may

recover interest for such delay from that bank.
■ Banks are required to implement the recommendation of the Goiporia Committee that
dishonoured instruments are returned / despatched to the customer promptly without
delay, in any case within 24 hours.
■ The paying bank is required to return the dishonoured cheques presented through
clearing houses strictly as per the return discipline prescribed for respective clearing
house and for cheques presented directly, it should return dishonoured such cheques
immediately. The collecting bank on receipt of such dishonoured cheques should
despatch it immediately to the payees / holders indicating the reason for return of the
cheque.
■ In order to enforce financial discipline among customers, in case of
dishonour of cheque of Rs. 1 Crore and above drawn on a particular account
for financial reasons on four occasions in a financial year, no fresh cheque
book should be issued. Bank may also consider closing the account at its
discretion. In respect of advances
accounts such as cash credit account, overdraft account, the need for
continuance or otherwise of these credit facilities and the cheque facility
.
relating to these accounts should be reviewed by appropriate authority higher
than the sanctioning authority.
■ Banks may formulate suitable policy for frequent dishonour of cheques of less than
Rs. 1 Crore as also frequent dishonour of ECS mandate with the approval of respective
Boards.
General
Banks are required to extend full co-operation and furnish documentary proof of
dishonour for proceedings before any forum.
Banks are required to adopt with approval of their Boards appropriate procedure for
dealing with dishonoured cheques.
Complaints
Banks are required to provide Complaints/suggestion box at each office besides
maintaining Complaint Book/Register with perforated copies in each set. A copy of the
complaint is also to be forwarded to Controlling Office along with remark of the Branch
Manager within a time frame.
Complaint form along with name of the nodal officer for complaint redressal be provided in
the Homepage of Website to facilitate submission by customers. Complaints received are
to be reviewed by Board for taking corrective steps wherever required. The details are to
be disclosed in the financial results giving the number of complaints received, redressed,
Awards by Ombudsman, etc.
Banks are also required to put in place a proper Grievance Redressal Mechanism and
examine on an on-going basis whether it is found effective in achieving improvement in

customer service in different areas.
Erroneous Debits arising on fraudulent or other transactions
While opening and allowing operation in deposit accounts, banks should remain vigilant
to avoid lapses to safeguard against unscrupulous persons opening accounts mainly to
use them as conduit for fraudulently encashing payment instruments, etc. In such
cases, banks should compensate the customer upon completion of departmental action
or police interrogation as part of their approved Customer Relation Policy.
Safe Deposit Locker/Safe Custody Article Facility
■ Banks have to refrain from restrictive practices such as linking the lockers facility with
placement of fixed or any other deposit beyond what is specifically permitted. Banks
may obtain Fixed Deposits to cover 3 years rent and charges of breaking open the
locker to take care of an eventuality that the locker-hirer neither operates the locker
nor pays rent.
.
■ Bank branches are required to maintain a wait list for the purpose of allotment of lockers
and ensure transparency in allotment of the lockers. A copy of the Agreement may be
passed on to the locker-hirer at the time of allotment of the locker.
■ Banks may carry out customer due diligence for both new and existing
customers at least to the levels prescribed for customers classified as medium risk. If
the customer is classified in a higher risk category, customer due diligence as per KYC
norms applicable to such higher risk category should be carried out.
■ Where the lockers have remained unoperated for more than three years for
medium risk category or one year for a higher risk category, banks should immediately
contact the locker-hirer and advise him to either operate the locker or surrender it. This
exercise should be carried out even if the locker hirer is paying the rent regularly.
■ Nomination facility is available to locker hirer which would provide for nomination and
release of contents of safety lockers/safe custody article to the nominee and protection
against notice of claim of other persons (Sec. 45ZC to 45 ZF of B.R. Act 1949)
Banking Companies (Nomination) Rules 1985
The Banking Companies (Nomination) Rules 1985 together with the new Sections
45ZA to 45ZF of the Banking Regulation Act, 1949 regarding nomination facilities
came into force w.e.f. 1985 provide for:-
a) Nomination Forms for deposit accounts, articles kept in safe custody and
contents of safety lockers.
b) Forms for cancellation and variation of the nominations.
c) Registration of Nominations and cancellation and variation of
nominations, and matters related to the above.
■ Nomination facility can be made available in respect of deposits held in the name of
individuals (single/Joint accounts) including sole proprietorship concerns and Safe
Deposit Locker/Safe Custody. Nomination shall be made only in favour of individuals

and a nominee cannot be an Association, Trust, Society or any other Organisation or
any office-bearer thereof in his official capacity
■ There cannot be more than one nominee in respect of a joint deposit account. In the
case of a joint deposit account the nominee's right arises only after the death of all the
depositors.
■ Banks may allow variation/cancellation of a subsisting nomination by all the surviving
depositor(s) acting together. This is also applicable to deposits having operating
instructions "either or survivor".
.
■ Banks are required to acknowledge in writing to the depositor(s)/ locker hirers (s)
the filing of the relevant duly completed Form of nomination, cancellation and / or
variation of the nomination.
■ Banks may introduce the practice of recording on the face of the passbook the
position regarding availment of nomination facility with the legend "Nomination
Registered". This may be done in the case of term deposit receipts also.
Deceased Depositors – Settlement of claims – Procedure thereof
Accounts with survivor/nominee clause
In case there exists a valid nomination and the deposit account is opened with the
survivorship clause (“either or survivor” or “anyone or survivor” or “former or survivor” or
“latter or survivor”), bank can make payment of the balance in the deposit account to the
survivor(s)/nominee of a deceased deposit account holder which is considered as a
valid discharge of the bank’s liability provided:-
a) The bank has exercised due care and caution in establishing the identity of the
survivor(s)/ nominee and fact of death of the account holder through appropriate
documentary evidence; there is no order from the competent court restraining the
bank from making the payment from the account of the deceased; and
b) Survivor(s)/nominee has been advised in clear terms that he would be receiving
the payment from the bank as a trustee of the legal heirs of the deceased
depositor.
Banks may desist from insisting production of succession certificate, letter of
administration or probate, etc., or obtain any bond of indemnity or surety from the
survivor(s)/nominee, irrespective of the amount standing to the credit of the deceased
account holder.
Accounts without the survivor/nominee clause
In deceased deposit accounts without the survivor/nominee clause, banks may fix some
minimum threshold limit for settlement of claim without insisting on production of any
documents
other than a letter of indemnity.
Premature termination of Term deposit accounts would not attract any penalty and such
clause may be incorporated in the opening form itself.

Any claim on the balances lying in deceased depositors received from survivor(s) /
nominee(s) should be settled within a period not exceeding 15 days from the date
of receipt of the claim subject to the production of proof of death of the depositor
and suitable identification of the claim(s), to the bank's satisfaction.
.
Access to Safe Deposit Locker/Safe Custody articles (with survivor/nominee
clause)
In the event of death of sole locker hirer, banks may give access to the locker with
liberty to remove the contents of the locker to the nominee and in case of the locker
hired jointly with operational instruction to operate under joint signatures and nomination
exists, bank may give access to the locker with liberty to remove the articles jointly to
the survivor(s)/nominee.
In the case of the locker was hired jointly with survivorship clause and the hirers
instructed that the access of the locker should be given over to "either or survivor",
"anyone or survivor" or "former or survivor" or according to any other survivorship
clause, banks may follow the mandate in the event of the death of one or more of the
locker-hirers.
Access to Safe Deposit Locker/Safe Custody articles (without survivor/nominee
clause)
Banks are required to evolve a customer-friendly procedure drawn up in consultation with
their legal advisers for giving access to legal heir(s) / legal representative of the
deceased locker hirer. Similar procedure should be followed for the articles under safe
custody of the bank.
Banks are also required to prepare an inventory before returning articles left in safe
custody/before permitting removal of the contents of the safe deposit locker. Banks are
not required to open sealed/closed packets left with them in Safe Custody or found in
locker while releasing them to the nominee and surviving locker heirs/depositor of safe
custody article. Banks are required to put in their website the entire procedure for
improvement in customer service.
Settlement of claims in respect of missing persons
Banks are required to formulate a policy which would enable them to settle the
claims of a missing person after considering the legal opinion and taking into
account the facts and circumstances of each case (claims are to be settled as per
provisions u/s 107/108 of Indian Evidence Act 1872).
In order to avoid inconvenience and undue hardship to the common person, banks
may, keeping in view their risk management systems, fix a threshold limit, up to
which claims in respect of missing persons could be settled without insisting on
production of any documentation other than (i) FIR and the non-traceable report issued
by police authorities and (ii) letter of indemnity.
Release of other assets of deceased borrowers to legal heirs

Banks need not insist upon legal representation for release of other assets of
deceased customers irrespective of the amount involved. However, in case there are
.
disputes, bank may call for succession certificates from legal heirs of deceased
borrowers or bank has a reasonable doubt about genuineness of the claimant/s being
the only legal heir/s of the borrower.
Unclaimed deposits/Inoperative Accounts in banks
■ A savings as well as current account should be treated as inoperative / dormant if
there are no transactions in the account for over a period of two years.
■ If credits by way of interest on Fixed Deposit account is being received in the Savings
Bank accounts as per the mandate of the customer, the same can be treated as a
customer induced transaction and the account can be treated as an operative
account. It will become inoperative only after 2 years from the date of the last
credit entry of the interest on Fixed Deposit account.
■ For the purpose of classifying an account as ‘inoperative’ both the type of
transactions i.e., debit as well as credit transactions induced at the instance of
customers as well as third party should be considered. However, the service charges
levied by the bank or interest credited by the bank should not be considered
■ Banks need to ascertain the whereabouts of the account holder(s) by letters,
telephone calls, or contacting legal heirs, or contacting the introducers or employers
as available record or any other means suited to them in case of no operations
(credits other than periodic interest or debiting service charges) for more than one
year.
■ Periodical interest should continue to be credited in the inoperative accounts and
proceeds of FDR unpaid, the amount left unclaimed should attract Savings Bank rate
of interest. Inoperative accounts should get audited periodically. There should not be
any charge on activation of an inoperative account.
Directions on inoperative/dormant accounts
Considering the increase in the amount of the unclaimed deposits with banks year
after year and the inherent risk associated with such deposits, banks should play a
more pro-active role in finding the whereabouts of the account holders whose
accounts
have remained inoperative. Further several complaints were received in respect of
difficulties faced by the customers on account of their accounts having been classified
as inoperative. Moreover, there is a feeling that banks are undeservedly enjoying the
unclaimed deposits, while paying no interest on it. Keeping these factors in view, the
instructions issued by RBI have been reviewed and banks are advised to follow the
instructions detailed below while dealing with inoperative accounts. RBI, in the light of
the foregoing, has issued certain directions to banks while dealing with the inoperative
accounts as under:-

.
a) Banks should undertake an annual review of accounts in which there are no
operations (i.e., no credit or debit other than crediting of periodic interest or
debiting of service charges) for more than one year.
b) In case letters sent returned undelivered, enquiry may be made to ascertain the
whereabouts of customers or their legal heirs in case they are deceased.
c) In case the whereabouts of the customers are not traceable, bank may contact
the introducer or employer/or any other person whose details are available with
them.
d) A savings as well as current account should be treated as inoperative/dormant
if there are no transactions in the account for over a period of 2 years.
e) In case the account holder responds giving reasons for not operating the
account, banks may continue classifying the account as an operative account
for one more year within which period the account holder may be requested to
operate the account.
f) For the purpose of classifying an account as ‘inoperative’ both the
type of transactions i.e., debit as well as credit transactions induced at
the instance of customers as well as third party should be considered.
g) In case of crediting interest on Fixed Deposit account to Savings Bank account
as per the mandate given by the customer and there are no other operations in
the savings bank account, such accounts should not be treated as inoperative
as the credits are customer induced transaction.
h) The account may be segregated, but, with least inconvenience to the
customers. The classification is only to bring to the attention of dealing staff,
the increased risk in the account.
i) Operation in inoperative accounts may be allowed after due diligence as per
risk category of the customer.
j) No charge should be levied for activation of inoperative accounts.
k) The inoperative accounts ledger should be audited by the internal auditors/
statutory auditors of the bank periodically.
l) Interest on savings bank accounts should be credited on regular basis whether
the account is operative or not.
m) If a Fixed Deposit Receipt matures and proceeds are unpaid and left unclaimed
with the bank, the same will attract savings bank rate of interest.
n) Banks may also consider launching a special drive for finding the whereabouts
of the customers / legal heirs in respect of existing accounts which have already
been transferred to the separate ledger of ‘inoperative accounts’, etc.
In addition to the above, banks may also consider displaying the list of unclaimed
deposits/inoperative accounts which are inactive /inoperative for 10 years or more in
their respective websites giving only the names and address. In case such accounts

are not in the name of individuals, the names of individuals authorized to operate the
accounts should also be indicated.
Customer Confidentiality Obligations
.
Banks are not supposed to divulge any information about the account to third parties
except where:-
a) disclosure is under compulsion of law
b) there is duty to the public to disclose
c) interest of bank requires disclosure and
d) the disclosure is made with the express or implied consent of the customer.
The information collected from the customer for the purpose of opening of
account is to be treated as confidential and not divulge any details thereof for cross
selling or any other purposes.
Transfer of account from one branch to another
Instructions from customer for transfer of his account to another office should be carried
out immediately by transferring the account opening form, specimen signature, standing
instructions, etc. under advice to the customer.
Co-ordination with officers of Central Board of Direct Taxes
Banks should maintain greater co-ordination between the Income-Tax departments and
extend necessary help/co-ordination to tax officials whenever required.
Declaration of Holiday under the Negotiable Instruments Act, 1881
In terms of Section 25 of the Negotiable Instruments Act, 1881, the expression "public
holiday" includes Sunday and any other day declared by the Central Government by
notification in the Official Gazette to be a public holiday.
This power has been delegated to State Govt. by Central Govt. subject to the condition
that the Central Government may itself exercise the said function, should it deem fit to
do so and this implies that when Central Government itself has notified a day as "public
holiday" under Section 25 of the Negotiable Instruments Act, 1881, there is no need
for banks to wait for the State Government notification.
Miscellaneous
■ In predominantly residential areas banks may keep their branches open for business
on Sundays by suitably adjusting the holidays and banks should keep rural branches
open on weekly market day.
■ Banks are required to accept standing instructions in Savings and Current
accounts and the same can be enlarged to include payments on account of
taxes, bills, rents, school/college fees, etc.
■ Branch Manger may be permitted to allow clean overdraft for small amounts to
customers whose dealings have been satisfactory.
■ All transactions, including payment of interest on deposits/charging of interest on
advances, should be rounded off to the nearest rupee.

■ In order to keep a watch on the progress achieved by the bank in the implementation
of
the recommendations of various working groups/Committees on customer service,
banks may examine the recommendations which have relevance in the present day
banking and continue to implement them.
■ Banks should follow various provisions of the Code of Bank’s Commitment
to Customers, implementation of which is monitored by the Banking Codes and
Standards Board of India (BCSBI), etc.
Ref Master Circular from RBI on customer service (www.rbi.org.in)
Customer service in banks
1. Introduction
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., to bring in improvement
in performance and procedure involved in the dispensation of hassle-free customer service.
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. It has
constantly brought into sharp focus the inadequacy in banking services available to the common person
and the need to benchmark the current level of service, review the progress periodically,

enhance the timeliness and quality, rationalize the processes taking into account technological
developments, and suggest appropriate incentives to facilitate change on an ongoing basis
through instructions/guidelines.
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. So defined, a
‘Customer’ may include:
a person or entity that maintains an account and/or has a business relationship with the bank;
one on whose behalf the account is maintained (i.e. the beneficial owner);
beneficiaries of transactions conducted by professional intermediaries, such as Stock Brokers,

Chartered Accountants, Solicitors, etc., as permitted under the law, and
any person or entity connected with a financial transaction which can pose significant reputational or
other risks to the bank, say, a wire transfer or issue of a high value demand draft as
a single transaction.
1.1 General
Policy for general management of the branches
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:-
(a) providing infrastructure facilities by branches by bestowing particular attention to providing adequate
space, proper furniture, drinking water facilities, with specific emphasis on
pensioners, senior citizens, disabled persons, etc.
(b) providing entirely separate enquiry counters at their large / bigger branches in addition to a regular
reception counter.
(c) displaying indicator boards at all the counters in English, Hindi as well as in the concerned regional
language. Business posters at semi-urban and rural branches of banks should also be
in the concerned regional languages.

(d) posting roving officials to ensure employees' response to customers and for helping out customers in
putting in their transactions.
(e) providing customers with booklets consisting of all details of service and facilities available at the bank
in Hindi, English and the concerned regional languages.
(f) use of Hindi and regional languages in transacting business by banks with customers, including
communications to customers.
(g) reviewing and improving upon the existing security system in branches so as to instil confidence
amongst the employees and the public.
(h) wearing on person an identification badge displaying photo and name thereon by the employees.
(i) Periodic change of desk and entrustment of elementary supervisory jobs.
(j) Training of staff in line with customer service orientation. Training in Technical areas of banking to the
staff at delivery points. Adopting innovative ways of training / delivery
ranging from job cards to roving faculty to video conferencing.
(k) visit by senior officials from Controlling Offices and Head Office to branches at periodical intervals for
on the spot study of the quality of service rendered by the branches.
(l) rewarding the best branches from customer service point of view by annual awards/running shield.
(m) Customer service audit, Customer surveys.
(n) holding Customer relation programmes and periodical meetings to interact with different cross
sections of customers for identifying action points to upgrade the customer service with
customers.
(o) clearly establishing a New Product and Services Approval Process which should require approval by
the Board especially on issues which compromise the rights of the Common Person.
(p) appointing Quality Assurance Officers who will ensure that the intent of policy is translated into the
content and its eventual translation into proper procedures.
2. Customer Service: Institutional Framework
Need for Board's involvement
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.
2.1 Customer Service Committee 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.
2.1.1 Role of the Customer Service Committee
Customer Service Committee of the Board, illustratively, could address the following:-
formulation of a Comprehensive Deposit Policy
issues such as the treatment of death of a depositor for operations of his account
product approval process with a view to suitability and appropriateness
annual survey of depositor satisfaction
tri-enniel audit of such services.
Besides, the Committee could also examine any other issues having a bearing on the quality of customer
service rendered.
2.1.2 Monitoring the implementation of awards under the Banking Ombudsman Scheme
The Committee should also play a more pro-active role with regard to complaints / grievances resolved by
Banking Ombudsmen of the various States.
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. After detailed examination of the complaints / grievances of
customers of banks and after perusal of the comments of banks, the Banking Ombudsmen issue their
awards in respect of individual complaints to redress the grievances. 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 :

a) place all the awards given by the Banking Ombudsman before the Customer Service Committee to
enable them to address issues of systemic deficiencies existing in banks, if any, brought out
by the awards; and
b) place all the awards remaining unimplemented for more than three months with the reasons therefor
before the Customer Service Committee to enable the Customer Service Committee to report
to the Board such delays in implementation without valid reasons and for initiating necessary remedial
action.
2.1.3 Board Meeting to Review and Deliberate on Customer Service
Banks are advised to review customer service / customer care aspects in the bank and submit a detailed
memorandum in this regard to the Board of Directors, once every six months and initiate
prompt corrective action wherever service quality / skill gaps have been noticed.
2.2 Standing Committee on Customer Service
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. The CPPAPS therefore recommended that
the Ad hoc Committees should be converted into Standing Committees on Customer Service.
On the basis of the above recommendation, banks are required to convert the existing Ad hoc
Committees into a Standing Committee on Customer Service. The Ad hoc Committees when converted
as a
permanent Standing Committee cutting across various departments can serve as the micro level
executive committee driving the implementation process and providing relevant feedback while the
Customer Service Committee of the Board would oversee and review / modify the initiatives. Thus the two
Committees would be mutually reinforcing with one feeding into the other.
The constitution and functions of the Standing Committee may be on the lines indicated below :-

i) 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.
ii) 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.
iii) 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.
iv) A brief report on the performance of the Standing Committee during its tenure indicating, inter alia, the
areas reviewed, procedures / practices identified and simplified / introduced may
be submitted periodically to the Customer Service Committee of the Board.
With the conversion of the Ad hoc Committees into Standing Committees on Customer Service, the
Standing Committee will act as the bridge between the various departments of the bank and the
Board / Customer Service Committees of the Board.
2.3 Branch Level Customer Service Committees
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. 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.

The branch level committees may also submit quarterly reports giving inputs / suggestions to the
Standing Committee on Customer Service thus enabling the
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Standing Committee to examine them and provide relevant feedback to the Customer Service Committee
of the Board for necessary policy / procedural action.
2.4 Nodal department / official for customer service
Each bank is expected to have a nodal department / official for customer service in the Head Office and
each controlling office, with whom customers with grievances can approach in the first
instance and with whom the Banking Ombudsman and RBI can liaise.
3. Board approved policies on Customer Service
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:
3.1 Comprehensive Deposit Policy
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.
3.2 Cheque Collection Policy
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:
Immediate Credit for Local / Outstation cheques
Time frame for Collection of Local / Outstation Instruments
Interest payment for delayed collection

.
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Broad principles enumerated in paragraph 14.1 should be taken into account while formulating the policy.
3.3 Customer Compensation Policy
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:-
(a) Erroneous Debits arising on fraudulent or other transactions
(b) Payment of interest for delays in collection
(c) Payment of interest for delay in issue of duplicate draft
(d) Other unauthorised actions of the bank leading to a financial loss to customer
3.4 Customer Grievance Redressal Policy
Banks must have a well documented Customer Grievance Redressal Policy duly approved by their
Boards. The Policy should be framed based on the broad principles enumerated in paragraph 16 of
this Circular.
3.5 Giving publicity to the policies
(i) Banks should ensure that wide publicity is given to the above policies formulated by them by placing
them prominently on the web-site and also otherwise widely disseminating the policies
such as, displaying them on the notice board in their branches.
(ii) The customers should be clearly apprised of the assurances of the bank on the services on these
aspects at the time of establishment of the initial relationship be it as a depositor,
borrower or otherwise.
(iii) Further, they may also take necessary steps to keep the customers duly informed of the changes in
the policies formulated by them from time to time.
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4. Financial Inclusion
4.1 Basic Savings Bank Deposit Account (BSBDA)

Banks are advised to offer a 'Basic Savings Bank Deposit Account' which will offer following minimum
common facilities to all their customers :
i. The 'Basic Savings Bank Deposit Account' should be considered a normal banking service available to
all.
ii. This account shall not have the requirement of any minimum balance.
iii. The services available in the account will include deposit and withdrawal of cash at bank branch as
well as ATMs; receipt / credit of money through electronic payment channels or by
means of deposit / collection of cheques drawn by Central / State Government agencies and departments.
iv. 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.
v. Facility of ATM card or ATM-cum-Debit Card.
vi. The above facilities will be provided without any charges. Further, no charge will be levied for non-
operation / activation of in-operative 'Basic Savings Bank Deposit Account'.
vii. 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.
viii. The 'Basic Savings Bank Deposit Account' would be subject to RBI instructions on Know Your
Customer (KYC) / Anti-Money Laundering (AML) for opening of bank accounts issued from time to
time. If such account is opened on the basis of simplified KYC norms, the account would additionally be
treated
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as a 'Small Account' and would be subject to conditions stipulated for such accounts as indicated in
paragraph 3.2.2(I)(A)(vi) of Master Circular dated July 01, 2015 on 'KYC norms / AML
standards / Combating of Financing of Terrorism (CFT) / Obligation of banks under PMLA, 2002'.
ix. Holders of 'Basic Savings Bank Deposit Account' will not be eligible for opening any other savings
bank deposit account in that bank. If a customer has any other existing savings bank
deposit account in that bank, he / she will be required to close it within 30 days from the date of opening a
'Basic Savings Bank Deposit Account'.

x. The existing basic banking 'no-frills' accounts should be converted to 'Basic Savings Bank Deposit
Account' as per the instructions contained above.
4.1.1 BSBDA – Frequently Asked Questions (FAQs)
In view of several queries received in connection with BSBDAs, a list of FAQs was issued. These FAQs
are furnished in Annex VII.
4.2 IT-enabled Financial Inclusion
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.
A few banks have already initiated certain pilot projects in different remote parts of the country utilizing
smart cards/mobile technology to extend banking services similar to those
dispensed from branches. 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:
• highly secure,
• amenable to audit and
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• follow widely accepted open standards to allow inter-operability among the different systems adopted by
different banks.
4.3 Printed material in trilingual form
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., in trilingual form i.e., English, Hindi and the concerned
Regional Language.
4.4 Rights of Transgender Persons – Changes in bank forms/ applications 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, 2014 of the Supreme Court
in the case of National Legal Services Authority v. Union of India and others [AIR
2014 SC 1863: (2014) 5 SCC 438] on treating all transgender persons as ‘third gender’. The Supreme
Court, in that case, upheld transgender persons’ right to decide their self-identified
gender and directed the Centre and State Government to grant legal recognition of their gender identity
such as male, female or as third gender.
Banks are, therefore, directed to include ‘third gender’ in all forms/applications etc. prescribed by the
Reserve Bank or the banks themselves, wherein any gender classification is envisaged.
5. Opening / Operation of Deposit Accounts
5.1 Customer Identification Procedure for individual accounts
Banks should be generally guided by RBI instructions on KYC / AML for opening of accounts.
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5.1.1 Intra-bank Deposit Accounts Portability
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. The
customer should be allowed to transfer his account from one branch to another branch without insisting
on fresh proof of address and on the basis of a self-declaration from the account holder
about his / her current address, subject to submitting proof of address within a period of six months.
Periodical updation of KYC data would continue to be done by bank as per prescribed
periodicity.
5.2 Savings Bank Rules
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.
5.3 Photographs of depositors

Banks should obtain and keep on record photographs of all depositors/account holders in respect of
accounts opened by them subject to the following clarifications:
(i) The instructions cover all types of deposits including fixed, recurring, cumulative, etc.
(ii) They apply to all categories of depositors, whether resident or non-resident. Only banks, Local
Authorities and Government Departments (excluding public sector undertakings or quasi-
Government bodies) will be exempt from the requirement of photographs.
(iii) The banks may not insist on photographs in case of accounts of staff members only (Single/Joint).
(iv) The banks should obtain photographs of all persons authorised to operate the accounts viz., Savings
Bank and Current Accounts without exception.
(v) The banks should also obtain photographs of the 'Pardanishin' women.
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(vi) The banks may obtain two copies of photographs and obtaining photocopies of driving
licence/passport containing photographs in place of photographs would not suffice.
(vii) The banks should not ordinarily insist on the presence of account holder for making cash withdrawals
in case of 'self' or 'bearer' cheques unless the circumstances so warrant. The banks
should pay 'self' or 'bearer' cheques taking usual precautions.
(viii) Photographs cannot be a substitute for specimen signatures.
(ix) Only one set of photographs need be obtained and separate photographs should not be obtained for
each category of deposit. The applications for different types of deposit accounts should
be properly referenced.
(x) Fresh photographs need not be obtained when an additional account is desired to be opened by the
account holder.
(xi) In the case of operative accounts, viz. Savings Bank and Current accounts, photographs of persons
authorised to operate them should be obtained. In case of other deposits, viz., Fixed,
Recurring, Cumulative, etc., photographs of all depositors in whose names the deposit receipt stands
may be obtained except in the case of deposits in the name of minors where guardians'
photographs should be obtained.
5.4 Minimum balance in savings bank accounts

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., if the minimum
balance is not maintained. Any charge levied subsequently should be transparently made known to all
depositors in advance with one month’s notice. 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, 2014, banks are not permitted to levy penal charges for non-maintenance of minimum
balances in any inoperative account.
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5.4.1 Levy of Penal Charges on Non-Maintenance of Minimum balance in savings bank accounts
With effect from April 1, 2015, while levying charges for non-maintenance of minimum balance in savings
bank accounts, banks shall adhere to the following additional guidelines:
(i) In the event of a default in maintenance of minimum balance / average minimum balance as agreed to
between the bank and customer, the bank should notify the customer clearly by SMS /
email / letter etc. that in the event of the minimum balance not being restored in the account within a
month from the date of notice, penal charges will be applicable.
(ii) In case the minimum balance is not restored within a reasonable period, which shall not be less than
one month from the date of notice of shortfall, penal charges may be recovered under
intimation to the account holder.
(iii) The policy on penal charges to be so levied may be decided with the approval of Board of the bank.
(iv) The penal charges should be directly proportionate to the extent of shortfall observed. 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.
(v) It should be ensured that such penal charges are reasonable and not out of line with the average cost
of providing the services.
(vi) It should be ensured that the balance in the savings account does not turn into negative balance
solely on account of levy of charges for non-maintenance of minimum balance.

These guidelines should be brought to the notice of all customers apart from being disclosed on the
bank's website.
5.5 Purchase of Local Cheques, Drafts, etc.,
during suspension of Clearing
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
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realize promptly the proceeds of cheques, drafts, etc., drawn on the local banks other than those with
whom they maintain accounts. 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., deposited in their accounts for collection, special consideration being shown in respect of
cheques drawn by Government departments/companies of good standing and repute, as
also demand drafts drawn on local banks. 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.
5.6 Statement of accounts / Pass Books
5.6.1 Issuance of Passbooks to Savings Bank Account holders
(Individuals)
(i) A passbook is a ready reckoner of transactions and is handy and compact and as such, is far more
convenient to the small customer than a statement of account. Use of statements has some
inherent difficulties viz., (a) these need to be filed regularly (b) the opening balance needs to be tallied
with closing balance of last statement (c) loss of statements in postal transit is

not uncommon and obtaining duplicates thereof involves expense and inconvenience (d) ATM slips
during the interregnum between two statements does not provide a satisfactory solution as full
record of transactions is not available and (e) there are a large number of small customers who do not
have access to computers / internet, etc. 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.
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(ii) It has come to our notice that some banks are not issuing pass books to their savings banks account
holders (individuals) and only issue a computer generated account statement even when
the customer desires pass book facility. Banks are, therefore, advised to strictly adhere to the extant
instructions.
5.6.2. Updating passbooks
(i) 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.
(ii) 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.
(iii) 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.
5.6.3 Entries in passbooks / statement of accounts
(i) Banks should give constant attention to ensure entry of correct and legible particulars in the pass
books and statement of accounts.

(ii) The banks often show the entries in depositors' passbooks / statements of accounts, as "by clearing"
or "by cheque". Further, it is observed that in the case of Electronic Clearing
System (ECS) and RBI Electronic Fund Transfer (RBIEFT), banks generally do not provide any details
even though brief particulars of the remittance are provided by the receiving bank. In some
cases, computerized entries use codes which just cannot be deciphered. With a view to avoiding
inconvenience to depositors, banks should avoid such inscrutable entries in passbooks /
statement of accounts and ensure that brief, intelligible particulars are invariably entered in passbooks /
statement of account.
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5.6.4 Maintenance of savings bank pass books: precautions
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:
(i) Branches should accept the pass books and return them against tokens.
(ii) Pass books remaining with the branches should be held in the custody of
named responsible officials.
(iii) While remaining with the branch, pass books should be held under lock and
key overnight.
5.6.5 Providing monthly statement of accounts
(i) Banks may ensure that they adhere to the monthly periodicity while sending
statement of accounts.
(ii) 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.
(iii) Further, banks should advise their Inspecting Officers to carry out sample
check at the time of internal inspection of branches to verify whether the
statements are being despatched in time.

5.6.6 Address / Telephone Number of the Branch in Pass Books / Statement of Accounts
In order to improve the quality of service available to customers in branches, it would be useful if the
address / telephone number of the branch is mentioned on the passbooks / statement of
accounts.
Banks are therefore advised to ensure that full address / telephone number of the branch is invariably
mentioned in the passbooks / statement of accounts issued to account holders.
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5.6.7 Printing of MICR code and IFSC code on passbook / statement of account
The Magnetic Ink Character Recognition (MICR) code is necessary for all Electronic Clearing Service
(ECS – Credit and Debit) transactions and the Indian Financial System Code (IFSC) is a
pre-requisite for National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS)
transactions. At present, this information is made available on the cheque leaf along with
the IFSC code of the branch. However, on a review, banks are advised to take necessary steps to
provide this information in all passbook / statement of account of their account holders.
5.7 Issue of Cheque Books
5.7.1 Issuing large number of cheque books
(issued to Public Sector Banks)
Banks may issue cheque books with larger number of (20/25) leaves if a customer demands the same
and also ensure that adequate stocks of such cheque books (20/25 leaves) are maintained with
all the branches to meet the requirements of the customers.
Banks should take appropriate care while issuing large number of cheque books. It should be done in
consultation with the Controlling Office of the bank.
5.7.2 Writing the cheques in any language
All cheque forms should be printed in Hindi and English. The customer may, however, write cheques in
Hindi, English or in the concerned regional language.
5.7.3 Dispatching the cheque book by courier
The procedure of disallowing depositors to collect the cheque book at the branch and insisting on
dispatching the cheque book by courier after forcibly obtaining a declaration from the

depositor that a dispatch by the courier is at depositor's risk is an unfair practice. Banks should refrain
from obtaining such undertakings from depositors and ensure that cheque books are
delivered over the counters on request to the depositors or his authorized representative.
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5.7.4 Acceptance of cheques bearing a date as per
National Calendar (Saka Samvat) for payment
Government of India has accepted Saka Samvat as National Calendar with effect from 22 March 1957
and all Government statutory orders, notifications, Acts of Parliament, etc. bear both the
dates i.e., Saka Samvat as well as Gregorian Calendar. An instrument written in Hindi having date as per
Saka Samvat calendar is a valid instrument. Cheques bearing date in Hindi as per the
National Calendar (Saka Samvat) should, therefore, be accepted by banks for payment, if otherwise in
order. Banks can ascertain the Gregorian calendar date corresponding to the National Saka
calendar in order to avoid payment of stale cheques.
5.7.5 Issue of Multicity / Payable at All Branches Cheques by CBS enabled Banks:
In order to bring efficiency in the cheque clearing, all CBS enabled banks have been advised to issue only
“payable at par” / “multi-city” CTS 2010 Standard cheques to all eligible customers
without extra charges with appropriate Board approved risk management procedures based on risk
categorization of accounts. Banks have been advised not to charge their savings bank account
customers for issuance of CTS-2010 standard cheques when they are issued for the first time.
5.8 Term Deposit Account
5.8.1 Issue of term deposit receipt
Bank should issue term deposit receipt indicating therein full details, such as, date of issue, period of
deposit, due date, applicable rate of interest, etc.
5.8.2 Transferability of deposit receipts
Term deposits should be freely transferable from one office of bank to another.
5.8.3 Disposal of deposits

Advance instructions from depositors for disposal of deposits on maturity may be obtained in the
application form itself. Wherever such instructions are not obtained, banks should ensure
sending of intimation of impending due date of maturity well in advance to their depositors as a rule in
order to extend better customer service.
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5.8.4 Notifying the change in interest rates
Change in interest rate on deposits should be made known to customers as well as bank branches
expeditiously.
5.8.5 Payment of interest on fixed deposit –
Method of calculation of interest
Indian Banks’ Association (IBA) Code for Banking Practice has been issued by IBA for uniform adoption
by the member banks. The Code is intended to promote good banking practices by setting
out minimum standards, which member banks should follow in their dealings with customers. IBA, for the
purpose of calculation of interest on domestic term deposit, has prescribed that on
deposits repayable in less than three months or where the terminal quarter is incomplete, interest should
be paid proportionately for the actual number of days reckoning the year at 365 days.
Some banks are adopting the method of reckoning the year at 366 days in a Leap year and 365 days in
other years. While banks are free to adopt their methodology, they should provide
information to their depositors about the manner of calculation of interest appropriately while accepting
the deposits and display the same at their branches.
5.8.6 Premature withdrawal of term deposit
A bank, on request from the depositor, should allow withdrawal of a term deposit before completion of the
period of the deposit agreed upon at the time of making the deposit. The bank will
have the freedom to determine its own penal interest rate of premature withdrawal of term deposits. The
bank should ensure that the depositors are made aware of the applicable penal rate
along with the deposit rate. While prematurely closing a deposit, interest on the deposit for the period that
it has remained with the bank will be paid at the rate applicable to the period

for which the deposit remained with the bank and not at the contracted rate. No interest is payable, where
premature withdrawal of deposits takes place before completion of the minimum period
prescribed. With effect from April 1, 2013 banks will have the discretion to disallow premature withdrawal
of a term deposit in respect of bulk deposits of `1 crore and above of all
depositors, including deposits of individuals and HUFs. Bank should, however, notify such depositors of
its policy of disallowing premature withdrawal in advance, i.e., at the time
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of accepting such deposits. A bank on request from a depositor shall allow withdrawal of a Rupee term
deposits of less than 1 crore, before completion of the period of the deposit agreed upon
at the time of making the deposit. Bank will have the freedom to determine its own penal interest rates for
premature withdrawal of term deposits. Bank should ensure that the depositors are
made aware of the applicable penal rates along with the deposit rates. The revised guidelines are made
applicable with effect from April 1, 2013.
5.8.6.1 Repayment of Term/Fixed Deposits in banks:
Some banks insist on the signatures of both the depositors to allow repayment of money in fixed/term
deposits, though the deposit account is opened with operating instructions (sometimes
called ‘repayment instructions’), ‘Either or Survivor’ or ‘Former or Survivor’. Such insistence on the
signatures of both the depositors has the effect of making the mandate given by the
depositors redundant. This, in turn, results in unjustified delays and allegations of poor customer service.
1. It is clarified that if fixed/term deposit accounts are opened with operating instructions ‘Either or
Survivor’, the signatures of both the depositors need not be obtained for payment of
the amount of the deposits on maturity. However, the signatures of both the depositors may have to be
obtained, in case the deposit is to be paid before maturity. If the operating instruction
is ‘Either or Survivor’ and one of the depositors expires before the maturity, no pre-payment of the
fixed/term deposit may be allowed without the concurrence of the legal heirs of the
deceased joint holder. This, however, would not stand in the way of making payment to the survivor on
maturity.

2. In case the mandate is ‘Former or Survivor’, the ‘Former’ alone can operate/withdraw the matured
amount of the fixed/term deposit, when both the depositors are alive. However, the
signature of both the depositors may have to be obtained, in case the deposit is to be paid before maturity.
If the former expires before the maturity of the fixed/term deposit, the
‘Survivor’ can withdraw the deposit on maturity. Premature withdrawal would however require the consent
of both the parties, when both of them are alive, and that of the surviving depositor
and the legal heirs of the deceased in case of death of one of the depositors.
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3. If the joint depositors prefer to allow premature withdrawals of fixed/term deposits also in accordance
with the mandate of ‘Either or Survivor’ or ‘Former or Survivor’, as the case may
be, it would be open to banks to do so, provided they have taken a specific joint mandate from the
depositors for the said purpose. In other words, in case of term deposits with "Either or
Survivor" or "Former or Survivor" mandate, banks are permitted to allow premature withdrawal of the
deposit by the surviving joint depositor on the death of the other, only if, there is a
joint mandate from the joint depositors to this effect.
4. It has come to our notice that many of the banks have neither incorporated such a clause in the
account opening form nor have they taken adequate measures to make the customers aware of
the facility of such mandate, thereby putting the "surviving" deposit account holder(s) to unnecessary
inconvenience. Banks are, therefore, advised to invariably incorporate the aforesaid
clause in the account opening form and also inform their existing as well as future term deposit holders
about the availability of such an option.
5. The joint deposit holders may be permitted to give the mandate either at the time of placing fixed
deposit or anytime subsequently during the term / tenure of the deposit. If such a
mandate is obtained, banks can allow premature withdrawal of term / fixed deposits by the surviving
depositor without seeking the concurrence of the legal heirs of the deceased joint deposit
holder. It is also reiterated that such premature withdrawal would not attract any penal charge.

6. When a fixed deposit account is opened in the joint names of two depositors on ‘Either or Survivor’
basis and the said joint depositors already have a savings bank account in their names
jointly on ‘Either or Survivor’ instructions, on maturity of the fixed deposit, proceeds of the matured fixed
deposit can be credited to the joint savings bank account already opened in the
bank. There is no need for opening a separate savings bank account in the name of the first depositor for
crediting the proceeds of the fixed deposit.
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5.8.7 Renewal of Overdue deposits
All aspects concerning renewal of overdue deposits may be decided by individual banks subject to their
Board laying down a transparent policy in this regard and the customers being notified
of the terms and conditions of renewal including interest rates, at the time of acceptance of deposit. The
policy should be non-discretionary and non-discriminatory.
5.8.8 Addition or deletion of the name/s of joint account holders
A bank may, at the request of all the joint account holders, allow the addition or deletion of name/s of joint
account holder/s if the circumstances so warrant or allow an individual
depositor to add the name of another person as a joint account holder. However, in no case should the
amount or duration of the original deposit undergo a change in any manner in case the
deposit is a term deposit.
A bank may, at its discretion, and at the request of all the joint account holders of a deposit receipt, allow
the splitting up of the joint deposit, in the name of each of the joint account
holders only, provided that the period and the aggregate amount of the deposit do not undergo any
change.
Note: NRE deposits should be held jointly with non-residents only. NRO accounts may be held by non-
residents jointly with residents.
5.8.9 Payment of interest on accounts frozen by banks
Banks are at times required to freeze the accounts of customers based on the orders of the enforcement
authorities. The issue of payment of interest on such frozen accounts was examined in

consultation with Indian Banks’ Association and banks are advised to follow the procedure detailed below
in the case of Term Deposit Accounts frozen by the enforcement authorities:
(i) A request letter may be obtained from the customer on maturity. While obtaining the request letter from
the depositor for renewal, banks should also advise him to indicate the term for
which the deposit is to be renewed. In case the depositor does not exercise his option of choosing the
term for renewal, banks may renew the same for a term equal to the original term.
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(ii) No new receipt is required to be issued. However, suitable note may be made regarding renewal in the
deposit ledger.
(iii) Renewal of deposit may be advised by registered letter / speed post / courier service to the concerned
Government department under advice to the depositor. In the advice to the
depositor, the rate of interest at which the deposit is renewed should also be mentioned.
(iv) If overdue period does not exceed 14 days on the date of receipt of the request letter, renewal may be
done from the date of maturity. If it exceeds 14 days, banks may pay interest for
the overdue period as per the policy adopted by them, and keep it in a separate interest free sub-account
which should be released when the original fixed deposit is released.
Further, with regard to the savings bank accounts frozen by the Enforcement authorities, banks may
continue to credit the interest to the account on a regular basis.
5.8.10 Acknowledgement by banks at the time of submission of Form 15-G / 15-H
Banks are not required to deduct TDS from depositors who submit declaration in Form 15-G/15-H under
Income Tax Rules, 1962. However, it has been brought to our notice that despite submission
of Form 15-G/15-H by customers, banks are deducting tax at source, at times, causing inconvenience to
customers resulting in a number of complaints. Such instances arise because either the
forms are misplaced or a track is not kept of forms received in the branches.
The matter has been examined by us in consultation with Indian Banks’ Association (IBA). With a view to
protect interest of the depositors and for rendering better customer service, banks are
advised to give an acknowledgment at the time of receipt of Form 15-G/15-H. This will help in building a
system of accountability and customers will not be put to inconvenience due to any

omission on part of the banks.
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5.8.11 Timely Issue of TDS Certificate to Customers
Some banks are not providing TDS Certificate in Form 16A to their customers in time, causing
inconvenience to customers in filing income-tax returns.
With a view to protect the interests of the depositor and for rendering better customer service, banks are
advised to provide TDS Certificate in Form 16A, to their customers in respect of
whom they (banks) have deducted tax at source. Banks are advised to put in place systems that will
enable them to provide Form 16A to the customers well within the time-frame prescribed under
the Income Tax Rules.
5.9 Acceptance of cash over the counter
Some banks have introduced certain products whereby the customers are not allowed to deposit cash
over the counters and also have incorporated a clause in the terms and conditions that cash
deposits, if any, are required to be done through ATMs.
Banking, by definition, means acceptance of deposits of money from the public for the purpose of lending
and investment. As such, banks cannot design any product which is not in tune with the
basic tenets of banking. Further, incorporating such clauses in the terms and conditions which restrict
deposit of cash over the counters also amounts to an unfair practice.
Banks are, therefore, advised to ensure that their branches invariably accept cash over the counters from
all their customers who desire to deposit cash at the counters. Further, they are
also advised to refrain from incorporating clauses in the terms and conditions which restrict deposit of
cash over the counters.
5.10 Opening accounts in the name of minors with Mothers as guardians
Considerable difficulty was experienced by women customers in opening bank accounts in the names of
minors, with mothers as their guardians. Presumably, the banks were reluctant to accept the
mother as a guardian of a minor, while father is alive in view of section 6 of the Hindu Minority and
Guardianship Act, 1956, which stipulates that the father alone should be deemed to be the

guardian in such case. To overcome this legal difficulty and to enable the banks to open freely such
accounts in the name of minors
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under the guardianship of their mothers, it was suggested in some quarters that the above provisions
should be suitably amended. While it is true that an amendment of the above Act may
overcome the difficulty in the case of Hindus, it would not solve the problem for other communities as
minors belonging to Muslim, Christian, Parsi communities would still be left out unless
the laws governing these communities are also likewise amended.
The legal and practical aspects of the above problem were, therefore, examined in consultation with the
Government of India and it was advised that if the idea underlining the demand for
allowing mothers to be treated as guardians relates only to the opening of fixed and savings bank
accounts, there would seem to be no difficulty in meeting the requirements as,
notwithstanding the legal provisions, such accounts could be opened by banks provided they take
adequate safeguards in allowing operations in the accounts by ensuring that the minors'
accounts opened with mothers as guardians are not allowed to be overdrawn and that they always
remain in credit. In this way, the minors' capacity to enter into contract would not be a
subject matter of dispute. If this precaution is taken, the banks' interests would be adequately protected.
Banks are advised to instruct their branches to allow minors' accounts (fixed and savings only) with
mothers as guardians to be opened, whenever such requests are received by them, subject to
the safeguards mentioned above.
The facility of allowing opening of minor’s accounts with mothers as guardians may be extended to
Recurring Deposit Accounts also subject to precautions mentioned above.
5.10.1 Opening of Bank Accounts in the Names of Minors
With a view to promote the objective of financial inclusion and also to bring uniformity among banks in
opening and operating minors’ accounts, banks are advised as under:
a. A savings /fixed / recurring bank deposit account can be opened by a minor of any age through his/her
natural or legally appointed guardian.

b. Minors above the age of 10 years may be allowed to open and operate savings bank accounts
independently, if they so desire. Banks may, however, keeping in view their risk management
systems, fix limits in terms of age and amount up to which minors may be allowed to operate the deposit
accounts independently.
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They can also decide, in their own discretion, as to what minimum documents are required for opening of
accounts by minors.
c. On attaining majority, the erstwhile minor should confirm the balance in his/her account and if the
account is operated by the natural guardian / legal guardian, fresh operating
instructions and specimen signature of erstwhile minor should be obtained and kept on record for all
operational purposes.
2. Banks are free to offer additional banking facilities like internet banking, ATM/ debit card, cheque book
facility etc., subject to the safeguards that minor accounts are not allowed to be
overdrawn and that these always remain in credit.
5.11 Opening of Current Accounts – Need for discipline
(i) Keeping in view the importance of credit discipline for reduction in NPA level of banks, banks should, at
the time of opening current accounts, insist on a declaration to the effect that
the account holder is not enjoying any credit facility with any other bank. Banks should scrupulously
ensure that their branches do not open current accounts of entities which enjoy credit
facilities (fund based or non-fund based) from the banking system without specifically obtaining a No-
Objection Certificate from the lending bank(s). Banks should note that non-adherence to
the above discipline could be perceived to be abetting the siphoning of funds and such violations which
are either reported to RBI or noticed during our inspection would make the concerned
banks liable for penalty under Banking Regulation Act, 1949.
(ii) Banks may open current accounts of prospective customers in case no response is received from the
existing bankers after a minimum waiting period of a fortnight. If a response is

received within a fortnight, banks should assess the situation with reference to information provided on
the prospective customer by the bank concerned and are not required to solicit a
formal no objection, consistent with true freedom to the customer of banks as well as needed due
diligence on the customer by the bank.
(iii) In case of a prospective customer who is a corporate or large borrower enjoying credit facilities from
more than one bank, the banks should exercise due diligence and inform the
consortium leader, if under consortium, and the concerned banks, if under multiple banking arrangement.
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5.12 Reconciliation of transactions at ATMs failure - Time limit
Reserve Bank has been receiving a number of complaints from bank customers, regarding debit of
accounts even though the ATMs have not disbursed cash for various reasons. More importantly,
banks take considerable time in reimbursing the amounts involved in such failed transactions to card
holders. In many cases, the time taken is as much as 50 days. The delay of the magnitude
indicated above is not justified, as it results in customers being out of funds for a long time for no fault of
theirs. Moreover, this delay can discourage customers from using ATMs.
Based on a review of the developments and with a view to further improve the efficiency of operations, it
has been decided as under:-
a. The time limit for resolution of customer complaints by the issuing banks shall stand reduced from 12
working days to 7 working days from the date of receipt of customer complaint.
Accordingly, failure to recredit the customer’s account within 7 working days of receipt of the complaint
shall entail payment of compensation to the customer @ ` 100/- per day by the issuing
bank. This compensation shall be credited to the customer’s account automatically without any claim from
the customer, on the same day when the bank affords the credit for the failed ATM
transaction.
b. Any customer is entitled to receive such compensation for delay, only if a claim is lodged with the
issuing bank within 30 days of the date of the transaction.
c. The number of free transactions permitted per month at other bank ATMs to Savings Bank account
holders shall be inclusive of all types of transactions, financial or non-financial.

d. All disputes regarding ATM failed transactions shall be settled by the issuing bank and the acquiring
bank through the ATM System Provider only. No bilateral settlement arrangement outside
the dispute resolution mechanism available with the system provider is permissible. This measure is
intended to bring down the instances of disputes in payment of compensation between the
issuing and acquiring banks.
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Non-adherence to the provisions contained in para 5.12 (a) to (d) shall attract penalty as prescribed under
the Payment and Settlement Systems Act 2007 (Act 51 of 2007).
5.13 Lodging of ATM related Complaints
The following information should be displayed prominently at the ATM locations:-
(i) ATM ID may be displayed clearly in the premises to make use of it while making a complaint /
suggestion
(ii) Information that complaints should be lodged at the branches where customers maintain accounts to
which ATM card is linked
(iii) Telephone numbers of help desk / contact persons of the ATM owning bank to lodge complaint / seek
assistance
(iv) Uniform Template (as given in Annexure V) for lodging of complaints relating to ATM transactions.
To improve the customer service through enhancement of efficiency in ATM operations, banks are
advised to initiate following action:
(i) Message regarding non-availability of cash in ATMs should be displayed before the transaction is
initiated by customer
(ii) Make available forms for lodging the complaints with name and phone number of the officials with
whom they have to be lodged
(iii) Make available sufficient toll-free phone numbers for lodging complaints / reporting and blocking lost
cards and also attend the requests on priority
(iv) Mobile numbers / e-mail IDs of the customers may be registered to send alerts
In case of complaints pertaining to a failed ATM transaction at other bank ATMs, the customer should
lodge a complaint with the card issuing bank even if the transaction was carried out at
another bank’s ATM.
5.14 Transactions at ATM-Procedural Amendment - Pin Validation for Every Successive Transaction

The process flow followed for ATM transactions varies from bank to bank. The type of card readers
installed by each ATM vendor also contributes to the variation in the
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process flow. Security concerns arise in the case of certain type of card readers which facilitate multiple
transactions without the need for pin validation for every successive transaction.
The possibility of frauds / misuse of cards is very high in a scenario where the card is inserted in such
reader slots, the card holder fails to collect the card after the transaction is
completed and the card is misused. This risk can be eliminated to a great extent if, for every transaction,
the process flow demands pin validation. Hence each bank may ensure that the
process flow is modified to provide for the pin validation for every transaction, including balance enquiry
facilitated through ATM. Further, as an additional safety measure, banks are
advised that the time-out of sessions should be enabled for all screens / stages of ATM transaction
keeping in view the time required for such functions in normal course.
Non-adherence to the above provisions shall attract penalty as prescribed under the Payment and
Settlement Systems Act 2007 (Act 51 of 2007).
5.15 Security Issues and Risk mitigation measures- Online alerts to the cardholder for usage of
credit/debit cards
Banks were mandated to send online alerts to the cardholders for all Card Not Present (CNP)
transactions for the value of ` 5000/- and above. In view of the incidents of unauthorized /
fraudulent withdrawals at ATMs that came to the notice of RBI, banks were advised to put in place, latest
by June 30, 2011, a system of online alerts for all types of transactions
irrespective of the amount, involving usage of cards at various channels. This measure is expected to
encourage further usage of cards at various delivery channels. Banks should provide
easier methods (like SMS) for the customer to block his card and get a confirmation to that effect after
blocking the card.
5.16 Security Issues and Risk mitigation measures related to Card Not Present (CNP) transactions
Banks have been mandated to necessarily put in place additional factor of authentication/validation based
on information not visible on the cards for all on-line Card not Present (CNP)

transactions in a phased manner, starting with online transactions followed by Interactive Voice Response
(IVR), Mail Order Telephone Order(MOTO) and Standing Instructions (SI). In the case
of MOTO and SI transactions, it has been stated that in case of customer complaint regarding issues, if
any, arising
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out of transactions effected without the additional factor of authentication after the stipulated date, the
issuer bank has to reimburse the loss to the customer further without demur.
5.17 Securing Electronic Payment Transactions
The electronic modes of payment like RTGS, NEFT and IMPS have emerged as channel agnostic modes
of funds transfer. These have picked up to a large extent through the internet banking channel
and hence it is imperative that such delivery channels are also safe and secure. Some of the additional
measures that need to be introduced by the banks could be as follows :
(i) Customer induced options may be provided for fixing a cap on the value / mode of transactions /
beneficiaries. In the event of customer wanting to exceed the cap, an additional
authorization may be insisted upon.
(ii) Limit on the number of beneficiaries that may be added in a day per account could be considered.
(iii) A system of alert may be introduced when a beneficiary is added.
(iv) Banks may put in place mechanism for velocity check on the number of transactions effected per day
/ per beneficiary and any suspicious operations should be subjected to alert within the
bank and to the customer.
(v) Introduction of additional factor of authentication (preferably dynamic in nature) for such payment
transactions should be considered.
(vi) The banks may consider implementation of digital signature for large value payments for all
customers, to start with for RTGS transactions.
(vii) Capturing of Internet Protocol (IP) address as an additional validation check should be considered.
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6. Levy of Service Charges

6.1 Fixing service charges by banks
The practice of IBA fixing the benchmark service charges on behalf of member banks has been done
away with and the decision to prescribe service charges has been left to individual banks.
While fixing service charges for various types of services like charges for cheque collection, etc., banks
should ensure that the charges are reasonable and are not out of line with the
average cost of providing these services. Banks should also take care to ensure that customers with low
volume of activities are not penalised.
Banks should make arrangements for working out charges with prior approval of their Boards of Directors
as recommended above and operationalise them in their branches as early as possible.
6.2 Ensuring Reasonableness of Bank Charges
In order to ensure fair practices in banking services, Reserve Bank of India had constituted a Working
Group to formulate a scheme for ensuring reasonableness of bank charges and to
incorporate the same in the Fair Practices Code, the compliance of which would be monitored by the
Banking Codes and Standards Board of India (BCSBI). Based on the recommendations of the
Group, action required to be taken by banks is indicated under the column 'action points for banks' in the
Annex I to this circular.
6.3 Home Loans-Levy of fore-closure charges/pre-payment penalty
6.3.1 The Committee on Customer Service in Banks (Chairman: M. Damodaran) had observed that
foreclosure charges levied by banks on prepayment of home loans are resented upon by home loan
borrowers across the board especially since banks were found to be hesitant in passing on the benefits of
lower interest rates to the existing borrowers in a falling interest rate scenario.
As such, foreclosure charges are seen as a restrictive practice deterring the borrowers from switching
over to cheaper available source.
6.3.2 The removal of foreclosure charges/prepayment penalty on home loans will lead to reduction in the
discrimination between existing and new borrowers and competition among banks will
result in finer pricing of the floating rate home loans. Though many
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banks have in the recent past voluntarily abolished pre-payment penalties on floating rate home loans,
there is a need to ensure uniformity across the banking system. It has, therefore, been
decided that banks will not be permitted to charge foreclosure charges/pre-payment penalties on home
loans on floating interest rate basis, with immediate effect.
6.3.3 As per extant guidelines a fixed rate loan is one where the rate is fixed for entire duration of the loan.
Hence, the Dual Rate/Special Rate home loans sanctioned by banks cannot be
treated as fixed rate loans. In case of Dual Rate/ Special Rate home loans, the provisions of paragraph
6.3.1 above will be applicable from the date the rate of interest on the loan becomes
floating.
6.4 Levy of Foreclosure Charges / Pre-payment Penalty on Floating Rate Term Loans
Banks will not be permitted to charge foreclosure charges / pre-payment penalties on all floating rate term
loans sanctioned to individual borrowers.
6.5 RTGS charges for customers
Consequent to the levy of service charges for members under RTGS, banks cannot charge their
customers for outward RTGS remittances beyond the amounts stipulated below:
RTGS Transaction Maximum customer charges
Inward Transactions Free
Outward transactions
` 2 lakh to ` 5 lakh ` 25 + applicable time varying tariff subject to a maximum of ` 30
Above ` 5 lakh ` 50 + applicable time varying tariff subject to a maximum of ` 55
6.6 Uniformity in Intersol Charges
With the introduction of Core Banking Solution (CBS), it is expected that customers of banks would be
treated uniformly at any sales or service delivery point. It is, however, observed that
some banks are discriminating against their own customers on the basis
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of one branch being designated as the 'home' or 'base' branch where charges are not levied for products /
services and other branches of the same bank being referred to as 'non-home' branches

where charges are levied for the same products / services. The charges generally referred to as 'Intersol'
charges, are also not uniform across home / non-home branches. This practice
followed by some banks is contrary to the spirit of the Reserve Bank's guidelines on reasonableness of
bank charges. As 'Intersol' charges are charges levied by the bank to cover the cost of
extending services to customers by using the CBS / Internet / Intranet platform, the cost should be branch
/ customer agnostic in-principle. It is clarified that cash handling charges may not
be included under intersol charges.
Banks are advised to follow a uniform, fair and transparent pricing policy and not discriminate between
their customers at home branch and non-home branches. Accordingly, if a particular
service is provided free at home branch, the same should be available free at non home branches also.
There should be no discrimination as regards intersol charges between similar
transactions done by customers at home branch and those done at non-home branches.
6.7 Charges for Sending SMS Alerts
Banks are required to put in place a system of online alerts for all types of transactions irrespective of the
amounts involving usage of cards at various channels.
Accordingly, with a view to ensuring reasonableness and equity in the charges levied by banks for
sending SMS alerts to customers, banks are advised to leverage the technology available with
them and the telecom service providers to ensure that such charges are levied on all customers on actual
usage basis.
7. Service at the counters
7.1 Banking hours / working days of bank branches
Banks should normally function for public transactions at least for 4 hours on week days and 2 hours on
Saturdays in the larger interest of public and trading community. Extension counters,
Satellite Offices, one man offices or other special class of branches may remain open for such shorter
hours as may be considered necessary.
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7.2 Changes in banking hours

No particular banking hours have been prescribed by law and a bank may fix, after due notice to its
customers, whatever business hours are convenient to it i.e., to work in double shifts, to
observe weekly holiday on a day other than Sunday or to function on Sundays in addition to the normal
working days, subject to observing normal working hours for public transactions referred
to in paragraph above.
In order to safeguard banks' own interest, a bank closing any of its offices on a day other than a public
holiday, will have to give due and sufficient notice to all the parties concerned who
are or are likely to be affected by such closure. Thus, in all the above cases, it is necessary for a bank to
give sufficient notice to the public/its customers of its intention. What is
sufficient or due notice is a question of fact, depending on the circumstances of each case. It is also
necessary to avoid any infringement of any other relevant local laws such as Shops and
Establishment Act, etc.
Further, the provisions, if any, in regard to the banks' obligations, to the staff under the Industrial Awards /
Settlements, should be complied with. Clearing House authority of the place
should also be consulted in this regard.
The banks' branches in rural areas can fix the business hours (i.e. number of hours, as well as timings)
and the weekly holidays to suit local requirements. This may, however, be done subject
to the guidelines given above.
7.3 Commencement / Extension of working hours
Commencement of employees’ working hours 15 minutes before commencement of business hours could
be made operative by banks at branches in metropolitan and urban centres. The banks should
implement the recommendation taking into account the provisions of the local Shops and Establishments
Act.
The branch managers and other supervising officials should, however, ensure that the members of the
staff are available at their respective counters right from the commencement of banking
hours and throughout the prescribed business hours so that there may not be any grounds for customers
to make complaints.

.
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Banks should ensure that no counter remains unattended during the business hours and uninterrupted
service is rendered to the customers. Further, the banks should allocate the work in such a
way that no Teller counter is closed during the banking hours at their branches.
All the customers entering the banking hall before the close of business hours should be attended to.
7.4 Extended business hours for non-cash banking transactions
Banks should extend business hours for banking transactions other than cash, up till one hour before
close of the working hours.
The following non-cash transactions should be undertaken by banks during the extended hours, i.e., up to
one hour before the close of working hours:
(a) Non-voucher generating transactions :
(i) Issue of pass books/statement of accounts;
(ii) Issue of cheque books ;
(iii) Delivery of term deposit receipts/drafts;
(iv) Acceptance of share application forms;
(v) Acceptance of clearing cheques;
(vi) Acceptance of bills for collection.
(b) Voucher generating transactions:
(i) Issue of term deposit receipts;
(ii) Acceptance of cheques for locker rent due;
(iii) Issue of travellers cheques;
(iv) Issue of gift cheques;
(v) Acceptance of individual cheques for transfer credit.
Such non-cash transactions to be done during the extended business hours should be notified adequately
for information of the customers.
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Banks can have evening counters at the premises of existing branches in urban/metropolitan centres for
providing facilities to the public beyond the normal hours of business so as to bring
about improvement in customer service. It is necessary that in such cases the transactions conducted
during such extended hours of business are merged with the main accounts of the branch
where it is decided to provide the aforesaid facilities.
The concerned banks should give to their constituents due notice about the functions to be undertaken
during the extended banking hours through local newspapers, as also by displaying a
notice on the notice board at the branch(es) concerned. Further, as and when the hours of business of
any of the branches are extended, the concerned clearing house should be informed.
8. Guidance to customers and Disclosure of Information
8.1 Assistance/guidance to customers
All branches, except very small branches should have “Enquiry” or “May I Help You” counters either
exclusively or combined with other duties, located near the entry point of the banking hall.
8.2 Display of time norms
Time norms for specialised business transactions should be displayed predominantly in the banking hall.
8.3 Display of information by banks –
Comprehensive Notice Board
The display of information by banks in their branches is one of the modes of imparting financial education.
This display enables customers to take informed decision regarding products and
services of the bank and be aware of their rights as also the obligations of the banks to provide certain
essential services. It also disseminates information on public grievance redressal
mechanism and enhances the quality of customer service in banks and improves the level of customer
satisfaction.
Further, in order to promote transparency in the operations of banks, various instructions have been given
by RBI to banks towards display of various key aspects
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such as service charges, interest rates, services offered, product information, time norms for various
banking transactions and grievance redressal mechanism. However, during the course of

inspection/visits to bank branches by RBI, it was observed that many banks were not displaying the
required information due to space constraints, lack of standardization of the instructions,
etc.
Keeping in view the need for maintaining a good ambience at the branches as also space constraints, an
Internal Working Group in RBI revisited all the existing instructions relating to
display boards by commercial banks so as to rationalize them. Based on the recommendations of the
Working Group, the following instructions were issued to banks:
8.3.1 Notice Boards
The Group felt that rationalization of the existing instructions could be best achieved if the instructions
were clubbed on certain categories such as ‘customer service information', 'service
charges', 'grievance redressal' and 'others'. At the same time, the Group felt that there may not be any
need to place detailed information in the Notice Board and only the important aspects
or 'indicators' to the information be placed.
Accordingly, the existing mandatory instructions have been broadly grouped into four categories
mentioned above and given in a Comprehensive Notice Board which has been formulated by the
above Group. The format of the Comprehensive Notice Board is given in the Annex - II. The minimum
size of the Board may be 2 feet by 2 feet as Board of such a size would facilitate
comfortable viewing from a distance of 3 to 5 meters. Banks are advised to display the information in the
Notice Boards of their Branches as per the format given for the Comprehensive Notice
Board.
While displaying the information in the notice board, banks may also adhere to the following principles:
(a) The notice board may be updated on a periodical basis and the board should indicate the date up to
which the board was updated (incorporated in the display board)
(b) Though the pattern, colour and design of the board is left to the discretion of the banks, yet the display
must be simple and readable.
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(c) The language requirements (i.e., bilingual in Hindi speaking states and trilingual in other states) may
be taken into account.

(d) The notice board shall specifically indicate wherever recent changes have been done. For instance, if
there is a recent change in the SSI loan products offered by the bank, the
information on the SSI loan products may be displayed as 'We offer SSI loans/products ( changed
on ……….)’.
(e) The notice board may also indicate a list of items on which detailed information is available in booklet
form.
Further, in addition to the above Board, the banks should also display details such as ‘Name of the bank /
branch, Working Days, Working Hours and Weekly Off-days' outside the branch
premises.
8.3.2 Booklets/Brochures:
The detailed information as indicated in Para (E) of Annex II may be made available in various booklets /
brochures as decided by the bank. These booklets / brochures may be kept in a
separate file / folder in the form of ‘replaceable pages’ so as to facilitate copying and updation. In this
connection, banks may also adhere to the following broad guidelines:
The file / folder may be kept at the customer lobby in the branch or at the ‘May I Help You’ counter or
at a place that is frequented by most of the customers.
The language requirements (i.e. bilingual in Hindi speaking states and trilingual in other states) may be
taken into account.
While printing the booklets it may be ensured that the font size is minimum Arial 10 so that the
customers are able to easily read the same.
Copies of booklets may be made available to the customers on request.
8.3.3 Website
The detailed information as indicated in Para (E) of Annex II may also be made available on the bank’s
web-site. Banks should adhere to the broad guidelines relating to dating of material,
legibility, etc., while placing the same on their websites. In this context, banks are also advised to ensure
that the customers are able to easily access
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the relevant information from the Home Page of the bank’s web-sites. Further, there are certain
information relating to service charges and fee and grievance redressal that are to be posted

compulsorily on the websites of the bank. Reserve Bank is providing a link to the websites of banks so
that customers can also have access to the information through RBI’s website.
8.3.4 Other modes of display
Banks may also consider displaying all the information that has to be given in the booklet form in the
touch screen by placing them in the information kiosks. Scroll Bars, Tag Boards are
other options available. The above broad guidelines may be adhered to while displaying information using
these modes.
8.3.5 Other issues
Banks are free to decide on their promotional and product information displays. However, the mandatory
displays may not be obstructed in anyway. As customer interest and financial education
are sought to be achieved by the mandatory display requirements, they should also be given priority over
the other display boards. Information relating to Government sponsored schemes as
applicable location-wise may be displayed according to their applicability.
8.4 Display of information relating to
Interest Rates and Service Charges –
Rates at a quick glance
A format has been devised by Reserve Bank for display of information relating to interest rates and
service charges which would enable the customer to obtain the desired information at a
quick glance. The format is given in Annex III. Banks are advised to display the information as per the
format given in Annex III on their web-sites. Banks are however free to modify the
format to suit their requirements, without impairing the basic structure or curtailing the scope of
disclosures.
Banks may also ensure that only latest updated information in the above format is placed on their web-
sites and the same is easily accessible from the Home Page of their web-sites.
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8.5 Display of information by banks
In order to enhance transparency in pricing of credit, based on the recommendations of Working Group
on Pricing of Credit, banks are advised to adhere to the following additional instructions

with effect from April 1, 2015:
(a) Website:
i. Banks should display on their website the interest rate range of contracted loans for the past quarter for
different categories of advances granted to individual borrowers along with mean
interest rates for such loans.
ii. The total fees and charges applicable on various types of loans to individual borrower should be
disclosed at the time of processing of loan as well as displayed on the website of banks
for transparency and comparability and to facilitate informed decision making by customers.
iii. Banks should publish Annual Percentage Rate (APR) or such similar other arrangement of
representing the total cost of credit on a loan to an individual borrower on their websites so as
to allow customers to compare the costs associated with borrowing across products and/ or lenders.
(b) Key Statement/ Fact Sheet:
Banks should provide a clear, concise, one page key fact statement/fact sheet, as per prescribed format
in Annex IX, to all individual borrowers at every stage of the loan processing as well
as in case of any change in any terms and conditions. The same may also be included as a summary box
to be displayed in the credit agreement.
8.6 Disclosure of Information by banks in the public domain
Disclosure of information on products and services on websites is found to be an effective channel for
reaching out to customers and the public at large. Such disclosures increase
transparency in operations and also help to create awareness among customers about the products and
services offered by banks. Some of the details, which could be at the minimum, be made
available for public viewing through websites of banks are listed below:-
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I. Policy / Guidelines
(i) Citizen's Charter
(ii) Deposit Policy

(iii) Deceased Depositors Policy along with Nomination Rules
(iv) Cheque Collection Policy
(v) Fair Practices Code for Lenders
(vi) Fair Practices Code for Self- Regulation of Credit Card
Business
(vii) Code of Conduct for Direct Selling Agents
(viii) Code for Collection of Dues and Repossession of Security
II. Complaints
(i) Grievance Redressal Mechanism
(ii) Information relating to Banking Ombudsmen
(iii) Information relating to Customer Service Centres (for Public Sector Banks)
III. Opening of Accounts
(i) Account Opening Forms
(ii) Terms and Conditions
(iii) Service Charges for various types of services – Should cover
typical common services including courier charges – What
services are available without any charges.
(iv) Interest rates on Deposits
(v) Minimum balances – along with corresponding facilities
offered.
IV. Loans and Advances
(i) Application forms relating to loans and advances
(ii) Copy of blank agreement to be executed by the borrower
(iii) Terms and Conditions
(iv) Processing fee and other charges
(v) Interest rates on Loans and Advances
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V. Branches
(i) Details of branches along with addresses and telephone numbers
(with search engine for queries relating to branch location)
(ii) Details of ATMs along with addresses
8.7 Display of Timelines for Credit Decisions
Banks should clearly delineate the procedure for disposal of loan proposals, with appropriate timelines,
and institute a suitable monitoring mechanism for reviewing applications pending
beyond the specified period. There should not, however, be any compromise on due diligence
requirements. Banks may also make suitable disclosures on the timelines for conveying credit
decisions through their websites, notice-boards, product literature, etc.
9. Operation of Accounts by Old & Incapacitated Persons
9.1 Facility to sick/old/incapacitated non-pension account holders
The facilities offered to pension account holders should be extended to the non-pension account holders
also who are sick / old / incapacitated and are not willing to open and operate joint
accounts.
9.2 Types of sick / old / incapacitated account holders
The cases of sick / old / incapacitated account holders fall into following categories:
(a) An account holder who is too ill to sign a cheque / cannot be physically present in the bank to
withdraw money from his bank account but can put his/her thumb impression on the
cheque/withdrawal form;
(b) An account holder who is not only unable to be physically present in the bank but is also not even able
to put his/her thumb impression on the cheque/withdrawal form due to certain
physical incapacity.
9.3 Operational Procedure
With a view to enabling the old / sick account holders operate their bank accounts, banks may follow the
procedure as under:-
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(a) Wherever thumb or toe impression of the sick/old/incapacitated account holder is obtained, it should
be identified by two independent witnesses known to the bank, one of whom should be a
responsible bank official.
(b) Where the customer cannot even put his / her thumb impression and also would not be able to be
physically present in the bank, a mark can be obtained on the cheque / withdrawal form which
should be identified by two independent witnesses, one of whom should be a responsible bank official.
(c) The customer may also be asked to indicate to the bank as to who would withdraw the amount from
the bank on the basis of cheque / withdrawal form as obtained above and that person should
be identified by two independent witnesses. The person who would be actually drawing the money from
the bank should be asked to furnish his signature to the bank.
9.4 Opinion of IBA in case of a person who can not sign due to loss of both hands
Opinion obtained by the Indian Banks’ Association from their consultant on the question of opening of a
bank account of a person who has lost both his hands and could not sign the cheque /
withdrawal form is as under :
“In terms of the General Clauses Act, the term “Sign” with its grammatical variations and cognate
expressions, shall with reference to a person who is unable to write his name, include “mark”
with its grammatical variations and cognate expressions. The Supreme Court has held in AIR 1950 –
Supreme Court, 265 that there must be physical contact between the person who is to sign and
the signature can be by means of a mark. This mark can be placed by the person in any manner. It could
be the toe impression, as suggested. It can be by means of mark which anybody can put on
behalf of the person who has to sign, the mark being put by an instrument which has had a physical
contact with the person who has to sign”.
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10. Providing bank facilities to persons with disabilities
10.1 Guidelines framed by IBA based on the judgment of
Chief Commissioner for Persons with Disabilities

Indian Banks' Association has framed operational guidelines for implementation of its member banks on
providing banking facilities to persons with disabilities. Banks should adopt / follow
the operational guidelines meticulously.
10.2 Need for Bank Branches / ATMs to be made
accessible to persons with disabilities
Banks are advised to take necessary steps to provide all existing ATMs / future ATMs with ramps so that
wheel chair users / persons with disabilities can easily access them. Care may also be
taken to make arrangements in such a way that the height of the ATMs does not create an impediment in
their use by wheelchair users. However, in cases where it is impracticable to provide
such ramp facilities, whether permanently fixed to earth or otherwise, this requirement may be dispensed
with, for reasons recorded and displayed in branches or ATMs concerned.
Banks are also to take appropriate steps, including providing of ramps at the entrance of the bank
branches, wherever feasible, so that the persons with disabilities/wheel chair users can
enter bank branches and conduct business without difficulty. Banks are advised to report the progress
made in this regard periodically to their respective Customer Service Committee of the
Board and ensure compliance.
10.3 Providing banking facilities to Visually Impaired Persons
In order to facilitate access to banking facilities by visually challenged persons, banks are advised to offer
banking facilities including cheque book facility / operation of ATM / locker,
etc., to the visually challenged as they are legally competent to contract.
In the Case No. 2791/2003, the Honourable Court of Chief Commissioner for Persons with Disabilities
had passed Orders dated September 5, 2005 which was forwarded by IBA to all the member
banks vide their circular letter dated October 20, 2005. In the above Order, the Honorable Court has
instructed that banks should offer all the banking
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facilities including cheque book facility, ATM facility and locker facility to the visually challenged and also
assist them in withdrawal of cash.

Further, in Paragraph 14 of the above Order, the Honorable Court has observed that visually impaired
persons cannot be denied the facility of cheque book, locker and ATM on the possibility of
risk in operating / using the said facility, as the element of risk is involved in case of other customers as
well.
Banks should therefore ensure that all the banking facilities such as cheque book facility including third
party cheques, ATM facility, Net banking facility, locker facility, retail loans,
credit cards etc., are invariably offered to the visually challenged without any discrimination.
Banks may also advise their branches to render all possible assistance to the visually challenged for
availing the various banking facilities.
10.3.1 Talking ATMs with Braille keypads to facilitate
use by persons with visual impairment
Banks should make all new ATMs installed from July 1, 2014 as talking ATMs with Braille keypads. Banks
should lay down a road map for converting all existing ATMs as talking ATMs with Braille
keypads and the same may be reviewed from time to time by the Customer Service Committee of the
Board.
In addition to the above, magnifying glasses should also be provided in all bank branches for the use of
persons with low vision, wherever they require for carrying out banking transactions
with ease. The branches should display at a prominent place notice about the availability of magnifying
glasses and other facilities available for persons with disabilities.
11. Guidelines for the purpose of opening/ operating bank accounts of Persons with Autism, Cerebral
Palsy, Mental Retardation, Mental Illness and Mental Disabilities
The following guidelines would be applicable for the purpose of opening / operating bank accounts of the
above persons:
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i. The Mental Health Act, 1987 provides a law relating to the treatment and care of mentally ill persons
and to make better provision with respect to their property and affairs. According to
the said Act, “mentally ill person” means a person who is in need of treatment by reason of any mental
disorder other than mental retardation. Sections 53 and 54 of this Act provide for the

appointment of guardians for mentally ill persons and in certain cases, managers in respect of their
property. The prescribed appointing authorities are the district courts and collectors of
districts under the Mental Health Act, 1987.
ii. The National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple
Disabilities Act, 1999 provides a law relating to certain specified disabilities.
Clause (j) of Section 2 of that Act defines a “person with disability” to mean a person suffering from any of
the conditions relating to autism, cerebral palsy, mental retardation or a
combination of any two or more of such conditions and includes a person suffering from severe multiple
disabilities. This Act empowers a Local Level Committee to appoint a guardian, to a
person with disabilities, who shall have the care of the person and property of the disabled person.
iii. Banks are advised to take note of the legal position stated above and may rely on and be guided by
the orders/certificates issued by the competent authority, under the respective Acts,
appointing guardians/managers for the purposes of opening/operating bank accounts. In case of doubt,
care may be taken to obtain proper legal advice.
Banks may also ensure that their branches give proper guidance to their customers so that the
guardians/managers of the disabled persons do not face any difficulties in this regard.
11.1 Display of information regarding Local Level Committees set up
under the National Trust for the Welfare of Persons with Autism,
Cerebral Palsy, Mental Retardation and Multiple Disabilities Act,
1999
In a case which came up before the High Court of Delhi, the Honorable Court had directed that all banks
should ensure that their branches display in a conspicuous place (i) essential details
about the facilities under the enactment (Mental Disabilities Act); (ii)
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the fact that the parties can approach the Local Level Committees, for the purpose of issuance of the
certificate and that the certificate issued under the Mental Disabilities Act is

acceptable; and (iii) the details of the Local Level Committees in that area. The Court had further directed
that the information shall be displayed in the local language and English / Hindi
(or both). Banks are advised to strictly comply with the above orders of the Court.
12. Remittance
12.1 Remittance of Funds for Value ` 50,000/- and above
Banks should ensure that any remittance of funds by way of demand drafts/mail transfers / telegraphic
transfers or any other mode and issue of travellers cheques for value of ₹ 50,000/- and
above is effected only by debit to the customer’s account or against cheques or other instruments
tendered by the purchaser and not against cash payment . These instructions are extended to
retail sale of gold/silver/platinum. In the current scenario, where the integrity of the financial system in
general and the banking channels in particular is of paramount importance, breach
of these guidelines is a matter of serious regulatory concern in view of the wide ranging ramifications. Any
violation of these instructions will be viewed seriously.
12.2 Demand Drafts
12.2.1 Issue of Demand Drafts
Measures seeking to bring down the incidence of frauds perpetrated through bank drafts should be built
into the draft form itself. Necessary changes in system and procedures to speed up issue
and payment of drafts should be taken.
Banks should ensure that demand drafts of ` 20,000/- and above are issued invariably with account
payee crossing.
All superscriptions about validity of the demand draft should be provided at the top of the draft form. A
draft should be uniformly valid for a period of three months and procedure for
revalidation after three months should be simplified.
Banks should ensure that drafts of small amounts are issued by their branches against cash to all
customers irrespective of the fact whether they are having accounts with the
- 49 -
banks or not. Bank's counter staff should not refuse to accept small denomination notes from the
customers (or non customers for issuance of the drafts).

12.2.2 Encashment of drafts
The banks should ensure that drafts drawn on their branches are paid immediately. Payment of draft
should not be refused for the only reason that relative advice has not been received.
12.2.3 Issue of Duplicate Demand Draft
Duplicate draft, in lieu of lost draft, up to and including ` 5,000/- may be issued to the purchaser on the
basis of adequate indemnity and without insistence on seeking non payment advice
from drawee office irrespective of the legal position obtaining in this regard.
Banks should issue duplicate Demand Draft to the customer within a fortnight from the receipt of such
request. Further, for the delay beyond this stipulated period, banks were advised to pay
interest at the rate applicable for fixed deposit of corresponding maturity in order to compensate the
customer for such delay. The period of fortnight prescribed would be applicable only in
cases where the request for duplicate demand draft is made by the purchaser or the beneficiary and
would not be applicable in the case of third party endorsements.
Some doubts were raised regarding the term "customer" used above and whether it would include only
purchaser / beneficiary or also include any holder of the instrument other than the
purchaser or the beneficiary. It is clarified that the above instructions would be applicable only in cases
where the request for duplicate demand draft is made by the purchaser or the
beneficiary and would not be applicable in the case of draft endorsed to third parties.
12.3 Remittance through electronic mode
In case of remittance through electronic funds transfer, originating banks should provide the option to the
customer to choose between RTGS system and NEFT system at the time of initiation of
the funds transfer. The option should be made available to all the
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customers who may originate remittance either at the branch or through internet or any other means. The
funds are to be transferred necessarily through the option chosen by the customer.
Further, banks should allow the customers to choose NEFT also as one of the electronic modes of
making payment towards loan EMIs / repayments, etc.

12.3.1 Providing Positive Confirmation to the Originator
All banks should put in place appropriate mechanism to ensure positive confirmation is sent to the
remittance originator confirming the successful credit of funds to the beneficiary’s account
when funds are transferred through NEFT. While it is expected that such confirmation messages are sent
as soon as the beneficiary account is credited, it should not exceed beyond end-of –
the-day under any circumstance.
12.3.2 Payment of penal interest for delayed credit /refunds of NEFT transactions
In case of delay in crediting the beneficiary customer’s account or in returning the uncredited amount to
the remitter in case of NEFT, banks should pay penal interest. Under the extant
guidelines, banks are required to pay penal interest at the current RBI LAF Repo Rate plus two percent
for the period of delay / till the date of refund as the case may be to the affected
customers suo moto, without waiting for claim from customers.
Under the NEFT Procedural Guidelines, banks are required to establish dedicated Customer Facilitation
Centres (CFCs) to handle customer queries/complaints regarding NEFT transactions. The
contact details of CFCs are available on websites of banks as well as the website of RBI for easy
availability to the customers. Further, banks have to keep the contact details of their CFCs,
set up to handle customer queries / complaints regarding NEFT transactions, updated at all times.
Changes, if any, should be advised by banks immediately to the National Clearing Cell,
Nariman Point, RBI for updating the central directory placed on RBI website. Banks should also ensure
that calls made / e-mails sent to CFCs are promptly attended to and sufficient resources
are dedicated for the same.
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12.3.3 National / Regional Electronic Clearing Service (NECS / RECS) – Extension of service to
remaining branches
With a view to extend both NECS and RECS facility to the customers of all bank branches, the
participating banks are advised to make efforts in bringing all their branches under NECS/RECS.

12.3.4. National Electronic Funds Transfer (NEFT) – Requirement of Indian Financial System Code (IFSC)
in transactions
To facilitate electronic modes of remittance and enhancing customer service at branches for NEFT
transactions, the participating banks are advised that staff should provide customers with
necessary assistance in filling out the details as required in the NEFT application form, including ensuring
that beneficiary account details etc. are duly filled in.
12.3.5 National Electronic Funds Transfer (NEFT) System - Rationalisation of customer charges
Maximum Customer charges that can be levied by the banks for NEFT transactions are as under:
12.3.6 NEFT - Customer Service and Charges - Adherence to Procedural Guidelines and Circulars
With a view to minimizing instances of customer complaints, all participant banks (both direct as well as
sub-members), are advised to ensure adherence to extant instructions as under:
Value Band
Maximum Charges (exclusive of service tax)
Amounts up to `10,000/-
` 2.50/-
Amounts from ` 10,001/- to ` 1 lakh
` 5/-
Amounts above ` 1 lakh up to ` 2 lakh
` 15/-
Amounts above ` 2 lakh
` 25/-
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NEFT application forms with proper instructions are made available at all branches.
The charges levied on customers for inter-bank NEFT transactions at both branch locations and
Customer Service Point (CSP)/Business Correspondent (BC) /agent locations are at par.
The extant charges applicable on NEFT transactions should be displayed at all branches / locations of
the bank where NEFT transactions can be conducted.
A printed “charges card” in appropriate vernacular language should invariably be carried by agents /
business correspondents of the banks.

Positive confirmation of credit to beneficiary account is invariably sent for all inward transactions
received by the bank.
Banks originating the NEFT transactions should ensure that the positive confirmation is relayed to all
remitting customers, including walk-in customers who provide their mobile number / e-
mail id.
Intimation of failed / returned transactions should also be brought to the notice of the remitting
customer and funds credited to the account immediately / returned to the remitter at the
earliest.
In case of delayed credits or delayed returns, the penal interest as applicable is paid suo-moto to the
customer. Even in the case of back-dating or value-dating such delayed transactions,
banks should pay the penal interest for the delayed period.
12.4 Mobile banking transaction limits
The transaction limit of ` 50,000/- per customer per day has been done away with for mobile banking
transactions. However, banks may place per transaction limits based on their own risk
perception with the approval of its Board.
12.5 Domestic Money Transfer – relaxations
In order to enable migrant population, who do not have access to formal banking channel for want of
proof of identity/address and to give impetus to the process of
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financial inclusion, banks have been permitted to put in place three schemes for person to person (P2P)
fund transfers –
(a) Cash Pay-out scheme which facilitates transfer of funds from the accounts of their customers to
beneficiaries not having bank accounts through the use of ATMs, BCs etc. upto ` 10,000 per
transaction subject to a monthly cap of ` 25,000 with full details of the beneficiary.
(b) Cash Pay-in scheme where a walk-in / non-account holding customer can transfer funds to a bank
account of a beneficiary etc. upto ` 5000 per transaction with a monthly cap of ` 25,000
with minimum details of the remitter.

(c) Card-to-Card transfers upto ` 5000 per transaction subject to a monthly cap of
` 25,000.
13. Cheque Drop Box Facility
Both the drop box facility and the facility for acknowledgement of the cheques at regular collection
counters should be available to the customers and no branch should refuse to give an
acknowledgement if the customer tenders the cheques at the counters.
Banks should ensure that customers are not compelled to drop the cheques in the drop-box. Further, in
the context of customer awareness in this regard, banks should invariably display on the
cheque drop-box itself that "Customers can also tender the cheques at the counter and obtain
acknowledgment on the pay-in-slips". The above message is required to be displayed in English,
Hindi and the concerned regional language of the State.
Banks are also advised to make absolutely fool proof arrangements accounting for the number of
instruments each time the box is opened so that there are no disputes and the customer’s
interests are not compromised.
14. Collection of instruments
14.1 Formulating Cheque Collection Policies
In most countries banks are obliged to develop their own individual policy / procedures relating to
collection of cheques and also provide due disclosures to the customers on the bank's
obligations and the customers' rights. Due to the technological progress in
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payment and settlement systems and the qualitative changes in operational systems and processes that
have been undertaken by a number of banks, it is observed that prescription of a single
set of rules may not be appropriate. Hence, efficiencies in collection of proceeds and providing funds to
customers in time are best achieved through a spirit of competition among the banks
rather than through issuance of guidelines by RBI.

Keeping in view the above, earlier instructions issued regarding immediate credit of local /outstation
cheques, time frame for collection of local/outstation instruments and interest payment
for delayed collection have been withdrawn by Reserve Bank leaving it to the individual banks to
formulate policies in this regard.
Broadly, the policy should include instructions on the following:
Immediate Credit for Local / Outstation cheques
Time frame for Collection of Local / Outstation Instruments
Interest payment for delayed collection
Banks have been advised to reframe their Cheque Collection Policies to include compensation payable
for the delay in the collection of local cheques as well. In case, no rate is specified in
the CCP for delay in realisation of local cheques, compensation at savings bank interest rate should be
paid for the corresponding period of delay.
With a view to encouraging faster migration to CTS-2010 standard cheques, banks are advised that non
CTS-2010 standard instruments will be cleared at less frequent intervals in the CTS
clearing centres. Banks may educate and notify their customers of the likely delay in realisation of non-
CTS-2010 standard instruments in view of the arrangement for clearing of such
instruments at less frequent intervals. Banks’ Cheque Collection Policies (CCPs) may also be modified
suitably to reflect this change. They may also put in place appropriate arrangement for
handling customer complaints, if any, arising out of this new arrangement.
14.1.1 Broad Principles
(i) Banks should formulate a comprehensive and transparent policy covering all the above three aspects,
taking into account their technological capabilities, systems and
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processes adopted for clearing arrangements and other internal arrangements for collection through
correspondents.
(ii) Further, they may also review their existing arrangements and capabilities and work out a scheme for
reduction in collection period.
(iii) Adequate care also may be taken to ensure that the interests of the small depositors are fully
protected.

(iv) The policy framed in this regard should be integrated with the deposit policy formulated by the bank in
line with the IBA's model deposit policy.
(v) The policy should clearly lay down the liability of the banks by way of interest payments due to delays
for non-compliance with the standards set by the banks themselves.
(vi) Compensation by way of interest payment, where necessary, should be made without any claim from
the customer.
The policy should be placed before the Board of the Bank along with Reserve Bank's earlier instructions
as indicated in paragraph 3.2 and the Board's specific approval should be obtained on
the reasonableness of the policy and the compliance with the spirit of our guidelines.
14.1.2 Delays in Cheque Clearing - Case No. 82 of 2006 before
National Consumer Disputes Redressal Commission
Banks are advised to comply with the final order on 'timeframe for collection of outstation cheques'
passed by the National Consumer Disputes Redressal Commission in case no. 82 of 2006.
Further, banks are advised as under:
(i) Banks shall reframe their Cheque Collection Policies (CCPs) covering local and outstation cheque
collection as per the timeframe prescribed by the Commission.
(ii) For local cheques, credit and debit shall be given on the same day or at the most the next day of their
presentation in clearing. Ideally, in respect of local clearing, banks shall
permit usage of the shadow credit afforded to the customer accounts immediately after
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closure of relative return clearing and in any case withdrawal shall be allowed on the same day or
maximum within an hour of commencement of business on the next working day, subject to usual
safeguards.
(iii) Timeframe for collection of cheques drawn on State Capitals / major cities / other locations to be
7/10/14 days respectively. If there is any delay in collection beyond this period,
interest at the rate specified in the CCP of the bank, shall be paid. In case the rate is not specified in the
CCP, the applicable rate shall be the interest rate on Fixed Deposits for the

corresponding maturity. The timeframe for collection specified by the Commission shall be treated as
outer limit and credit shall be afforded if the process gets completed earlier.
(iv) Banks shall not decline to accept outstation cheques deposited by its customers for collection.
(v) Banks shall give wide publicity to the CCP by prominently displaying salient features thereof in bold
and visible letters on the notice board at their branches.
(vi) A copy of the complete CCP shall be made available by the branch manager, if the customers require
so.
14.1.3 Collection of Account Payee Cheque - Prohibition on Crediting Proceeds to Third Party Account
a) In consonance with the legal requirements and in particular, the intent of the Negotiable Instruments
Act, 1881 and with a view to protect the banks being burdened with liabilities arising
out of unauthorized collections, and in the interest of the integrity and soundness of the payment and
banking systems, and in order to prevent recurrence of deviations observed in the recent
past, the Reserve Bank has considered it necessary to prohibit the banks from crediting 'account payee'
cheque to the account of any person other than the payee named therein. Accordingly,
banks were directed that they should not collect account payee cheques for any person other than the
payee constituent.
Where the drawer / payee instructs the bank to credit the proceeds of collection to any account other than
that of the payee, the instruction being contrary to the intended
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inherent character of the 'account payee' cheque, bank should ask the drawer / payee to have the cheque
or the account payee mandate thereon withdrawn by the drawer. This instruction would
also apply with respect to the cheque drawn by a bank payable to another bank.
b) In order to facilitate collection of cheques from a payment system angle, account payee cheques
deposited with the sub-member for credit to their customers' account can be collected by the
member bank (referred to as the sponsor member) of the Clearing House. Under such arrangements,
there should be clear undertaking to the effect that the proceeds of the account payee cheque
will be credited to the payee's account only, upon realization.

c) With a view to mitigate the difficulties faced by the members of co-operative credit societies in
collection of account payee cheques, it is further clarified that collecting banks may
consider collecting account payee cheques drawn for an amount not exceeding ` 50,000/- to the account
of their customers who are co-operative credit societies, if the payees of such cheques
are the constituents of such co-operative credit societies. While collecting the cheques as aforesaid,
banks should have a clear representation in writing given by the co-operative credit
societies concerned that, upon realization, the proceeds of the cheques will be credited only to the
account of the member of the co-operative credit society who is the payee named in the
cheque. This shall, however, be subject to the fulfillment of the requirements of the provisions of
Negotiable Instruments Act, 1881, including Section 131 thereof.
d) Banks may note that the above instructions shall also extend to drafts, pay orders and bankers’ cheque.
14.1.4 Payment of Cheques/Drafts/Pay Orders/Banker’s Cheques
With effect from April 1, 2012, banks should not make payment of cheques/drafts/pay orders/banker’s
cheques bearing that date or any subsequent date, if they are presented beyond the period
of three months from the date of such instrument. Banks should ensure strict compliance of these
directions and notify the holders of such instruments of the change in practice by printing or
stamping on the cheque leaves, drafts, pay orders and banker’s cheques issued on or after April 1, 2012,
by issuing
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suitable instruction for presentment within the period of three months from the date of the instrument.
14.2 Cheques / Instruments lost in transit / in clearing process /
at paying bank's branch
Banks are advised to follow the following guidelines regarding cheques lost in transit : -
(i) In respect of cheques lost in transit or in the clearing process or at the paying bank's branch, the bank
should immediately bring the same to the notice of the accountholder so that
accountholder can inform the drawer to record stop payment and can also take care that other cheques
issued by him are not dishonoured due to non-credit of the amount of the lost cheques /

instruments.
(ii) The onus of such loss lies with the collecting banker and not the accountholder.
(iii) The banks should reimburse the accountholder related expenses for obtaining duplicate instruments
and also interest for reasonable delays occurred in obtaining the same.
(iv) If the cheque / instrument has been lost at the paying bank's branch, the collecting banker should
have a right to recover the amount reimbursed to the customer for the loss of the
cheque / instrument from the paying banker.
Banks are advised to incorporate the above guidelines in their Cheque Collection Policies.
14.3 Bills for collection
Bills for collection including bills discounted required to be collected through another bank at the realising
centre should be forwarded directly by the forwarding office to the realising
office.
14.3.1 Payment of interest for Delays in collection of bills
The lodger's bank should pay interest to the lodger for the delayed period in respect of collection of bills at
the rate of 2% p.a. above the rate of interest payable on balances of Savings
Bank accounts. The delayed period should be reckoned after making allowance for normal transit period
based upon a time frame of 2 days each for (i)
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Despatch of bills; (ii) Presentation of bills of drawees (iii) Remittance of proceeds to the lodger's bank (iv)
Crediting the proceeds to drawer's account.
To the extent the delay is attributing to the drawee's bank, the lodger's bank may recover interest for such
delay from that bank. The banks may suitably revise the format of their payment
advices to incorporate the above information.
14.3.2 Delay in Re-presentation of Technical Return Cheques and Levy of Charges for such Returns:
Banks have been advised to levy cheque return charges only in cases where the customer is at fault and
is responsible for such returns. The illustrative, but not exhaustive, list of returns,

where the customers are not at fault are indicated in the Annex VI. In cases where the cheques need to
be re-presented without any recourse to the payee, such re-presentation should be made
in the immediate next presentation clearing not later than 24 hours(excluding holidays) with due
notification to the customers of such representation through SMS alert, email etc.
15. Dishonour of Cheques – Procedure thereof
15.1 Returning dishonoured cheques
(i) Banks are required to implement the recommendation of the Goiporia Committee that dishonoured
instruments are returned / despatched to the customer promptly without delay, in any case
within 24 hours.
(ii) Pursuant to the investigation by the Joint Parliamentary Committee (JPC) into the Stock Market Scam,
the JPC has recommended (in paragraph 5.214 of its report) that "specific guidelines
need to be issued by the Reserve Bank to all banks regarding the procedure to be followed by them in
respect of dishonoured cheques from Stock Exchanges." In the light of aforesaid
recommendations of the JPC, the extant instructions relating to return of all dishonoured cheques have
been reviewed.
(iii) It is understood that banks are already following the appropriate procedure keeping in view the above
instructions to deal with the dishonour of cheques. However, it is considered
necessary to streamline the procedure to be followed by all banks in this behalf. It is therefore suggested
that in addition to the existing instruction in respect of
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dishonoured instruments for want of funds, banks may follow the additional instructions laid down in
paragraph 15.2 below which could cover all cheques dishonoured on account of insufficient
funds and not only those relating to settlement transactions of Stock Exchanges.
15.2 Procedure for return/ despatch of dishonoured cheques
(i) The paying bank should return dishonoured cheques presented through clearing houses strictly as per
the return discipline prescribed for respective clearing house in terms of Uniform
Regulations And Rules for Bankers' Clearing Houses. The collecting bank on receipt of such dishonoured
cheques should despatch it immediately to the payees / holders.

(ii) In relation to cheques presented direct to the paying bank for settlement of transaction by way of
transfer between two accounts with that bank, it should return such dishonoured cheques
to payees/ holders immediately.
(iii) In case of dishonor / return of cheques, the paying banks should clearly indicate the return reason
code on the return memo / objection slip which should also bear the signature /
initial of the bank officials as prescribed in Rule 6 of the Uniform Regulations and Rules for Bankers’
Clearing Houses (URRBCH).
15.3 Information on dishonoured cheques
Data in respect of each dishonoured cheque for amount of ` 1 crore and above should be made part of
bank's MIS on constituents and concerned branches should report such data to their
respective controlling office / Head Office.
Data in respect of cheques drawn in favour of stock exchanges and dishonoured should be consolidated
separately by banks irrespective of the value of such cheques as a part of their MIS
relating to broker entities, and be reported to their respective Head Offices / Central Offices.
15.4 Dealing with incidents of frequent dishonour of
cheques of value ` 1 crore and above
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(i) With a view to enforce financial discipline among the customers, banks should introduce a condition for
operation of accounts with cheque facility that in the event of dishonour of a
cheque valuing rupees one crore and above drawn on a particular account of the drawer on four
occasions during the financial year for want of sufficient funds in the account, no fresh cheque
book would be issued. Also, the bank may consider closing current account at its discretion. However, in
respect of advances accounts such as cash credit account, overdraft account, the need
for continuance or otherwise of these credit facilities and the cheque facility relating to these accounts
should be reviewed by appropriate authority higher than the sanctioning authority.
(ii) For the purposes of introduction of the condition mentioned at (i) above in relation to operation of the
existing accounts, banks may, at the time of issuing new cheque book, issue a

letter advising the constituents of the new condition.
(iii) If a cheque is dishonoured for a third time on a particular account of the drawer during the financial
year, banks should issue a cautionary advice to the concerned constituent drawing
his attention to aforesaid condition and consequential stoppage of cheque facility in the event of cheque
being dishonoured on fourth occasion on the same account during the financial year.
Similar cautionary advice may be issued if a bank intends to close the account.
15.5 Dealing with frequent dishonour of cheques of value of less than ` 1 crore
Since frequent dishonour of cheques of value of less than ` 1 crore is also a matter of concern, it is felt
that banks need to take appropriate action in those accounts where such dishonour
of cheques occur. Further, it is also felt that though it may not be necessary to extend all the steps laid
down in our earlier circular to smaller cheques, banks should have their own
approach to deal with recalcitrant customers.
Banks are therefore advised to have a Board approved policy for dealing with frequent dishonour of
cheques of value of less than ` 1 crore. The policy should also deal with matters relating
to frequent dishonour of ECS mandates.
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15.6 General
(i) For the purpose of adducing evidence to prove the fact of dishonour of cheque on behalf of a
complainant (i.e., payee / holder of a dishonoured cheque) in any proceeding relating to
dishonoured cheque before a court, consumer forum or any other competent authority, banks should
extend full co-operation, and should furnish him/her documentary proof of fact of dishonour of
cheques.
(ii) Banks should place before their Audit/ Management Committee, every quarter, consolidated data in
respect of the matters referred to above.
15.7 Framing appropriate procedure for dealing with dishonoured cheques

Banks are also advised to adopt, with the approval of their respective Boards, appropriate procedure for
dealing with dishonoured cheques with inherent preventive measures and checks to
prevent any scope for collusion of the staff of the bank or any other person, with the drawer of the cheque
for causing delay in or withholding the communication of the fact of dishonour of
the cheque to the payee/ holder or the return of such dishonoured cheque to him.
Banks should also lay down requisite internal guidelines for their officers and staff and advise them to
adhere to such guidelines and ensure strict compliance thereof to achieve aforesaid
object of effective communication and delivery of dishonoured cheque to the payee.
16. Dealing with Complaints and Improving Customer Relations
16.1 Complaints/suggestions box
Complaints/suggestions box should be provided at each office of the bank. Further, at every office of the
bank a notice requesting the customers to meet the branch manager may be displayed
regarding grievances, if the grievances remain unredressed.
16.2 Complaint Book /Register
Complaint book with perforated copies in each set may be introduced, so designed as to instantly provide
an acknowledgement to the customers and anintimation to the Controlling Office.
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IBA has, for the sake of uniformity, prepared a format of the complaint book with adequate number of
perforated copies, which are so designed that the complainant could be given an
acknowledged copy instantly. A copy of the complaint is required to be forwarded to the concerned
Controlling Office of the bank along with the remark of the Branch Manager within a time
frame. Bank should introduce the complaint book as per the above format for uniformity.
All bank's branches should maintain a separate complaints register in the prescribed format given for
entering all the complaints/grievances received by them directly or through their Head
Office/Govt. These registers should be maintained irrespective of the fact whether a complaint is received
or not in the past.

The complaints registers maintained by branches should be scrutinised by the concerned Regional
Manager during his periodical visit to the branches and his observations/comments recorded in
the relative visit reports.
Banks having computerized operations may adopt the afore-said format and generate copies
electronically.
16.3 Complaint Form
Further, a complaint form, along with the name of the Nodal Officer for complaint redressal, may be
provided in the homepage itself to facilitate complaint submission by customers. The
complaint form should also indicate that the first point for redressal of complaints is the bank itself and
that complainants may approach the Banking Ombudsman only if the complaint is not
resolved at the bank level within a month. Similar information may be displayed in the boards put up in all
the bank branches to indicate the name and address of the Banking Ombudsman. In
addition, the name, address and telephone numbers of the Controlling Authority of the bank to whom
complaints can be addressed may also be given prominently.
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16.4 Analysis and Disclosure of complaints -
Disclosure of complaints / unimplemented awards of
Banking Ombudsmen along with Financial Results
The Committee on Procedures and Performance Audit on Public Services (CPPAPS) had recommended
that banks should place a statement before their Boards analyzing the complaints received. CPPAPS
had further recommended that the Statement of complaints and its analysis should also be disclosed by
banks along with their financial results. Further, a suggestion has been received that
unimplemented awards of the Banking Ombudsman should also be disclosed along with financial results.
Banks should place a statement of complaints before their Boards / Customer Service Committees along
with an analysis of the complaints received. The complaints should be analyzed (i) to
identify customer service areas in which the complaints are frequently received; (ii) to identify frequent
sources of complaint; (iii) to identify systemic deficiencies; and (iv) for

initiating appropriate action to make the grievance redressal mechanism more effective.
Further, banks are also advised to disclose the following brief details along with their financial results:
A. Customer Complaints
(a) No. of complaints pending at the beginning of the year
(b) No. of complaints received during the year
(c) No. of complaints redressed during the year
(d) No. of complaints pending at the end of the year
B. Awards passed by the Banking Ombudsman
(a) No. of unimplemented Awards at the beginning of the year
(b) No. of Awards passed by the Banking Ombudsmen during the
year
(c) No. of Awards implemented during the year
(d) No. of unimplemented Awards at the end of the year
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Further, banks are also advised to place the detailed statement of complaints and its analysis on their
web-site for information of the general public at the end of each financial year. Banks
should include all complaints pertaining to ATM cards issued by them in their disclosures.
16.5 Grievance Redressal Mechanism
Banks should ensure that a suitable mechanism exists for receiving and addressing complaints from its
customers / constituents with specific emphasis on resolving such complaints fairly and
expeditiously regardless of source of the complaints.
Banks are also advised to:
(i) Ensure that the complaint registers are kept at prominent place in their branches which would make it
possible for the customers to enter their complaints.
(ii) Have a system of acknowledging the complaints, where the complaints are received through letters /
forms.
(iii) Fix a time frame for resolving the complaints received at different levels.

(iv) Ensure that redressal of complaints emanating from rural areas and those relating to financial
assistance to Priority Sector and Government’s Poverty Alleviation Programmes also form
part of the above process.
(v) Prominently display at the branches, the names of the officials who can be
contacted for redressal of complaints, together with their direct telephonenumber, fax number, complete
address (not Post Box No.) and e-mail address, etc., for proper and timely contact by
the customers and for enhancing the effectiveness of the redressal machinery.
(vi) The names of the officials displayed at the branches who can be contacted for redressal of complaints
should also include the name and other details of the concerned Nodal Officer
appointed under the Banking Ombudsman Scheme, 2006.
(vii) Banks should display on their web-sites, the names and other details of the officials at their Head
Office / Regional Offices / Zonal Offices who can be contacted for redressal of
complaints including the names of the Nodal Officers / Principal Nodal Officers.
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(viii) Further, banks should also display on their web-sites, the names and other details of their CMD /
CEO and also Line Functioning Heads for various operations to enable their customers
to approach them in case of need, if necessary.
Further, as stated above in Paragraph 16.4, banks are required to disclose the brief details regarding the
number of complaints along with their financial results. This statement should
include all the complaints received at the Head Office / Controlling Office level as also the complaints
received at the branch level. However, where the complaints are redressed within the
next working day, banks need not include the same in the statement of complaints. This is expected to
serve as an incentive to the banks and their branches to redress the complaints within
the next working day.
Where the complaints are not redressed within one month, the concerned branch / Controlling Office
should forward a copy of the same to the concerned Nodal Officer under the Banking Ombudsman

Scheme and keep him updated regarding the status of the complaint. This would enable the Nodal Officer
to deal with any reference received from the Banking Ombudsman regarding the complaint
more effectively. Further, it is also necessary that the customer is made aware of his rights to approach
the concerned Banking Ombudsman in case he is not satisfied with the bank’s response.
As such, in the final letter sent to the customer regarding redressal of the complaint, banks should
indicate that the complainant can also approach the concerned Banking Ombudsman. The
details of the concerned Banking Ombudsman should also be included in the letter.
Banks should give wide publicity to the grievance redressal machinery through advertisements and also
by placing them on their web sites.
16.5.1 Display of Names of Nodal Officers
With a view to making the Grievance Redressal Mechanism more effective, in addition to the instructions
mentioned above, banks are further advised as under:
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i) Ensure that the Principal Nodal Officer appointed under the Banking Ombudsman Scheme is of a
sufficiently senior level, not below the rank of a General Manager.
ii) Contact details including name, complete address, telephone / fax number, email address, etc., of the
Principal Nodal Officer needs to be prominently displayed in the portal of the bank
preferably on the first page of the web-site so that the aggrieved customer can approach the bank with a
sense of satisfaction that she / he has been attended at a senior level.
iii) Grievance Redressal Mechanism (GRM) should be made simpler even if it is linked to call centre of
customer care unit without customers facing hassles of proving identity, account
details, etc.
iv) Adequate and wider publicity are also required to be given by the respective financial services provider.
The name and address of the Principal Nodal Officer may also be forwarded to the Chief General
Manager, Customer Education and Protection Department, Reserve Bank of India, Central Office,
1st Floor, Amar Building, Sir P.M.Road, Mumbai-400 001 (email).
16.6 Review of grievances redressal machinery in Public Sector Banks

Banks should critically examine on an on-going basis as to how Grievances Redressal Machinery is
working and whether the same has been found to be effective in achieving improvement in
customer service in different areas.
Banks should identify areas in which the number of complaints is large or on the increase and consider
constituting special squads to look into complaints on the spot in branches against
which there are frequent complaints.
Banks may consider shifting the managers/officers of branches having large number of complaints to
other branches/regional offices/departments at Head Offices where contacts with public may
be relatively infrequent.
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At larger branches and at such of the branches where there are a large number of complaints, the banks
may consider appointing Public Relations Officers /Liaison Officers for looking
into/mitigating the complaints/grievances of customers expeditiously.
The banks may arrange to include one or two sessions on customer service, public relations etc., in
training programmes conducted in their training establishments.
In cases where the contention of the complainant has not been accepted, a complete reply should be
given to him to the extent possible.
Grievances/complaints relating to congestions in the banking premises should be examined by the bank’s
internal inspectors/auditors on a continuing basis and action taken for augmentation of
space, whenever necessary, keeping in view the availability of larger accommodation in the same locality
at a reasonable rent and other commercial considerations.
16.7 Select Banks to appoint Chief Customer Service Officer
With a view to further boosting the quality of customer service and ensuring that there is undivided
attention to resolution of customer complaints in banks, all public sector banks, and some
private sector and foreign banks (Annex X) have been advised to appoint an internal ombudsman
designated as Chief Customer Service Officer (CCSO). These banks have been selected on the basis

of their asset size, business mix, etc. The CCSO should not have worked in the bank in which he/she is
appointed as CCSO. The bank’s internal ombudsman will be a forum available to bank
customers for grievance redressal before they can even approach the Banking Ombudsman.
17. Erroneous Debits arising on fraudulent or other transactions
17.1 Vigilance by banks
Banks have been advised to adhere to the guidelines and procedures for opening and operating deposit
accounts to safeguard against unscrupulous persons opening accounts mainly to use them as
conduit for fraudulently encashing payment instruments. However, in view of receipt of continuous
complaints of fraudulent encashment by unscrupulous persons opening deposit accounts in the
name/s similar
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to already established concern/s resulting in erroneous and unwanted debit of drawers’ accounts, banks
should remain vigilant to avoid such lapses and issue necessary instructions to the
branches / staff.
17.2 Compensating the customer
Besides in cases of the above kind, banks also do not restore funds promptly to customers even in bona-
fide cases but defer action till completion of either departmental action or police
interrogation. Therefore, (i) In case of any fraud, if the branch is convinced that an irregularity / fraud has
been committed by its staff towards any constituent, the branch should at once
acknowledge its liability and pay the just claim, (ii) in cases where banks are at fault, the banks should
compensate customers without demur, and (iii) in cases where neither the bank is at
fault nor the customer is at fault but the fault lies elsewhere in the system, then also the banks should
compensate the customers (up to a limit) as part of a Board approved customer
relations policy.
18. Extension of Safe Deposit Locker / Safe Custody Article Facility

The Committee on Procedures and Performance Audit on Public Services (CPPAPS) had made some
recommendations for easy operation of lockers. Reserve Bank has reviewed all the guidelines issued
by the Bank on various issues relating to safe deposit lockers / safe custody articles. The following
guidelines supersede all the guidelines issued earlier in this regard.
18.1 Allotment of Lockers
18.1.1 Linking of Allotment of Lockers to placement of Fixed Deposits
The Committee on Procedures and Performance Audit of Public Services (CPPAPS) observed that linking
the lockers facility with placement of fixed or any other deposit beyond what is
specifically permitted is a restrictive practice and should be prohibited forthwith. RBI concurs with the
Committee's observations and banks are advised to refrain from such restrictive
practices.
18.1.2 Fixed Deposit as Security for Lockers
Banks may face situations where the locker-hirer neither operates the locker nor pays rent. To ensure
prompt payment of locker rent, banks may at the time of allotment,
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obtain a Fixed Deposit which would cover 3 years rent and the charges for breaking open the locker in
case of an eventuality. However, banks should not insist on such Fixed Deposit from the
existing locker-hirers.
18.1.3 Wait List of Lockers
Branches should maintain a wait list for the purpose of allotment of lockers and ensure transparency in
allotment of lockers. All applications received for allotment of locker should be
acknowledged and given a wait list number.
18.1.4 Providing a copy of the agreement
Banks should give a copy of the agreement regarding operation of the locker to the locker-hirer at the
time of allotment of the locker.
18.2 Security aspects relating to Safe Deposit Lockers
18.2.1 Operations of Safe Deposit Vaults/Lockers

Banks should exercise due care and necessary precaution for the protection of the lockers provided to
the customer. Banks should review the systems in force for operation of safe deposit
vaults / locker at their branches on an on-going basis and take necessary steps. The security procedures
should be well-documented and the concerned staff should be properly trained in the
procedure. The internal auditors should ensure that the procedures are strictly adhered to.
18.2.2 Customer due diligence for allotment of lockers /
Measures relating to lockers which have remained unoperated
In a recent incident, explosives and weapons were found in a locker in a bank branch. This emphasizes
that banks should be aware of the risks involved in renting safe deposit lockers. In this
connection, banks should take following measures:
(i) Banks should carry out customer due diligence for both new and existing customers at least to the
levels prescribed for customers classified as medium risk. If the customer is classified
in a higher risk category, customer due diligence as per KYC norms applicable to such higher risk
category should be carried out.
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(ii) Where the lockers have remained unoperated for more than three years for medium risk category or
one year for a higher risk category, banks should immediately contact the locker-hirer
and advise him to either operate the locker or surrender it. This exercise should be carried out even if the
locker hirer is paying the rent regularly. Further, banks should ask the locker
hirer to give in writing, the reasons why he / she did not operate the locker. In case the locker-hirer has
some genuine reasons as in the case of NRIs or persons who are out of town due to a
transferable job etc., banks may allow the locker hirer to continue with the locker. In case the locker-hirer
does not respond nor operate the locker, banks should consider opening the
lockers after giving due notice to him. In this context, banks should incorporate a clause in the locker
agreement that in case the locker remains unoperated for more than one year, the bank

would have the right to cancel the allotment of the locker and open the locker, even if the rent is paid
regularly.
(iii) Banks should have clear procedure drawn up in consultation with their legal advisers for breaking
open the lockers and taking stock of inventory.
18.3 Embossing identification code
Banks should ensure that identification Code of the bank / branch is embossed on all the locker keys with
a view to facilitate Authorities in identifying the ownership of the locker keys.
19. Nomination Facility
19.1 Legal Provisions
19.1.1 Provisions in the Banking Regulation Act, 1949
The Banking Regulation Act, 1949 was amended by Banking Laws (Amendment) Act, 1983 by
introducing new Sections 45ZA to 45ZF, which provide, inter alia, for the following matters:
a. To enable a banking company to make payment to the nominee of a deceased depositor, the amount
standing to the credit of the depositor.
b. To enable a banking company to return the articles left by a deceased person in its safe custody to his
nominee, after making an inventory of the articles in the manner directed by the
Reserve Bank.
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c. To enable a banking company to release the contents of a safety locker to the nominee of the hirer of
such locker, in the event of the death of the hirer, after making an inventory of the
contents of the safety locker in the manner directed by the Reserve Bank.
19.1.2 The Banking Companies (Nomination) Rules, 1985
Since such nomination has to be made in the prescribed manner, the Central Government framed, in
consultation with the Reserve Bank of India, the Banking Companies (Nomination) Rules, 1985.
These Rules, together with the provision of new Sections 45ZA to 45ZF of the Banking Regulation Act,
1949 regarding nomination facilities were brought into force with effect from 1985.
The Banking Companies (Nomination) Rules, 1985 which are self-explanatory, provide for:-
(i) Nomination Forms for deposit accounts, articles kept in safe custody and contents of safety lockers.
(ii) Forms for cancellation and variation of the nominations.

(iii) Registration of Nominations and cancellation and variation of nominations, and
(iv) matters related to the above.
19.1.3 Nomination facilities in respect of safe deposit locker / safe custody articles
Sections 45ZC to 45ZF of the Banking Regulation Act, 1949 provide for nomination and release of
contents of safety lockers / safe custody article to the nominee and protection against notice
of claims of other persons. Banks should be guided by the provisions of Sections 45 ZC to 45 ZF of the
Banking Regulation Act, 1949 and the Banking Companies (Nomination) Rules, 1985 and the
relevant provisions of Indian Contract Act and Indian Succession Act.
In the matter of returning articles left in safe custody by the deceased depositor to the nominee or
allowing the nominee/s to have access to the locker and permitting him/them to remove the
contents of the locker, the Reserve Bank of India, in pursuance
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of Sections 45ZC (3) and 45ZE (4) of the Banking Regulation Act, 1949 has specified the formats for the
purpose.
In order to ensure that the amount of deposits, articles left in safe custody and contents of lockers are
returned to the genuine nominee, as also to verify the proof of death, banks may
devise their own claim formats or follow the procedure, if any, suggested by the Indian Banks' Association
for the purpose.
19.1.4 Nomination Facility – Sole Proprietary Concern
Banks may extend the nomination facility also in respect of deposits held in the name of a sole proprietary
concern.
19.2 Nomination Facility in Single Deposit Accounts
Banks should give wide publicity and provide guidance to deposit account holders on the benefits of
nomination facility and the survivorship clause. Despite the best efforts in this regard,
banks might still be opening single deposit accounts without nomination.
In a case which came up before the Allahabad High Court, the Honourable Court has observed that "it will
be most appropriate that the Reserve Bank of India issues guidelines to the effect

that no Savings Account or Fixed Deposit in single name be accepted unless name of the nominee is
given by the depositors. It will go a long way to serve the purpose of the innocent widows
and children, who are dragged on long drawn proceedings in the Court for claiming the amount, which
lawfully belongs to them".
Keeping in view the above, banks should generally insist that the person opening a deposit account
makes a nomination. In case the person opening an account declines to fill in nomination,
the bank should explain the advantages of nomination facility. If the person opening the account still does
not want to nominate, the bank should ask him to give a specific letter to the
effect that he does not want to make a nomination. In case the person opening the account declines to
give such a letter, the bank should record the fact on the account opening form and
proceed with opening of the account if otherwise found eligible. Under no circumstances, a bank should
refuse to open an account solely on the ground that the person opening the account
refused to nominate.
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19.3 Acknowledgement of Nomination
It was observed that some banks do not have the system of acknowledging the receipt of the duly
completed form of nomination, cancellation and / or variation of the nomination. Further, in
some banks, although there is a system of acknowledgement of nomination as provided in the Savings
Bank account opening form, such acknowledgements are actually not given to the customers. In
this connection, banks are aware that in terms of Rules 2 (9), 3 (8) and 4 (9) of the Banking Companies
Nomination (Rules), 1985, they are required to acknowledge in writing to the depositor
(s) / locker hirers (s) the filing of the relevant duly completed Form of nomination, cancellation and / or
variation of the nomination.
Banks should therefore strictly comply with the provisions of Banking Regulation Act, 1949 and Banking
Companies (Nomination) Rules, 1985 and devise a proper system of acknowledging the

receipt of the duly completed form of nomination, cancellation and / or variation of the nomination. Such
acknowledgement should be given to all the customers irrespective of whether the same
is demanded by the customers.
19.4 Registering the nomination
In terms of Rules 2 (10), 3 (9) and 4 (10) of the Banking Companies (Nomination) Rules, 1985 banks are
required to register in its books the nomination, cancellation and / or variation of the
nomination. The banks should accordingly take action to register nominations or changes therein, if any,
made by their depositor(s) / hirers.
19.5 Incorporation of the legend “Nomination Registered”
in pass book, deposit receipt etc. and indicating the
Name of the Nominee in Pass Books / Fixed Deposit Receipts
When a bank account holder has availed himself of nomination facility, the same may be indicated on the
passbook so that, in case of death of the account holder, his relatives can know from
the pass book that the nomination facility has been availed of by the deceased depositor and take
suitable action. Banks may, therefore, introduce the practice of recording on the face of the
passbook the position regarding availment of nomination facility with the legend "Nomination Registered".
This may be done in the case of term deposit receipts also.
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Further, banks are advised that in addition to the legend “Nomination Registered”, they should also
indicate the name of the Nominee in the Pass Books / Statement of Accounts / FDRs, in case
the customer is agreeable to the same.
19.6 Separate nomination for savings bank account and pension account
Nomination facility is available for Savings Bank Account opened for credit of pension. Banking
Companies (Nomination) Rules, 1985 are distinct from the Arrears of Pension (Nomination) Rules,
1983 and nomination exercised by the pensioner under the latter rules for receipt of arrears of pension
will not be valid for the purpose of deposit accounts held by the pensioners with banks

for which a separate nomination is necessary in terms of the Banking Companies (Nomination) Rules,
1985 in case a pensioner desires to avail of nomination facility.
19.7 Nomination Facility – Certain Clarifications
19.7.1 Nomination facility in respect of deposits
(i) Nomination facility is intended for individuals including a sole proprietary concern.
(ii) Rules stipulate that nomination shall be made only in favour of individuals. As such, a nominee cannot
be an Association, Trust, Society or any other Organisation or any office-bearer
thereof in his official capacity. In view thereof any nomination other than in favour of an individual will not
be valid.
(iii) There cannot be more than one nominee in respect of a joint deposit account.
(iv) Banks may allow variation/cancellation of a subsisting nomination by all the surviving depositor(s)
acting together. This is also applicable to deposits having operating instructions
"either or survivor".
(v) In the case of a joint deposit account the nominee's right arises only after the death of all the
depositors.
(vi) Witness in Nomination Forms: The Banking Companies (Nomination) Rules, 1985 have been framed
in exercise of powers conferred by Section 52 read
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with Sections 45ZA, 45ZC and 45ZE of the Banking Regulation Act, 1949. In this connection, we clarify
that for the various Forms (DA1, DA2 and DA3 for Bank Deposits, Forms SC1, SC2 and SC3
for Articles left in Safe Custody, Forms SL1, SL1A, SL2, SL3 and SL3A for Safety Lockers) prescribed
under Banking Companies (Nomination) Rules, 1985 only Thumb-impression(s) shall be
attested by two witnesses. Signatures of the account holders need not be attested by witnesses.
(vii) Nomination in case of Joint Deposit Accounts: It is understood that sometimes the customers
opening joint accounts with or without "Either or Survivor" mandate, are dissuaded from
exercising the nomination facility. It is clarified that nomination facility is available for joint deposit
accounts also. Banks are, therefore, advised to ensure that their branches offer
nomination facility to all deposit accounts including joint accounts opened by the customers.

19.7.2 Nomination in Safe Deposit Lockers / Safe Custody Articles
(i) Nomination facilities are available only in the case of individual depositors and not in respect of
persons jointly depositing articles for safe custody.
(ii) Section 45ZE of the Banking Regulation Act, 1949 does not preclude a minor from being a nominee
for obtaining delivery of the contents of a locker. However, the responsibility of the
banks in such cases is to ensure that when the contents of a locker were sought to be removed on behalf
of the minor nominee, the articles were handed over to a person who, in law, was
competent to receive the articles on behalf of the minor.
(iii) As regards lockers hired jointly, on the death of any one of the joint hirers, the contents of the locker
are only allowed to be removed jointly by the nominees and the survivor(s)
after an inventory was taken in the prescribed manner. In such a case, after such removal preceded by
an inventory, the nominee and surviving hirer(s) may still keep the entire contents with
the same bank, if they so desire, by entering into a fresh contract of hiring a locker.
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19.8 Customer Guidance and Publicity Educating Customers
on the Benefits of nomination / survivorship clause
(i) The nomination facility is intended to facilitate expeditious settlement of claims in the accounts of
deceased depositors and to minimise hardship caused to the family members on the
death of the depositors. The banks should endeavour to drive home to their constituents the benefit of
nomination facilities and ensure that the message reaches all the constituents by taking
all necessary measures for popularising the nomination facility among their constituents.
(ii) Banks should give wide publicity and provide guidance to deposit account holders on the benefits of
the nomination facility and the survivorship clause. Illustratively, it should be
highlighted in the publicity material that in the event of the death of one of the joint account holders, the
right to the deposit proceeds does not automatically devolve on the surviving
joint deposit account holder, unless there is a survivorship clause.

(iii) In addition to obtaining nomination forms, banks should ensure that account opening form should
contain space for nomination also so that the customers could be educated about
availability of such facilities.
(iv) Unless the customers prefer not to nominate (this may be recorded without giving scope for
conjecture of non-compliance), nomination should be a rule, to cover all other existing and new
accounts.
(v) To popularise the nomination facility, publicity may be launched, including printing compatible
message on cheque books, pass-book and any other literature reaching the customers as well
as launching periodical drives. The methodology which the banks may like to adopt for this purpose may
vary. However, one of the banks has devised a small slip indicating the availability of
nomination facility and the slip is inserted in the cheque books and pass books and in current account
statements. A specimen format of the slip is given below :-
"Nomination facility available for -
- Deposits
- Safe Custody
- Safe Deposit Vault
Please make use of it.
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For details, please enquire at the Branch"
The availability of the above facility may also be indicated on the cheque/pass books.
20. Settlement of claims in respect of deceased depositors –
Simplification of procedure
Provisions of the Banking Regulation Act, 1949
Banks should adhere to the provisions of Sections 45 ZA to 45 ZF of the Banking Regulation Act, 1949
and the Banking Companies (Nomination) Rules, 1985.
20.1 Accounts with survivor/nominee clause

20.1.1 In the case of deposit accounts where the depositor had utilized the nomination facility and made a
valid nomination or where the account was opened with the survivorship clause
("either or survivor", or "anyone or survivor", or "former or survivor" or "latter or survivor"), the payment of
the balance in the deposit account to the survivor(s)/nominee of a deceased
deposit account holder represents a valid discharge of the bank's liability provided :
(a) the bank has exercised due care and caution in establishing the identity of the survivor(s) / nominee
and the fact of death of the account holder, through appropriate documentary
evidence;
(b) there is no order from the competent court restraining the bank from making the payment from the
account of the deceased; and
(c) it has been made clear to the survivor(s) / nominee that he would be receiving the payment from the
bank as a trustee of the legal heirs of the deceased depositor, i.e., such payment to
him shall not affect the right or claim which any person may have against the survivor(s) / nominee to
whom the payment is made.
20.1.2 It may be noted that since payment made to the survivor(s) / nominee, subject to the foregoing
conditions, would constitute a full discharge of the bank's liability, insistence on
production of legal representation is superfluous and unwarranted and only serves to cause entirely
avoidable inconvenience to the survivor(s) / nominee and would, therefore, invite serious
supervisory disapproval. In such case, therefore, while
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making payment to the survivor(s) / nominee of the deceased depositor, the banks should desist from
insisting on production of succession certificate, letter of administration or probate,
etc., or obtain any bond of indemnity or surety from the survivor(s)/nominee, irrespective of the amount
standing to the credit of the deceased account holder.
20.2 Accounts without the survivor / nominee clause
In case where the deceased depositor had not made any nomination or for the accounts other than those
styled as "either or survivor" (such as single or jointly operated accounts), banks are

required to adopt a simplified procedure for repayment to legal heir(s) of the depositor keeping in view the
imperative need to avoid inconvenience and undue hardship to the common person. In
this context, banks may, keeping in view their risk management systems, fix a minimum threshold limit,
for the balance in the account of the deceased depositors, up to which claims in respect
of the deceased depositors could be settled without insisting on production of any documentation other
than a letter of indemnity.
20.3 Premature Termination of term deposit accounts
In the case of term deposits, banks are required to incorporate a clause in the account opening form itself
to the effect that in the event of the death of the depositor, premature
termination of term deposits would be allowed. The conditions subject to which such premature
withdrawal would be permitted may also be specified in the account opening form. Such premature
withdrawal would not attract any penal charge.
20.4 Treatment of flows in the name of the deceased depositor
In order to avoid hardship to the survivor(s) / nominee of a deposit account, banks should obtain
appropriate agreement / authorization from the survivor(s) / nominee with regard to the
treatment of pipeline flows in the name of the deceased account holder. In this regard, banks could
consider adopting either of the following two approaches:
The bank could be authorized by the survivor(s) / nominee of a deceased account holder to open an
account styled as 'Estate of Shri ________________, the Deceased'
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where all the pipeline flows in the name of the deceased account holder could be allowed to be credited,
provided no withdrawals are made.
OR
The bank could be authorized by the survivor(s) / nominee to return the pipeline flows to the remitter with
the remark "Account holder deceased" and to intimate the survivor(s) / nominee
accordingly. The survivor(s) / nominee / legal heir(s) could then approach the remitter to effect payment
through a negotiable instrument or through ECS transfer in the name of the
appropriate beneficiary.

20.5 Interest payable on the deposit account of deceased depositor
In the case of a term deposit standing in the name/s of
(i) a deceased individual depositor, or
(ii) two or more joint depositors, where one of the depositors has died,
the criterion for payment of interest on matured deposits in the event of death of the depositor in the
above cases has been left to the discretion of individual banks subject to their Board
laying down a transparent policy in this regard.
In the case of balances lying in current account standing in the name of a deceased individual
depositor/sole proprietorship concern, interest should be paid only from 1st May, 1983, or from
the date of death of the depositor, whichever is later, till the date of repayment to the claimant/s at the
rate of interest applicable to savings deposit as on the date of payment.
20.6 Time limit for settlement of claims
Banks should settle the claims in respect of deceased depositors and release payments to survivor(s) /
nominee(s) within a period not exceeding 15 days from the date of receipt of the claim
subject to the production of proof of death of the depositor and suitable identification of the claim(s), to the
bank's satisfaction.
Banks should report to the Customer Service Committee of the Board, at appropriate intervals, on an
ongoing basis, the details of the number of claims received pertaining to deceased
depositors / locker-hirers / depositors of safe custody article accounts and those pending beyond the
stipulated period, giving reasons therefor.
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20.7 Claim Forms to be made available
With a view to facilitate timely settlement of claims on the death of a depositor, banks are advised to
provide claim forms for settlement of claims of the deceased accounts, to any person/s
who is/are approaching the bank / branches for forms. Claim forms may also be put on the bank’s website
prominently so that claimants of the deceased depositor can access and download the
forms without having to visit the concerned bank/branch for obtaining such forms for filing claim with the
bank.

21. Access to the safe deposit lockers / Return of safe custody articles to Survivor(s) / Nominee(s) / Legal
heir(s)
For dealing with the requests from the nominee(s) of the deceased locker-hirer / depositors of the safe-
custody articles (where such a nomination had been made) or by the survivor(s) of the
deceased (where the locker / safe custody article was accessible under the survivorship clause), for
access to the contents of the locker / safe custody article on the death of a locker hirer
/ depositor of the article, the banks are advised to adopt generally the foregoing approach, mutatis
mutandis, as indicated for the deposit accounts. Detailed guidelines in this regard are,
however, as follows:
21.1 Access to the safe deposit lockers / return of safe custody articles (with survivor/nominee clause)
21.1.1 If the sole locker hirer nominates a person, banks should give to such nominee access of the
locker and liberty to remove the contents of the locker in the event of the death of the
sole locker hirer. In case the locker was hired jointly with the instructions to operate it under joint
signatures, and the locker hirer(s) nominates person(s), in the event of death of any
of the locker hirers, the bank should give access of the locker and the liberty to remove the contents
jointly to the survivor(s) and the nominee(s). In case the locker was hired jointly with
survivorship clause and the hirers instructed that the access of the locker should be given over to "either
or survivor", "anyone or survivor" or "former or survivor" or according to any
other survivorship clause, banks should follow the mandate in the event of the death of one or more of the
locker-hirers.
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21.1.2 However, banks should take the following precautions before handing over the contents:
(a) Banks should exercise due care and caution in establishing the identity of the survivor(s) / nominee(s)
and the fact of death of the locker hirer by obtaining appropriate documentary
evidence;
(b) Banks should make diligent effort to find out if there is any order from a competent court restraining
the bank from giving access to the locker of the deceased; and

(c) Banks should make it clear to the survivor(s) / nominee(s) that access to locker / safe custody articles
is given to them only as a trustee of the legal heirs of the deceased locker hirer
i.e., such access given to him shall not affect the right or claim which any person may have against the
survivor(s) / nominee(s) to whom the access is given. Similar procedure should be
followed for return of articles placed in the safe custody of the bank. Banks should note that the facility of
nomination is not available in case of deposit of safe custody articles by more
than one person.
21.1.3 Banks should note that since the access given to the survivor(s) / nominee(s), subject to the
foregoing conditions, would constitute a full discharge of the bank's liability,
insistence on production of legal representation is superfluous and unwarranted and only serves to cause
entirely avoidable inconvenience to the survivor(s) / nominee(s) and would, therefore,
invite serious supervisory disapproval. In such case, therefore, while giving access to the survivor(s) /
nominee(s) of the deceased locker hirer / depositor of the safe custody articles, the
banks should desist from insisting on production of succession certificate, letter of administration or
probate, etc., or obtain any bond of indemnity or surety from the survivor(s)/nominee
(s).
21.2 Access to the safe deposit lockers / return of safe custody articles (without survivor/nominee clause)
There is an imperative need to avoid inconvenience and undue hardship to legal heir(s) of the locker
hirer(s). In case where the deceased locker hirer had not made any nomination or where the
joint hirers had not given any mandate that the access may be
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given to one or more of the survivors by a clear survivorship clause, banks are advised to adopt a
customer-friendly procedure drawn up in consultation with their legal advisers for giving
access to legal heir(s) / legal representative of the deceased locker hirer. Similar procedure should be
followed for the articles under safe custody of the bank.
21.3 Preparing Inventory

21.3.1 Banks should prepare an inventory before returning articles left in safe custody / before permitting
removal of the contents of a safe deposit locker as advised in terms of
Notification DBOD.NO.Leg.BC.38/ C.233A-85 dated March 29, 1985. The inventory shall be in the
appropriate Forms set out as enclosed to the above Notification or as near thereto as
circumstances require. A copy of the above Notification is shown as Annex IV of this Circular.
21.3.2 Banks are not required to open sealed/closed packets left with them for safe custody or found in
locker while releasing them to the nominee(s) and surviving locker hirers / depositor
of safe custody article.
21.3.3. Further, in case the nominee(s) / survivor(s) / legal heir(s) wishes to continue with the locker,
banks may enter into a fresh contract with nominee(s) / survivor(s) / legal heir(s)
and also adhere to KYC norms in respect of the nominee(s) / legal heir(s).
21.4 Simplified operational systems / procedures
As per the direction of Reserve Bank, the Indian Banks' Association (IBA) has formulated a Model
Operational Procedure (MOP) for settlement of claims of the deceased constituents, under
various circumstances, consistent with the instructions contained in this circular, for adoption by the
banks. The banks should, therefore, undertake a comprehensive review of their extant
systems and procedures relating to settlement of claims of their deceased constituents (i.e., depositors /
locker-hirers / depositors of safe-custody articles) with a view to evolving a
simplified policy / procedures for the purpose, with the approval of their Board, taking into account the
applicable statutory provisions, foregoing instructions as also the MOP formulated by
the IBA.
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21.5 Customer guidance and publicity
Banks should place on their websites the instructions along with the policies / procedures put in place for
giving access of the locker / safe custody articles to the nominee(s) / survivor(s)

/ Legal Heir(s) of the deceased locker hirer / depositor of the safe custody articles. Further, a printed copy
of the same should also be given to the nominee(s) / survivor(s) / Legal Heir(s)
whenever a claim is received from them.
Banks should view these instructions as very critical element for bringing about significant improvement in
the quality of customer service provided to survivor(s) / nominee(s) of deceased
depositors / locker hirer / depositor of safe custody articles.
22. Settlement of claims in respect of missing persons
22.1 Settlement of claims in respect of missing persons
Banks are advised to follow the following system in case a claim is received from a nominee / legal heirs
for settlement of claim in respect of missing persons :-
The settlement of claims in respect of missing persons would be governed by the provisions of Section
107 / 108 of the Indian Evidence Act, 1872. Section 107 deals with presumption of
continuance and Section 108 deals with presumption of death. As per the provisions of Section 108 of the
Indian Evidence Act, presumption of death can be raised only after a lapse of seven
years from the date of his/her being reported missing. As such, the nominee / legal heirs have to raise an
express presumption of death of the subscriber under Section 107/108 of the Indian
Evidence Act before a competent court. If the court presumes that he/she is dead, then the claim in
respect of a missing person can be settled on the basis of the same.
Banks are advised to formulate a policy which would enable them to settle the claims of a missing person
after considering the legal opinion and taking into account the facts and
circumstances of each case. Further, keeping in view the imperative need to avoid inconvenience and
undue hardship to the common person, banks are advised that keeping in view their risk
management systems, they may fix a threshold limit, up to which claims in respect of missing persons
could be settled without insisting on production of any documentation other than (i) FIR
and the non-traceable report issued by police authorities and (ii) letter of indemnity.
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22.2 Settlement of Claims in respect of Missing Persons in Uttarakhand Disaster

In the aftermath of Uttarakhand Natural Disaster during June 14-20, 2013 the Office of the Registrar
General of India, Ministry of Home Affairs, Government of India has devised a procedure
for Registration of Death of Missing persons in Natural Calamities affected areas in Uttarakhand vide its
circular F.No.1/2/(Uttarakhand)/2011-VS-CRS dated August 16, 2013 (MHA Circular). A
copy of MHA Circular is furnished at Annex VIII for reference. The MHA Circular has devised detailed
procedure for registration and issue of ‘Death Certificate’ of a person reportedly missing
since his/her visit to the site of disaster in Uttarakhand in June 2013.
In view of the above, banks are advised to settle the claims in respect of missing persons, covered by
MHA Circular, without insisting on production of any documentation other than (i) the
‘Death Certificate’ issued by the Designated Officer under MHA Circular and (ii) letter of indemnity.
Banks are further advised that the provisions detailed in Para 22.1 above on ‘Settlement of claims in
respect of missing persons’ would be applicable in other cases which are not covered by
MHA Circular.
23. Release of other assets of the deceased
borrowers to their legal heirs
Banks had represented that the principle of not obtaining succession certificates etc., could be extended
for settlement of claims in respect of other assets of deceased customers including
securities held against advances after adjustment thereof. Banks are advised not to insist upon legal
representation for release of other assets of deceased customers irrespective of the
amount involved.
Banks may, however, call for succession certificates from legal heirs of deceased borrowers in cases
where there are disputes and all legal heirs do not join in indemnifying the bank or in
certain other exceptional cases where the bank has a reasonable doubt about the genuineness of the
claimant/s being the only legal heir/s of the borrower.
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24. Unclaimed Deposits / Inoperative Accounts in banks

24.1 Section 26 of the Banking Regulation Act, 1949 provides, inter alia, that every banking company
shall, within 30 days after close of each calendar year submit a return in the prescribed
form and manner to the Reserve Bank of India as at the end of each calendar year (i.e., 31st December)
of all accounts in India which have not been operated upon for 10 years.
24.2 In view of the increase in the amount of the unclaimed deposits with banks year after year and the
inherent risk associated with such deposits, banks should play a more pro-active role
in finding the whereabouts of the account holders whose accounts have remained inoperative. Further
several complaints were received in respect of difficulties faced by the customers on
account of their accounts having been classified as inoperative. Moreover, there is a feeling that banks
are undeservedly enjoying the unclaimed deposits, while paying no interest on it.
Keeping these factors in view, the instructions issued by RBI have been reviewed and banks are advised
to follow the instructions detailed below while dealing with inoperative accounts:
(i) Banks should make an annual review of accounts in which there are no operations (i.e., no credit or
debit other than crediting of periodic interest or debiting of service charges) for
more than one year. The banks may approach the customers and inform them in writing that there has
been no operation in their accounts and ascertain the reasons for the same. In case the non-
operation in the account is due to shifting of the customers from the locality, they may be asked to provide
the details of the new bank accounts to which the balance in the existing account
could be transferred.
(ii) If the letters are returned undelivered, they may immediately be put on enquiry to find out the
whereabouts of customers or their legal heirs in case they are deceased.
(iii) In case the whereabouts of the customers are not traceable, banks should consider contacting the
persons who had introduced the account holder. They could also consider contacting the
employer / or any other person whose details are available with them. They could also consider
contacting the account holder telephonically in case his Telephone number / Cell number has been
furnished to the bank. In case of Non
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Resident accounts, the bank may also contact the account holders through e-mail and obtain their
confirmation of the details of the account.
(iv) A savings as well as current account should be treated as inoperative / dormant if there are no
transactions in the account for over a period of two years.
(v) In case any reply is given by the account holder giving the reasons for not operating the account,
banks should continue classifying the same as an operative account for one more year
within which period the account holder may be requested to operate the account. However, in case the
account holder still does not operate the same during the extended period, banks should
classify the same as inoperative account after the expiry of the extended period.
(vi) For the purpose of classifying an account as ‘inoperative’ both the type of transactions i.e., debit as
well as credit transactions induced at the instance of customers as well as third
party should be considered. However, the service charges levied by the bank or interest credited by the
bank should not be considered.
(vii) There may be instances where the customer has given a mandate for crediting the interest on Fixed
Deposit account and/or crediting dividend on shares to the Savings Bank account and
there are no other operations in the Savings Bank account. Since the interest on Fixed Deposit account
and/or dividend on shares is credited to the Savings Bank accounts as per the mandate of
the customer, the same should be treated as a customer induced transaction. As such, the account
should be treated as operative account as long as the interest on Fixed Deposit account and/or
dividend on shares is credited to the Savings Bank account. The Savings Bank account can be treated as
inoperative account only after two years from the date of the last credit entry of the
interest on Fixed Deposit account and/or dividend on shares, whichever is later, provided there is no
other customer induced transaction.
(viii) Further, the segregation of the inoperative accounts is from the point of view of reducing risk of
frauds etc. However, the customer should not be inconvenienced in any way, just
because his account has been rendered inoperative. The classification is there only to bring to the
attention of dealing staff, the increased risk in the account. The transaction may be
monitored at a higher level both from the point of view of preventing

.
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fraud and making a Suspicious Transactions Report. However, the entire process should remain un-
noticeable by the customer.
(ix) Operation in such accounts may be allowed after due diligence as per risk category of the customer.
Due diligence would mean ensuring genuineness of the transaction, verification of the
signature and identity etc. However, it has to be ensured that the customer is not inconvenienced as a
result of extra care taken by the bank.
(x) There should not be any charge for activation of inoperative account.
(xi) Banks are also advised to ensure that the amounts lying in inoperative accounts ledger are properly
audited by the internal auditors / statutory auditors of the bank.
(xii) Interest on savings bank accounts should be credited on regular basis whether the account is
operative or not. If a Fixed Deposit Receipt matures and proceeds are unpaid, the amount
left unclaimed with the bank will attract savings bank rate of interest.
24.3 Banks may also consider launching a special drive for finding the whereabouts of the customers /
legal heirs in respect of existing accounts which have already been transferred to the
separate ledger of ‘inoperative accounts’.
24.4 Display list of Inoperative Accounts: Banks should, in addition to the instructions contained above,
play a more pro-active role in finding the whereabouts of the accountholders of
unclaimed deposits/ inoperative accounts. Banks are, therefore, advised that they should display the list
of unclaimed deposits/inoperative accounts which are inactive / inoperative for ten
years or more on their respective websites. The list so displayed on the websites must contain only the
names of the account holder(s) and his/her address in respect of unclaimed
deposits/inoperative accounts. In case such accounts are not in the name of individuals, the names of
individuals authorized to operate the accounts should also be indicated. However, the
account number, its type and the name of the branch shall not be disclosed on the bank’s website. The
list so published by the banks should also provide a “Find” option to enable the public
to search the list of accounts by name of the account holder.

.
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Banks should also give on the same website, the information on the process of claiming the unclaimed
deposit/activating the inoperative account and the necessary forms and documents for
claiming the same. Banks are required to have adequate operational safeguards to ensure that the
claimants are genuine.
24.5 Strengthening the Regulatory Framework for Unclaimed Deposits
With a view to further strengthen the regulatory framework for inoperative accounts and unclaimed
deposits, banks are advised to put in place a Board approved policy on classification of
unclaimed deposits; grievance redressal mechanism for quick resolution of complaints; record keeping;
and periodic review of such accounts. The first periodic review of unclaimed
deposits/inoperative accounts should be put up to their respective bank Boards by September 30, 2012.
24.6 Treatment of certain savings bank accounts opened for credit of Scholarship amounts and credit of
Direct Benefit Transfer under Government Schemes
State and Central Governments have expressed difficulties in crediting cheques/Direct Benefit
Transfer/Electronic Benefit Transfer/Scholarships for students, etc. into accounts/Accounts with
zero balance opened for the beneficiaries under various Central/State Government schemes but had
been classified as dormant/inoperative due to non-operation of the account for over two years.
Keeping the above in view, banks are advised that they may allot a different “product code” in their CBS
to all such accounts opened by banks so that the stipulation of inoperative/dormant
account due to non-operation does not apply while crediting proceeds as mentioned above.
In order to reduce the risk of fraud etc., in such accounts, while allowing operations in these accounts,
due diligence should be exercised by ensuring the genuineness of transactions,
verification of signature and identity, etc. However, it has to be ensured that the customer is not
inconvenienced in any manner.
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24.7 Treatment of accounts opened for credit of Scholarship Amounts under Government Schemes

Bombay High Court has brought to our notice that banks fix a limit on total credits in zero balance
accounts opened for students studying in primary, secondary / higher secondary schools and
technical institutions. Resultantly, in cases where scholarship amounts exceed the credit limit, banks do
not allow the credit and return the amount to the disbursement account of the
Government. Further, in some cases banks are reported to have closed zero balance accounts
unilaterally without intimating student beneficiaries concerned. Instances of banks refusing to open
zero balance account for students have also been brought to our notice.
As directed by the Bombay High Court, banks are advised to ensure that accounts of all student
beneficiaries under the various Central/State Government Scholarship Schemes are free from
restrictions of ‘minimum balance’ and ‘total credit limit’.
25. Customer Confidentiality Obligations
The scope of the secrecy law in India has generally followed the common law principles based on implied
contract. The bankers' obligation to maintain secrecy arises out of the contractual
relationship between the banker and customer, and as such no information should be divulged to third
parties except under circumstances which are well defined. The following exceptions to the
said rule are normally accepted:
(i) Where disclosure is under compulsion of law
(ii) Where there is duty to the public to disclose
(iii) Where interest of bank requires disclosure and
(iv) Where the disclosure is made with the express or implied consent of the customer.
25.1 Collecting Information from customers for cross-selling purposes
At the time of opening of accounts of the customers, banks collect certain information. While complying
with the above requirements, banks also collect a lot of additional personal
information.
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In this connection, the Committee on Procedures and Performances Audit on Public Services (CPPAPS)
observed that the information collected from the customer was being used for cross selling
of services of various products by banks, their subsidiaries and affiliates. Sometimes, such information
was also provided to other agencies. As banks are aware, the information provided by
the customer for KYC compliance while opening an account is confidential and divulging any details
thereof for cross selling or any other purpose would be in breach of customer
confidentiality obligations. Banks should treat the information collected from the customer for the purpose
of opening of account as confidential and not divulge any details thereof for cross
selling or any other purposes. Banks may, therefore, ensure that information sought from the customer is
relevant to the perceived risk, is not intrusive, and is in conformity with the
guidelines issued in this regard.
Wherever banks desire to collect any information about the customer for a purpose other than KYC
requirements, it should not form part of the account opening form. Such information may be
collected separately, purely on a voluntary basis, after explaining the objectives to the customer and
taking his express approval for the specific uses to which such information could be
put. Banks should therefore, instruct all the branches to strictly ensure compliance with their obligations to
the customer in this regard.
26. Transfer of account from one branch to another
26.1 Instructions of a customer for transfer of his account to another office should be carried out
immediately on receipt of, and in accordance with, his instructions. It should be ensured
that along with the balance of the account, the relative account opening form, specimen signatures,
standing instructions, etc., or the master sheets wherever obtained, are also
simultaneously transferred, under advice to the customer.
26.2 The account transfer form with the enclosures may be handed over to the customer in a sealed
cover if he so desires for delivery at the transferee office / branch. However, the
transferee office should also be separately supplied with a copy of the account transfer letter.

26.3 When an office receives an enquiry from a customer regarding the receipt of his account on transfer
from another office it should take up the matter with the transferor
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office by electronic means, in case it has not received the balance of the account and/or other related
papers even after a reasonable transit time.
27. Switching banks by customers
Banks should ensure that depositors dissatisfied with customer service have the facility to switch banks
and thwarting depositors from such switches would invite serious adverse action.
28. Co-ordination with officers of Central Board of Direct Taxes
There is a need for greater co-ordination between the income-tax department and the banking system. As
such banks should extend necessary help/co-ordination to tax officials whenever
required. Further, banks will have to view with serious concern cases where their staff connive/assist in
any manner with offences punishable under the Income Tax Act. In such cases in
addition to the normal criminal action, such staff member should also be proceeded against
departmentally.
29. Declaration of Holiday under the Negotiable Instruments Act, 1881
In terms of Section 25 of the Negotiable Instruments Act, 1881, the expression "public holiday" includes
Sunday and any other day declared by the Central Government by notification in the
Official Gazette to be a public holiday. However, this power has been delegated by the Central
Government to State Governments vide the Government of India, Ministry of Home Affairs'
Notification No. 20-25-56-Pub-I dated 8 June, 1957. While delegating the power to declare public holidays
within concerned States under Section 25 of the Negotiable Instruments Act, 1881, the
Central Government has stipulated that the delegation is subject to the condition that the Central
Government may itself exercise the said function, should it deem fit to do so. This implies
that when Central Government itself has notified a day as "public holiday" under Section 25 of the
Negotiable Instruments Act, 1881, there is no need for banks to wait for the State
Government notification.

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30. Miscellaneous
30.1 Sunday banking
In predominantly residential areas banks may keep their branches open for business on Sundays by
suitably adjusting the holidays.
Banks should keep rural branches open on weekly market day.
30.2 Accepting standing instructions of customers
Standing instructions should be freely accepted on all current and savings bank accounts. The scope of
standing instructions service should be enlarged to include payments on account of
taxes, rents, bills, school / college fees, licences, etc.
30.3 Clean Overdrafts for small amounts
Clean overdrafts for small amounts may be permitted at the discretion of branch manager to customers
whose dealings have been satisfactory. Banks may work out schemes in this regard.
30.4 Rounding off of transactions
All transactions, including payment of interest on deposits/charging of interest on advances, should be

rounded off to the nearest rupee i.e., fractions of 50 paise and above shall be rounded
off to the next higher rupee and fraction of less than 50 paise shall be ignored. Issue prices of cash
certificates should also be rounded off in the same manner. However, banks should ensure
that cheques/drafts issued by clients containing fractions of a rupee are not rejected or dishonoured by
them.
31. Various Working Groups / Committees on Customer Service in Banks - Implementation of the
Recommendations
In order to keep a watch on the progress achieved by the bank in the implementation of the
recommendations of various working groups/Committees on customer service, banks may examine the
recommendations which have relevance in the present day banking and continue to implement them.
Banks may consider submitting periodically to their Customer Service Committee of the Board a
progress report on the steps/ measures taken in that regard.
32. Code of Bank’s Commitment to Customers

Banks should follow various provisions of the Code of Bank’s Commitment to Customers, implementation
of which is monitored by the Banking Codes and Standards Board of India (BCSBI).
Background
In November 2003, Reserve Bank of India (RBI) constituted the Committee on Procedures and
Performance Audit of Public Services under the Chairmanship of Shri S.S.Tarapore (former Deputy
Governor) to address the issues relating to availability of adequate banking services to the common
person. The mandate to the Committee included identification of factors that inhibited the
attainment of best customer services and suggesting steps to improve the quality of banking
services to individual customers. The Committee felt that in an effort to continuously upgrade the
package of services that banks offered to their customers, there was a need for benchmarking of
such services. After an in-depth study at the grass-roots level, the Committee concluded that there
was an institutional gap for measuring the performance of banks against a bench mark reflecting
the best practices (Code and Standards). Therefore, the Committee recommended setting up of the
Banking Codes and Standards Board of I ndia (BCSBI). BCSBI was set up to ensure that the

common person as a consumer of financial services from the banking Industry is in no way at a
disadvantageous position and really gets what he/she has been promised.
The Scheme of Banking Ombudsman, which has been functioning for quite some time, does not
look into systemic issues with a view to enforcing a prescribed quality of service. Ideally, such a
function should be performed by a Self-Regulatory Organisation (SRO) but in view of the existing
framework of the banking sector in India, it was felt that an independent, autonomous Board will be
best suited for the function. Therefore, Dr. Y.V. Reddy, Governor, Reserve Bank of India, in his
Monetary Policy Statement (April 2005) announced setting up of the Banking Codes and Standards
Board of India in order to ensure that a comprehensive code of conduct for fair treatment of
customers was evolved and adhered to.
The Banking Codes and Standards Board of India was registered as a society under the Societies
Registration Act, 1860 in February 2006. It functions as an independent and autonomous body.
Membership of BCSBI is voluntary and open to scheduled banks. Initially the membership of BCSBI
was open to scheduled commercial banks and has now been extended to include Regional Rural
Banks and select Urban Co-operative Banks.
The general superintendence, direction and control of the affairs and funds of the Society is vested
in the Governing Council (constituted by RBI) consisting of members drawn from different
disciplines such as banking, economics, service etc. The first Governing Council relinquished office
in December 2011 after which a new Governing Council was constituted.
The main objectives of the BCSBI are
 To plan, evolve, prepare, develop, promote and publish comprehensive Codes and
Standards for banks, for providing for fair treatment to their customers.
 To function as an independent and autonomous body to monitor, and to ensure that the
Codes and Standards adopted by banks are adhered to, in letter and spirit, while delivering
services to their customers.
BCSBI has in collaboration with the Indian Banks' Association (IBA), evolved two codes - Code of
Bank’s Commitment to Customers and the Code of Bank’s Commitment to Micro and Small
Enterprises - which set minimum standards of banking practices for member banks to follow when
they are dealing with individual customers and micro and small enterprises. These Codes are
subject to periodical review and revision.. The central objective of these Codes is promoting good
banking practices, setting minimum standards, increasing transparency, achieving higher operating
standards and above all, promoting a cordial banker-customer relationship which would foster
confidence of the common man in the banking system. The Codes lay great emphasis on
transparency and providing full information to the customer before a product or service is sold to
him. The Codes are not only commitments of banks to their customers but also in a sense a Charter
of Rights for the common person. By setting the minimum standards of customer service, the
Codes make the customer aware of he can expect each bank to deal with the his / her day-to-day

requirements,
BCSBI monitors the implementation of the Codes through the following

methods:
 Obtains from member banks an Annual Statement of Compliance (ASC)

 Visits branches to find out the status of ground-level implementation of Codes
 Studies complaints received from customers and orders / awards issued by Banking
Ombudsmen / Appellate Authority to find out whether there is any system-wide deficiency
 Organizes an annual Conference with Principal Code Compliance Officers of the Member
banks to discuss implementation issues.
BCSBI also
 Undertakes campaigns and initiatives to spread awareness of the Codes amongst

customers and banks
 Provides faculty support to training establishments of banks
 Participates in on-location workshops held by / for member banks to increase coverage
 associates with customer awareness programmes conducted by Banking Ombudsmen
 provides credit counselling services in Mumbai
 publishes quarterly newsletter entitled ‘Customer Matters’, containing matters of interest to
customers
BCSBI is not a forum for redressal of individual grievances. BCSBI, however, examines each
compliant to identify any systemic issue that may exist and takes up the matter with the respective
bank to ensure that systems and procedures are suitably amended so that such complaints do not
recur.
Members: The Board was set up as a Society, under the Societies Registration Act, 1860. Commercial
banks,
RRBs and Urban Coop Banks are its members. RBI was funding the entire cost of operations of the
Board for
the initial 5 years. Thereafter the Board has been levying an affiliation fee annually on all registered
members.
Governing body: A Governing Council of the BCSBI looks after its financial affairs and managerial policies.
The
tenure of the Council is 5 years and the appointment of the Council after 5 years would be with the
concurrence
of the RBI. Objectives: The main objectives of the BCSBI is to plan, evolve, prepare, develop, promote
and
publish voluntary comprehensive codes and standards for banks for providing fair treatment to their
customers. It

shall carry out its activities on the basis of contract entered into with individual banks (the process of
registration).
Memorandum of Association
Memorandum of Association of The Banking Codes and Standards Board of India
It is necessary, in the public interest, to ensure that banks evolve comprehensive codes and
standards for fair treatment of customers of banks.
It is necessary to have an independent watch dog to ensure that banks deliver services in
accordance with such codes and standards.
It is necessary to ensure that the institutional mechanism is autonomous, independent and

effectively monitors and enforces the compliance of such Codes and Standards.
The subscribers have decided to set up this Society:
1. Name Of The Society

2. Registered Office
3. Main Aims And Objects
4. Other Aims And Objects
5. Governing Council
6. Subscription
I) Name Of The Society
The name of the Society shall be "The Banking Codes And Standards Board Of India"
II) Registered Office
1. The Registered office of the society shall be situated in the State of Maharashtra at
Reserve Bank of India, C- 8/9, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051.
2. The Society may change the place of Registered Office after following the procedure

prescribed by law.
III) A. Main Aims And Objects :
The main aims and objects of the Society shall be:
1. To plan, evolve, prepare, develop, promote and publish voluntary comprehensive Codes
and Standards for banks, for providing for fair treatment to their customers.
2. To function as an independent and autonomous watch dog to monitor and to ensure that
the banking Codes and Standards voluntarily adopted by banks are adhered to, in true
spirit by banks in delivering the services, as promised, to their customers.
3. To conduct and undertake research of the Codes and Standards currently in vogue in and
outside India.
4. To enter into covenants with banks on observance of the codes and standards and for that
purpose to train employees of such banks about the Banking Codes.
5. To help people affected by natural calamities.
B. Other Aims And Objects :
1. To advertise and publish promotional literature in newspapers and otherwise about the
Codes and Standards for the guidance and knowledge of the public through Web site,
advertisements in the newspapers, magazines, journals, TV/Radio, hoardings or any other
mode which the Society may deem fit.
2. To take up specific assignments, if any, in the areas coming under the Society's objects as
projects, turnkey solutions or on any other terms of contracts with in-house resources or
with the participation of outside agencies in order to fully implement the Code.
3. To organize teaching and training courses, conferences, seminars, lectures and similar
other activities relating to the Codes and Standards or implementation of the said Codes
and Standards.
4. To publish journals, reports, pamphlets, books, booklets, research papers in furtherance of
the objects of the Society.
5. To maintain close contacts with Indian Banks' Association, other similar institutions, Boards
and organizations having similar objects or allied objects by way of subscription, enrolment
as a member thereof, financial or other kind of assistance, collaboration, cooperation and in

any manner as the Society may deem fit.
6. To initiate, establish and participate in collaborative activities with other institutions /
organizations having similar objects within and outside the country.
7. To establish, acquire, maintain and manage facilities such as offices, other accommodation,
library, computer centers, etc.
8. To institute and award fellowships, scholarships, prizes and medals to meritorious persons,
in accordance with the Rules framed by the Society.
9. To undertake any project or activity in furtherance of the objects of the Society.
10. To do any or all other lawful things as the Board may deem fit for the attainment of all or
any of its main or other objects.
IV) Governing Council
The names, addresses and occupation of members of the first Governing Council of the Society to
which by the Rules of the Society the management
Rules and Regulations

PRELIMINARY
1. The Society shall not be operated for profit and no part of its income shall accrue to any of its
member banks or its officials or any member of the Governing Council, provided that nothing herein
contained shall prevent making of any payment, in good faith of, remuneration, honoraria,
perquisites, sitting fees, facilities or benefits of any nature whatsoever to any member of the
Governing Council, officials or anyone else as the Council deems fit, in return for any service
rendered to the Society.
2. The aims and objects of the society shall be as given in the Memorandum
DEFINITION
3. In these Rules, unless the context requires otherwise:
a. Act means the Societies Registration Act, 1860 (Act XXI of 1860) in its application to the

State of Maharashtra
b. Chairman means the Chairman of the Governing Council referred to in Rule 6 or 7
c. Chief Executive Officer means the Chief Executive Officer of the Society referred to in Rule
13, or as the as may be, in Rule 14
d. Memorandum means the Memorandum of Association of the Society
e. Representative means an officer of the member bank, nominated by that bank to represent
it
f. Society means "THE BANKING CODES AND STANDARDS BOARD OF INDIA"
MEMBERSHIP OF THE SOCIETY
4. 1) The subscribers to the Memorandum shall become members of the Society only on signing the
covenant with the Society agreeing to comply with the Codes and Standards and paying the fee as
specified and fresh members may be admitted in accordance with the provisions of these Rules.
2) Membership of the Society shall be open to all banks that sign the covenant with the Society
agreeing to comply with the Codes and Standards.
3) A bank agreeing to comply with the Codes and Standards shall make an application to the
Society along with such fee as may be specified from time to time.
4) The Society shall maintain a roll or list of member banks with their addresses in accordance with
the provisions of Societies Registration (Maharashtra) Rules, 1971.
5) A member bank shall pay such annual subscription as may be specified by the Society from time
to time.
6) Member banks shall be entitled to get from the Society, the information and particulars in respect
of the national and international banking Codes and Standards.
MEETING OF MEMBER BANKS:
5. 1) The Society shall convene the annual general meeting of the member banks every year and
the meeting shall be attended by the respective representatives who shall have the right to vote.
2) Five members present through their representatives shall be the quorum.
If the quorum is not present, the meeting shall stand adjourned to the same day in the next week, at
the same time and place, or to such other day and at such other time and place as the Governing
Council may determine.

3) If at the adjourned meeting also, a quorum is not present within half an hour from the time
appointed for holding the meeting, the members present shall be a quorum.
4) The Annual General meeting shall be presided over by the Chairman and in his/her absence the
members of the Governing Council present shall select one of them to preside over the meeting.
5) The Society shall, at each annual general meeting, appoint an auditor or auditors for auditing the
accounts of the Society in accordance with the provisions of the Act and the Societies Registration
( Maharashtra ) Rules, 1971 and fix their remuneration.
6) All decisions shall be taken at the meeting by majority either by show of hands or by secret ballot
as may be decided by the Chairman.
7) The Society shall, at each annual general meeting, review the activities of the Society and
approve the accounts of the Society.
8) On the requisition of two third in number of the member banks of the Society, the Chairman shall
within 15 days from the date of such requisition proceed duly to call an extraordinary general
meeting of the Society. The requisition shall set out the matters for the consideration of which the
meeting is to be called, shall be signed by the requisitionists, and shall be addressed to the
Governing Council.
9) Provided that if within half an hour from the time appointed for holding a meeting upon a
requisition, a quorum is not present, the meeting shall stand dissolved.
FIRST GOVERNING COUNCIL:
6. 1) The individuals whose names are mentioned in Clause IV of the Memorandum shall be the
members of the first Governing Council.
2) The term of the first Governing Council shall consist of two successive terms of three years and
two years respectively. On the expiry of the first term of three years, Reserve Bank shall nominate
members thereto for the second term of two years. Provided that the members retiring on the expiry
of the first term shall be eligible for renomination for the second term. Provided further that the term
of office of a member of the first Governing Council shall always be subject to the pleasure of
Reserve Bank.
3) On the expiry of the second term, the members of the first Governing Council shall remain in
office till the Governing Council is reconstituted in accordance with Rule 7.
4) Where a vacancy arises in the office of Chairman or any member of the first Governing Council,
due to incapacitation or resignation or death or any other reason, the resulting vacancy may be
filled by nomination by Reserve Bank. Provided that the member so nominated shall hold office only
up to the date up to which the member in whose vacancy he is nominated would have held office if

it had not been vacated as aforesaid.
COMPOSITION OF THE SUBSEQUENT GOVERNING COUNCIL:
7. 1) On the expiry of the term of the first Governing Council, the subsequent Governing Council
shall be constituted in the manner specified in this Rule.
2) The Governing Council shall have not more than seven, members, consisting of:
a. upto four members nominated by Reserve Bank;

b. upto two members nominated by the member banks in consultation with the Reserve Bank;
and
c. the Chief Executive Officer
3) The persons to be nominated shall be persons of eminence and competence or are experts in
the field of banking, law, accountancy, information technology, rural development or representing
sectors of depositors' / consumers' or such other fields and sectors as are considered relevant to
the aims and objects of the Society. Provided that the officials in the employment of the member
banks shall not be nominated as members of the Governing Council.
4) The members of the Governing Council shall elect a Chairman from among themselves.
5) If no such Chairman is elected for any reason, including a tie in votes, the Reserve Bank shall
designate a member of the Governing Council as the Chairman of that Governing Council.
TERMS OF OFFICE AND RETIREMENT:
8. 1 - A member of the Governing Council, nominated under Rule 7:
i. shall hold office for a term not exceeding three years from the date of his nomination.
Provided that members nominated by the Reserve Bank shall hold office during the
pleasure of that Bank.
ii. shall be eligible for renomination for one more term, i.e. maximum of six years.
Provided that he shall retire from office on the expiry of his term or during the tenure of his office or
on attaining the age of 70 years, whichever is earlier, Provided further that he shall, notwithstanding
such expiry of his term or extended term, continue to hold office until another member is nominated.
Explanatory Note: Date of nomination means the date on which he first attends the GC meeting.
8. 2 - On the expiry of the term of the GC, the members of the GC shall remain in office and

discharge their duties till the next GC is reconstituted in accordance with Rule 7.
8. 3 - The period of such ad-hoc extension, if any, under Rule 8.2 shall not be counted for the
purpose of determining the maximum period of holding office by the Chairperson and Members.
8. 4 - All acts or decisions of the GC taken during the extended period shall be valid and effective
for all purposes.
RESIGNATION OF THE CHAIRMAN AND MEMBERS OF THE GOVERNING COUNCIL
9.1) The Chairman may, by writing under his / her hand addressed to the Governing Council, resign
from the Governing Council.
2) A member of the Governing Council may, by writing under his / her hand addressed to the
Chairman, resign from the Governing Council.
VACATION OF OFFICE BY THE MEMBERS OF THE GOVERNING COUNCIL:
10. The office of a member of the Governing Council shall become vacant if he / she absents
himself / herself from three consecutive meetings of the Governing Council, without obtaining leave
of absence from the Governing Council.
MEETINGS OF THE GOVERNING COUNCIL:
11.1) The Governing Council shall meet at least once in three months. The Chief Executive Officer
shall convene meetings of the Governing Council in consultation with the Chairman and unless
otherwise directed by the Chairman, 7 clear days' notice of the meeting shall be given to the
members.
2) If a vacancy in the office of the member of the Governing Council occurs, the continuing
members shall act as if no vacancy had occurred and no act or proceedings of the Governing
Council shall be deemed invalid merely by reason of a vacancy in the Governing Council or a defect
in the appointment of a person acting as a member.
3) The Chairman shall have the power to invite any person or persons not being members of the
Governing Council to attend the meetings of the Governing Council and take part in the
deliberations but such invitees shall not be entitled to vote.
4) The quorum for any meeting of the Governing Council shall be more than one half of the total
number of members of the Governing Council, out of which at least two should be members
nominated by Reserve Bank under sub-rule (2) of Rule 7. If there is no quorum, the meeting shall
stand adjourned and be held in the following week, as directed by the Chairman. If on the adjourned
date also no quorum of members assembles, the meeting shall continue as if quorum was there.

5) The Governing Council may meet at such places as may be determined by the Governing
Council. The Chairman shall preside over all meetings of the Governing Council and in his / her
absence the meeting shall be presided over by a member chosen by the other members present.
6) All decisions shall be taken at the meeting by majority either by show of hands or by secret ballot
as may be decided by the Chairman. In case of tie in votes, the Chairman or as the case may be
the presiding member shall have a second and casting vote, which shall be final.
7) A resolution in writing signed by a majority of the members shall be deemed to be the resolution
passed by the Governing Council and shall be deemed to have been passed on the date on which
the last signatory affixes his signature to it; Provided that any resolution passed in such a manner
through circulation shall be placed before the next meeting for noting of the Governing Council;
POWERS AND FUNCTIONS OF THE GOVERNING COUNCIL:
12.1) The general superintendence, direction and control of the affairs and funds of the Society
shall be vested in the Governing Council which may exercise all powers and do all acts and things
which may be exercised or done by the Society.
2) An annual review of the activities of the Society shall be made by the Governing Council and a
copy thereof shall be laid before the annual general meeting of the Society and may also be
published in such manner as may be decided by the Governing Council.
3) A review of the activities of the Society shall be made by the Reserve Bank in a meeting with the
Governing Council on completion of four years and at the beginning of the fifth year from the
registration of the society and consider strategies of the Society for future.
4) Without prejudice to the generality of the powers conferred by sub- rule (1), the Governing
Council shall have power:
i) To determine
a. Financial and managerial policies;

b. Priorities for the different activities of the Society;
c. Remuneration, honoraria, perquisites, facilities, sitting fees or benefits of any nature
whatsoever that may be paid or provided to any member of the Governing Council, the
Chief Executive Officer, member of any committee, official or special invitee or other
persons as the Governing Council may deem fit, in return for any service rendered to the
Society.
d. Establishment and maintenance of Provident and other benefit funds for the staff of the

Society;
e. Duties and conduct, salaries and allowances and other conditions of service of officers and
other employees of the Society;
f. Any other matter which is to be or may be provided.
II. To establish and maintain a fund, by making appropriation to such extent as may be decided by
the Governing Council from time to time, from out of the monies received from Reserve Bank of
India , member banks or other monies received by the Society in any other way.
III. To utilize a part or whole of the funds of the Society towards capital and recurring expenditure of
the Society, to make appropriate investments as per the law and deal with the funds in any other
way as may be necessary for the benefit of the Society.
IV. To acquire by way of purchase or gift or to take on lease or hire or otherwise temporarily or on
permanent basis, any movable or immovable property.
V. To sell, assign, mortgage, lease, exchange, transfer or otherwise deal with all or any property,
moveable or immovable, of the Society in the way it may find it necessary and to authorize the Chief
Executive Officer or any other employee of the Society to execute requisite documents to carry out
such transaction, and to take necessary action for proper maintenance of any such building,
moveable or immovable property.
VI. To borrow amounts for the purpose of carrying out the activities of the Society on the security of
its assets or otherwise.
VII. To authorize the Chief Executive Officer or any other employee of the Society to draw, accept,
make, endorse, discount, execute, sign, issue or otherwise deal with cheques, hundies, drafts,
certificates, receipts, Government securities, promissory notes, bills of exchange or other
instruments and securities whether negotiable or transferable or not, subject to such conditions as
may be specified.
5) The Governing Council shall sanction expenditures and investments of the funds of the Society
and shall have the powers to delegate sanction of expenditure and investment of funds, subject to
such conditions as it may specify.
6) The Governing Council shall have the powers to make, alter or rescind regulations of procedure
as it may find necessary for the management of the affairs of the Society.
7) The Governing Council shall have the powers to approve the research activities and other
programmes submitted to it for consideration by the Chief Executive Officer.
FIRST CHIEF EXECUTIVE OFFICER:

13. The member designated as Chief Executive Officer in Clause IV of the Memorandum shall be
the Chief Executive Officer on the registration of the Society.
APPOINTMENT OF SUBSEQUENT CHIEF EXECUTIVE OFFICER:
14.1) The Chief Executive Officer of the Society shall be appointed by the Governing Council and
shall hold his office during the pleasure of the Governing Council. Provided that in the event of the
vacancy arising in the post of Chief Executive Officer, due to incapacitation or resignation or death
or any other reason, the Chairman of the Governing Council shall have the authority to appoint an
interim successor to the Chief Executive Officer, for a period of six months or, till the appointment of
successor, whichever is earlier.
2) The Chief Executive Officer shall be legally competent to represent the Society in all legal and
other official proceedings.
3) The Chief Executive Officer shall be ex officio member of the Governing Council.
POWERS AND FUNCTIONS :
15.1) The Chief Executive Officer shall have the following powers and functions, namely:
a. formulation, management and administration of all programmes, projects and other

activities of the Society;
b. preparation of the annual budget for submission to the Society at its Annual General
Meeting
c. selection of projects within the programmes approved annually by the Governing Council
d. entering into contracts and agreements subject to policy guidelines and annual budget
authorizations given by the Society at its annual general meeting and to disburse funds.
e. procuring services including professional, academic, technical, clerical, maintenance,
security and other administrative staff as are required to carry out the functions of the
society, subject to the Rules made by the Governing Council.
f. exercising such other powers and performing such other functions as may be delegated or
assigned to him by the Governing Council
COMMITTEES:
16. The Governing Council may constitute Committees for such purposes, on such terms and with
such powers as it may consider necessary or desirable.

ANNUAL BUDGET:
17. An annual budget shall be prepared and submitted by the Chief Executive Officer in the form
and manner prescribed under the Bombay Public Trusts Act, 1950 and the Bombay Public Trusts
Rules, 1951.
MAINTENANCE OF BOOKS OF ACCOUNTS:
18. 1) The Society shall cause to be maintained such books of account and other books in relation
to its accounts in such form and in such manner as may be prescribed under the Societies
Registration ( Maharashtra ) Rules, 1971.
2) The financial year of the Society shall be from the 1st April of each year to the 31st March of the
next year.
STATEMENT OF ACCOUNTS:
19. The Society shall, as soon as may be, after closing the annual accounts, prepare a statement of
accounts in such form as the Governing Council may, in consultation with the auditors of the
Society, determine.
FURNISHING OF ANNUAL ACCOUNTS AND AUDITOR'S REPORT TO SOCIETY:
20.1) A copy each of the annual accounts of the Society together with the auditor's report thereto
and a report on the work undertaken during the year shall be furnished to the members of the
Society.
2) A copy of the Annual Report of the Society as approved by the Annual General Meeting shall be
placed in public domain within 30 days.
ALTERATION, EXTENSION OR ABRIDGMENT OF PURPOSES:
21. The Society may alter, extend or abridge the purposes for which it is established or amalgamate
the Society either wholly or partially with any other such Society, in accordance with Section 12 of
the Act.
REPRESENTATION IN SUITS AND OTHER LEGAL PROCEEDINGS:
22. For the purpose of Section 6 of the Act, the person in whose name the Society may sue or be
sued shall be the Chief Executive Officer of the Society.
DISSOLUTION OF SOCIETY:
23. The dissolution of the Society and adjustment of its affairs shall be in accordance with Sections

13 and 14 of the Act and in accordance with the provisions of any other law applicable thereto.
AMENDMENT OF RULES:
24. These Rules may be amended by the member banks by a resolution passed in a general
meeting of the member banks in which the votes cast in favour of the resolution is not less than
twice the number of votes if any cast against it.
Banking Code Rules
1. Title
These Rules may be called the Banking Code Rules.
2. Definitions
In these Rules -
a. 'BCSBI' means the Banking Codes and Standards Board of India;
b. 'Board' means the Governing Council of the Banking Codes and
Standards Board of India (BCSBI);
c. 'Code' means the Code of Bank's Commitment to Customers, as
amended from time to time;
d. 'Code Compliance Officer' means an employee of a Member appointed
as such in accordance with the requirements of these Rules;
e. 'Compliance Policy' means the policy set out in Chapter II of these
Rules;
f. 'Covenant' means the Covenant as in Form A of these Rules;
g. ' Disciplinary Procedure' means the disciplinary procedures set out in
Chapter III of these Rules;
h. 'Executive' means the Chief Executive Officer of the BCSBI;
i. 'Member' means a bank which has been admitted as a member of the
BCSBI in terms of Chapter I of these Rules.
CHAPTER I - MEMBERSHIP
3. Eligibility for Membership
3.1 The applicant must be a bank in India included in Schedule II to the Reserve
Bank of India Act, 1934.
3.2 The applicant must agree to adhere to the Code and sign the Covenant in
Form A.
3.3 The applicant must pay a non-refundable registration fee of Rs.10,000/-
(Rupees ten thousand only) to the BCSBI.
4. Application for Membership
4.1 Application for membership of the BCSBI shall be made in Form B.

4.2 The Chief Executive Officer shall place the application within 30 days of its
receipt before the Board.
4.3 The decision of the Board for admitting the applicant as member or rejecting
the application shall be communicated to the applicant within 45 days from
the date of receipt of the application.
4.4 The communication for admission shall state the membership fee payable
by the applicant for the first year, which it shall pay within thirty days from
the date of the receipt of the said communication.

4.5 The applicant whose application is rejected may make a representation to
the Board within 30 days from the date of receipt of communication of
rejection.
4.6 The Board may, if it considers necessary, afford an opportunity of hearing to
the applicant.
4.7 The decision of the Board regarding the admission of the applicant to the
membership of the BCSBI shall be final.
5. Membership Fees
5.1 Membership fees payable by Members shall be in proportion to their gross
domestic assets as on March 31, of the previous year and shall be of
such amount, as the Board may determine as payable by each Member.
Provided that the Board may prescribe a minimum fee that each Member
shall be liable to pay.
5.2 Membership fee for the first year shall be paid as stated in Rule 4.4.
5.3 Membership fee for the subsequent years shall be paid annually in
advance in respect of each financial year commencing April 1 within 30
days of the date of the invoice issued by the Executive.
5.4 Failure to pay annual membership fee within the specified time shall incur
a charge of interest at the rate of 2 percent per annum above the Bank
Rate from the date it is payable till the date of payment.
Provided where a Member does not pay the membership fee together with
interest due thereon for six months from the date of invoice, the Board shall
have a right to cancel membership of the bank without any further notice in
the matter.
5.5 Membership fee shall not be liable to be refunded on cessation of
membership whether on account of the Member's voluntary withdrawal or
on cancellation by the Board or for any reason whatsoever
5.6 Voluntary withdrawal of membership by the Member or its cancellation by
the Board shall not prejudice the right of the Board to institute any
investigation or disciplinary proceedings within three months of such
withdrawal/ cancellation or the right to continue any investigation or
disciplinary proceedings following such withdrawal/cancellation
6. Obligations of the Member

(a) A Member shall provide the BCSBI with such information as the BCSBI may
require from it from time to time to discharge its function of monitoring
compliance with the Code.
(b) Authorised representatives of the BCSBI shall be entitled to visit the
premises of any Member to verify and gather such information deemed
necessary for monitoring compliance with the Code.
(c) The Member shall cooperate with the authorised representatives of the
BCSBI visiting the bank.
(d) Incognito visits may also be undertaken to the premises of the Member.
(e) Member shall publish in its Annual Report sanctions imposed by the BCSBI.
7. Obligations of the BCSBI

7.1 In discharging its functions and in all its dealings with the Members, the
BCSBI shall act in good faith.
7.2 The BCSBI shall not, save as required by law, or as permitted in accordance
with these Rules, divulge any information in relation to the affairs or business
of the Member which it knows at the time to be confidential and which has
come in its possession in the course of its business.
Notwithstanding this, the BCSBI shall be free to divulge any information about any
Member to the Reserve Bank of India.
CHAPTER II - COMPLIANCE POLICY
8. Submission of Annual Statement of Compliance
8.1 The Annual Statement of Compliance containing such information and
details as the BCSBI may specify shall be submitted to the Board before
July 31. This Statement shall be signed by the duly authorised Code
Compliance Officer or an official duly authorised by the Member.
8.2 Failure to submit the duly completed Annual Statement of Compliance by
due date, shall render the Member liable to a daily default fine as may be
decided by the Board, provided that such fine shall not exceed Rs.1,000/-
(Rupees one thousand only) per day.
Provided further that if the default in submission of the duly completed Annual
Statement of Compliance continues for six months from the date when it is due,
the Board shall have the right to take appropriate action.
9. Code Compliance Officer
9.1 Every Member shall have a Code Compliance Officer at each of its
Controlling Offices above the level of the branch and at the Head Office.
Name, address and contact details of Code Compliance Officer/s shall be
promptly notified to the BCSBI and shall be displayed at the branches
falling under his jurisdiction as also be available to customers.
9.2 The Code Compliance Officer shall maintain a Register to keep a record
of all breaches within his jurisdiction of which he becomes aware and also
the details of the remedial action taken.
9.3 The Code Compliance Officer shall inform the BCSBI of (a) every breach,
within 7 days, and (b) the remedial action taken, within 15 days, of the
breach being brought to his notice.
10 Breach
10.1 Failure to comply with or fulfil any commitment/s or any obligation/s, in
full or in part thereof, under the Code or these Rules shall constitute a
Breach.
10.2 The purposes of disciplinary sanctions for breach of the Code or these
Rules are:
(a) to act as a deterrent against future breaches by the delinquent
Member;
(b) to engender public confidence in the Code by demonstrating that
Members cannot indulge in unfair, unreasonable or unethical
conduct with impunity;
(c) to help prevent Members from profiting from breaches whether by
acts of commission, such as exploitative marketing or misleading
advertising, or acts of omission, such as failure to upgrade systems
and procedures to ensure compliance with Code requirements;
(d) to help exclude Members which demonstrate unwillingness or
serious inability to comply with Code obligations from membership.
10.3 A breach by a Member shall render it liable to sanction under these
Rules. The Board shall act in a manner that is transparent, proportionate
and consistent.
10.4 No sanction shall be imposed on any Member without giving it an

opportunity of hearing by the Board.
CHAPTER III - DISCIPLINARY PROCEDURE
11. The objective of the Disciplinary Procedure is to enable a non-compliant
member to put right the system in a collaborative manner as quickly as
possible. The effort would be to take remedial action involving minimum
cost and inconvenience rather than penal measures.
12. Sources of Information
12.1 The BCSBI may choose to keep confidential, if so requested, the identity
of any person who refers a breach for investigation to the BCSBI or its
representative.
12.2 The BCSBI shall not undertake or cause investigation on a complaint
which is anonymous or is considered to be fictitious, vexatious or
frivolous. With respect to other complaints, the BCSBI may undertake or
cause investigation at its discretion, but shall be under no obligation to
do so.
13. Investigation
13.1 The Board may conduct or cause to conduct an investigation into a
breach which is alleged or suspected of having been committed or which
is alleged or suspected of being committed by a Member.
13.2 The Executive may make enquiries, seek clarification if necessary from
the Code Compliance Officer, or in his absence, from the Chief
Executive of the Member concerned, and from any other person it
considers necessary.
13.3 The Board may appoint or request the Member to appoint accountant/s
or other relevant professional/s to assist it in the investigation. Expenses
including professional fees in respect of such appointment shall be
payable by the Member concerned.
14. Procedure
14.1 The Executive shall prepare a draft statement of facts making out a
prima facie case of the alleged Breach.
14.2 The draft statement of facts shall be served on the Member concerned,
calling upon it to submit its explanation thereto within the time specified in
the notice.
14.3 The Board shall consider the explanation, if any, and decide if the
Breach is established and the sanction to be imposed, having regard to
its gravity and other relevant factors.
14.4 The BCSBI shall inform its decision to the Member within 10 days of the
meeting of the Governing Council in which such decision is taken.
14.5 The Member shall be provided with the reasons for the decision, and for
the proposed sanction, if any, to enable it to make a representation in
writing to the Board. The representation must reach the Board within 30
days of the date of the letter advising the Member of the decision of the
Board.
14.6 The representation under Rule 14.5 shall be considered by the Board to
decide whether its decision under Rule 14.3 needs any change.
14.7 The Member shall be advised of the Board's final decision within ten days
of the meeting of the Board at which that decision is made.
14.8 The final decision shall take effect from the date it is communicated to the
Member concerned.
Provided that where no representation is received under Rule 14.5 within 20
days of the date of the letter advising the Member of the decision of the Board,
the decision of the Board shall become effective on the expiry of that period.
15 Sanctions
15.1 For arriving at the sanction, all relevant factors shall be taken into
account, including:
(a) the extent of actual or potential harm to the customer;

(b) whether the breach was isolated or systemic;
(c) whether the breach was inadvertent, or represented a knowing act of
commission or omission;
(d) the length of time over which the breach continued undetected or
without effective remedial action being taken;
(e) whether there were any warning signals, such as concerns expressed
in the media, customer complaints, or guidance from the BCSBI, and
what heed was paid to such signals;
(f) the extent of damage to confidence in, or the reputation of, the banking
industry at large;
(g) the extent to which the Member sought to profit, or to avoid or mitigate
a loss, by its actions or omissions.
15.2 The Board shall be entitled to impose one or more of the following
sanctions:
(a) the publication of the Member's name and details of the breach in the
Annual Report of the BCSBI;
(b) the issue of directions as to future conduct of the Member;
(c) the issue of a warning or reprimand to the Member;
(d) the cancellation or suspension for a limited period of membership of
the Member;
(e) public censure of the Member, by notifying the media of the findings in
respect of a breach or breaches and any sanctions applied, and posting
the press release on the BCSBI's website. Instead of, or in addition to,
notifying the media, notification may also be made to any other bodies,
as the Board may deem fit.
15.3 The Board shall ensure that its sanction does not affect the confidentiality
obligation of the Member to its customers.
16. Costs
Each party shall bear its own costs incurred during the Disciplinary
Procedure except that the Member shall bear the cost of any
appointments made under Rule 14.3.
17. Intimation to the Reserve Bank of India

Where a sanction is imposed on any Member, the BCSBI shall inform the
Reserve Bank of India the details of the Breach and the sanctions
imposed.
18. Complaints
18.1 A Member who is dissatisfied in his dealings with the BCSBI may address
his complaint initially to the Chief Executive Officer, unless it concerns the
Chief Executive Officer's personal handling of the matter.
18.2 If the Chief Executive Officer fails to resolve the complaint, or is
personally involved in the cause of complaint, the complainant may write
to the Chairman of the Board.
18.3 Such complaints will be dealt with within thirty days from the date of its
receipt.
19. Exemption
The Board may, for reasons to be recorded in writing, exempt any
Member from any of its obligations, including obligation to comply with
the Code, or any rules or regulations, for such period and subject to
such conditions as the Board may deem fit.
20. Powers to alter Rules
20.1 The Board may alter these Rules, Compliance Policy, Disciplinary
Procedure, Forms etc. to enable the BCSBI to discharge its functions of

monitoring and encouraging compliance with the Code.
20.2 An alteration made under Rule 20.1 will be notified to the Members in
writing not less than 20 days prior to the date on which it comes into
effect.
21. A decision of the Board shall be binding on the Member.
(Rule
Code of Bank’s Commitment to CustomersJanuary 2018
Referance BANKING CODES AND STANDARDS
BOARD OF INDIA
www.bcsbi.org.in
1.1 Objectives of the Code
The Code has been developed to:
a. promote good and fair banking practices by setting minimum
standards in our dealings with you;
b. increase transparency so that you can have a better understanding
of what you can reasonably expect from us;
c. encourage market forces, through competition, to achieve higher
operating standards;
d. promote a fair and cordial relationship between you and your bank;
e. foster confidence in the banking system;
f. promote safe and fair customer dealing in case of banking in a
digitized environment;
g. increase awareness of customers and to enhance customer
protection.
The standards of the Code are covered by the Key Commitments in
Chapter 2.

2
Code of Bank’s Commitment to Customers – January 2018
1.2 Application of the Code
This Code applies to all the products and services listed below, whether
they are provided by our branch or agents acting on our behalf, whether
across the counter, over the phone, by post, through interactive electronic
devices, on the internet or by any other method. However, all products
discussed here may or may not be offered by us.
a. Current accounts, savings accounts, term deposits, recurring
deposits, PPF accounts and all other deposit accounts;
b. Payment services such as pension, payment orders, remittances by
way of demand drafts, wire transfers and all electronic transactions
e.g. RTGS, NEFT, IMPS, UPI;
c. Banking services related to Government transactions;
d. Demat accounts, Equity, Government bonds;
e. Indian currency notes / coins exchange facility;
f. Collection of cheques, safe custody services, safe deposit locker
facility;
g. Loans, overdrafts and guarantees;
h. Foreign exchange services including money changing;
i. Third party insurance and investment products marketed through
our branch and / or our authorised representatives or agents;
j. Card products including credit cards, debits cards, ATM cards,
smart cards and POS services (including credit cards offered by our
subsidiaries / companies promoted by us);
k. Digital Products such as e-wallet, Mobile Banking, internet banking,
UPI, BHIM, Aadhaar Pay.
The meanings of key words appearing in bold black have been given in

the Glossary.
2. KEY COMMITMENTS
2.1 Our Key Commitments to you
2.1.1 Right to Fair Treatment
Act fairly and reasonably in all our dealings with you by:
a. Providing minimum banking facilities of receipt and payment of
cash / cheques, remittances, exchange of soiled notes, etc. at the
bank’s counter and also providing cashless transactions through
alternate delivery channels.
b. Meeting the commitments and standards set in this Code, for the
products and services we offer, and in the procedures and practices
we follow.
c. Making sure our products and services meet relevant laws and
regulations in letter and spirit and are appropriate to your needs
and in line with the banking scenario, including digital banking.
d. Ensuring that our dealings with you rest on ethical principles of
integrity and transparency.
e. Offering digital banking and payment systems in a secure,
convenient and robust technological environment.
f. Not discriminating against you on the basis of age, race, gender,
marital status, religion, disability or financial status when offering
and delivering our products and services.
g. Promoting good and fair banking practices by setting minimum
standards in all dealings with you.
h. Promoting a fair and equitable relationship with you.
i. Training our staff attending to you adequately and appropriately and
ensuring that our staff attends to you promptly and courteously and

to deal quickly and sympathetically with things that may go wrong
by correcting mistakes and handling your complaints expeditiously.
2.1.2 Right to Transparency, Fair and Honest Dealing
We will help you to understand how our financial products and services
work by:
a. Giving you timely and adequate information about them and the
necessary safeguards in any one or more of the following languages
- Hindi, English or the appropriate local language.
b. Ensuring that our advertising and promotional literature is clear and
not misleading. We will make every effort to ensure that the contracts
or agreements we frame are transparent, easily understood by and
well communicated to you. The product’s price, the associated risks,
the terms and conditions that govern use over the product’s life cycle
and mutual responsibilities will be clearly disclosed. We will ensure
that you are not subjected to unfair business or marketing practices,
coercive contractual terms, negative confirmations or misleading
representations.
For achieving this, we will be following the practices and procedures
given in Chapter 3 on Information Transparency and Chapter 4 on
Advertising, Marketing and Sales.
c. Ensuring that you are given complete information about our products
and services, minimum balance requirements, the interest rates
and service charges, besides the terms and conditions applicable
to them in a transparent manner through the following methods as
per your preference.
i. By sending SMS or e-mails

ii. Through electronic or print media
iii. Display on our website
iv. Display on branch notice board
[Display on website and branch notice board will be in addition to
the other modes of information dissemination mentioned above.]
d. Giving you information on the facilities provided to you and how
you can avail of these and whom and how you may contact for
addressing your queries.
e. Displaying in our branch, for your information
i. Services we provide.
ii. Minimum balance requirement, if any, for Savings Bank Accounts
and Current Accounts and the charges for non-maintenance
thereof.
iii. Information available in booklet form.
f. Displaying on our website our policies on
i. Deposits
ii. Cheque collection
iii. Grievance Redressal
iv. Compensation
v. Collection of Dues and Security Repossession
vi. Charter of Customer Rights
vii. Customer Protection Policy (including protection from cyber
fraud)
viii. Limited Liability in respect of unauthorized electronic banking
transactions
ix. Facilities for senior citizens and differently abled persons.
g. To increase awareness of the Code among customers we will

i. provide you with a copy of the Code when you open an account
with us and otherwise on request.
ii. make available this Code at our every branch and on our
website.
iii. ensure that our staff are trained to provide relevant information
about the Code and to effectively put the Code into practice.
iv. hold customer meetings on provisions of the Code periodically.
2.1.3 Right to Suitability
We will offer you products appropriate to your needs and based on
an assessment of your financial circumstances and understanding as
detailed in Chapter 4 on Advertising, Marketing and Sales and Clause
8.18 on Third Party Products.
2.1.4 Right to Privacy
We will treat all your personal information as private and confidential
subject to matters mentioned in Chapter 5 on Privacy and Confidentiality.
2.1.5 Right to Grievance Redressal and Compensation
We will deal quickly and sympathetically with things that go wrong by:
a. Correcting our mistakes promptly and cancelling any bank charges
that we apply by mistake and compensate you for any financial
loss you may have incurred due to our mistake, in terms of our
compensation policy.
b. Handling your complaints promptly.
c. Telling you how to take your complaint forward if you are still not
satisfied.
d. Providing suitable alternative avenues to alleviate problems arising
out of technological failures.

e. We will display in our branch for your information
i. Name of the official at the branch whom you may approach if
you have a grievance.
ii. Name and address of the Regional / Zonal Manager / Principal
Nodal Officer (PNO) whom you can approach if your grievance is
not redressed at the branch.
iii. Name and contact details of the Banking Ombudsman under
whose jurisdiction the branch falls.
We will advise you the internal procedures for redressing your complaints
including details of the Banking Ombudsman Scheme as explained in
Chapter 6 of the Code.
3. INFORMATION - TRANSPARENCY
We will display the information on products, services, Most Important
Terms and Conditions (MITC) in our premises on a Comprehensive Notice
Board (CNB) as prescribed in bilingual / trilingual language as applicable
(Annexure 1) and we will update the information on CNB on realtime
basis alongwith effective date of change.
You can get information on interest rates, fees and charges through
various modes mentioned below.
a. Notice Board in our branch.
b. Contacting our branch or helplines.
c. Our website.
d. Asking our designated staff / help desk.
e. Referring to the Tariff Schedule at our branch / on our website.
3.1 G eneral information
We will:
a. give you information on the types of products and services we offer
and those that may suit your needs.

b. prominently display in bilingual / trilingual language at all our branches
the documents required for opening Basic Savings Bank Deposit (BSBD)
Accounts. We will also display the relaxed requirements for opening
“Small Accounts”.
c. give you clear information explaining the key features of the services
and products you are interested in, including applicable interest
rates, fees and charges.
d. tell you the different channels through which our products and
services may be availed e.g. Branches, Banking Outlets, Business
Correspondents, Business Facilitators, ATMs, Micro ATMs, Phone
Banking, Mobile Banking, Net banking and tell you how to find out
more about them.
e. tell you the information needed from you to prove your identity and
address, for us to comply with legal, regulatory and internal policy
requirements.
f. give you information on your rights and responsibilities especially
regarding availing of nomination facility offered on all deposit
accounts, articles in safe custody and safe deposit lockers.
g. provide you Most Important Terms and Conditions (MITC) for your
record in respect of Savings Bank (SB) / Current Account (CA) and
all other deposit accounts before opening the account.
3.2 ‘Do Not Call’ service
We will not transmit to you any unsolicited commercial information
regarding our products and services, through telephone calls / SMS if
you have registered with the ‘Do Not Call Registry’ of our bank or with
the ‘National Do Not Call Registry’ directly or through your Service
Provider. However, this will not apply to receipt of information regarding

your account statements and other important advices and information
including SMS alerts relating to transactions in your account as also the
products and services you are currently availing.
3.3 Interest rates
We will give you information on:
a. the interest rates which apply to your deposit and loan accounts.
b. in case of loans at fixed rate of interest, details of interest reset
clause, if any, in the loan agreement and the effective date thereof.
c. in case of loans at floating rate of interest, the reference rate to
which your floating rate will be linked and the premium or discount
applied to the reference rate for determining the actual rate of
interest on your loan.
d. whether you have the option for converting your loan from fixed rate
to floating rate and vice versa and, if so, one time applicable charges
thereof.
e. periodicity at which we pay interest on your deposits or charge
interest on your loan accounts.
f. how we apply interest to your deposit and loan accounts and how
we calculate interest thereon.
3.3.1 Changes in interest rates
We will inform you of changes in interest rates on our loan products and
changes in the reference rate periodically by any of the following means
at the last updated customer contact details available with us:
a. Letter
b. E-mail
c. SMS

d. Media
We will also display this information on the Notice Board in our branch
as also on our website.
3.4 Tariff schedule
3.4.1 Fees & charges
a. We will ensure that our fees and service charges for various services
are approved by our Board or any competent authority duly
authorized by the Board to take decisions in this regard and that
they would be reasonable and non-discriminatory for similar class
of customers.
b. We will place our Tariff Schedule on our website and make a copy
available at every branch for your perusal. We will display in our
branches a notice about the availability of the Tariff Schedule at the
branch.
c. We will give you details in our Tariff Schedule of any charges
applicable to the products and services chosen by you.
d. We will also provide you information about the penalties leviable in
case of non-observance / violation of any of the terms and conditions
governing the product / services chosen by you.
3.4.2 Changes in fees & charges
If we increase any fee or charge or introduce a new fee or charge, it will
be notified through statements of accounts / e-mail / SMS alerts / notice
board at our branch one month prior to the revised charges becoming
effective. This information will also be made available on our website
prominently.
3.5 Terms and conditions
a. We will advise you the relevant terms and conditions for the products /

services you have asked us to provide.
b. All terms and conditions will be fair and will set out the respective
rights, liabilities and obligations clearly and as far as possible in
plain and simple language.
3.5.1 Changes in terms and conditions
a. We will tell you of changes in terms and conditions through any one
or more of the following channels one month prior to the revised
terms and conditions becoming effective:
i. Letter
ii. Statement of account
iii. SMS
iv. E-mail
This information will also be made available on the Notice Boards in our
branch and our website.
b. Normally, changes will be made with prospective effect after giving
notice of one month.
c. If we have made any change without notice, we will notify the change
within 30 days. If such change is to your disadvantage, you may
within 60 days of the notice, close your account or switch to any other
eligible account without having to pay revised charge or interest.
d. We will immediately update, on our website, any changes in the
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terms and conditions. We will give you, on request, a copy of the
new terms and conditions.
4. ADVERTISING, MARKETING AND SALES
a. We will make sure that all our advertising and promotional material
is clear and not misleading.

b. In any advertisement and promotional literature that draws
attention to a banking service or product or includes a reference to
an interest rate, we will also indicate whether other fees and charges
will apply and full details of the relevant terms and conditions will
be made available on request.
c. If we avail of the services of third parties for providing support
services, we will ensure that they handle your personal information (if
available to such third parties) with the same degree of confidentiality
and security as we would.
d. We may, from time to time, communicate to you various features of
our products availed by you by e-mail, SMS or over the telephone.
Information about our other products or promotional offers in respect
of our products / services will be conveyed to you only if you have
not registered for the ‘Do Not Call’ facility. As regards the information
shared through e-mail, you have the option to unsubscribe from
such future communications.
e. We have prescribed a code of conduct for our Direct Selling Agencies
(DSAs) whose services we may avail to market our products / services
which, amongst other matters, requires them to identify themselves
as only selling agents of our bank when they approach you for selling
our products personally or through phone. We will ensure that any
third party or agent acting on our behalf or selling our product
complies with the code of conduct.
f. In the event of receipt of any complaint from you that our representative
/ courier or DSA has engaged in any improper conduct or acted in
violation of this Code, we shall take appropriate steps to investigate
and to handle the complaint and to make good the loss as per our
compensation policy.

g. We will ensure that any third party or agent acting on our behalf or
selling our product discloses the fee or commission they are paid
upon completion of the sale.
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h. We will ensure that our advertisements will also include all relevant
messages which require to be conveyed for enhancing awareness
against unscrupulous / fictitious offers.
5. PRIVACY AND CONFIDENTIALITY
We will treat all your personal information as private and confidential
(even when you are no longer our customer), and shall be guided by the
following principles and policies:
a. We will not reveal information or data relating to your accounts, whether
provided by you or otherwise, to anyone, including other companies /
entities in our group, other than in the following exceptional cases:
i. Providing information to the Credit Information Companies
(CICs) as per Credit Information Companies (Regulation) Act
(CICA) about the loans, unsecured loans, credit card, etc.
ii. Giving the information required by law or by the banking
regulator.
iii. Fulfilling a duty towards the public to reveal the information.
iv. Our interests require us to give the information (for example,
to prevent fraud) but we will not use this as a reason for giving
information about you or your accounts (including your name
and address) to anyone else, including other companies in our
group, for marketing purposes.
v. You authorise us to reveal the information.
vi. When required to give a banker’s reference about you, we will
need, unless provided earlier, your written permission before

we give it.
b. We will not use your personal information for marketing purposes
by anyone including ourselves unless you specifically authorize us
to do so.
c. If we collect any information from you other than KYC requirement,
we will collect it separately and not as a part of account opening
form. In case we collect any additional information, we will explain
the purpose for which we are collecting this information and take
your specific consent for the same.
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5.1 Credit Information Companies
When you apply for a credit facility:
a. We will explain to you the role of Credit Information Companies
(CICs) as also the checks we may make with them and the effect that
the information they provide can have on your ability to get credit.
b. We will, on request and on payment of the prescribed fee, furnish
you a copy of the credit information report obtained by us from the
CICs.
c. We will provide correct information about credit availed by you from
us to the CICs at periodic intervals.
d. Information reported to CICs will also include personal debts you
owe us when
i. You have fallen behind with your payments
ii. The amount owed is in dispute
e. We will update the credit status immediately but not later than 30
days on repayment of overdues. We will report closure of loan to CICs
within 30 days of the event. If your loan account has been in default,

but thereafter regularised, we will update this information with the
CICs in the next report. If there is partial / delayed / any settlement
of credit dues, it will impact your credit score.
f. In case of dispute about the information provided to the CICs, we
will resolve the matter by satisfactorily explaining the reasons for
reporting to CICs.
g. We will, on request, inform you of the details of the CIC(s) to whom
we submit information regarding the credit / loan facility you have
availed from us.
h. We will identify and declare the names of wilful defaulters of `25 lakh*
and above and names of such wilful defaulters will be furnished to
Credit Information Companies, strictly as per the guidelines of RBI.
i. We will furnish the names of defaulters of `1.00 crore* and above
whose accounts have been classified as doubtful or loss assets to
Credit Information Companies strictly as per the guidelines of RBI.
*( or as amended from time to time.)
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6. COMPLAINTS, GRIEVANCES AND FEEDBACK
6.1 Internal procedures
a. If you want to make a complaint, we will tell you:
i. How to do so.
ii. Where a complaint can be made.
iii. To whom a complaint can be made.
iv. When to expect a reply.
v. Whom to approach for redressal.
vi. What to do if you are not satisfied about the outcome.
b. Our staff will help you with any questions you have.
c. We will tell you where to find details of our procedure for handling

complaints fairly and quickly.
d. We will display the name of the official at the branch whom you may
approach if you have a grievance. If your complaint is unresolved at
the branch level, we will ensure to escalate it to the topmost level of
grievance redressal authority within the Bank and give you a final
response within 30 days. You may approach our Regional / Zonal
Manager / Principal Nodal Officer (PNO) at the address displayed at
the branch, if you so desire.
e. If your written complaint is hand delivered, we shall immediately
provide an acknowledgement and a “complaint reference number”
will be separately sent by SMS on the registered mobile number. If
your complaint is relayed over phone at our designated telephone
helpdesk or customer service number, we shall provide you a
complaint reference number and keep you informed of the progress
within a reasonable period of time.
f. After examining the matter, we will send you our final response or
explain why we need more time to respond and shall endeavour to
do so within 30 days of receipt of your complaint and will tell you
how to take your complaint further, if you are still not satisfied.
g. Within 30 days of lodging a complaint with us, if you do not get
response / satisfactory response from us and you wish to pursue
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other avenues for redressal of grievances, you may approach Banking
Ombudsman appointed by RBI under the Banking Ombudsman
Scheme. Our staff would explain the procedure in this regard.
6.2 Banking Ombudsman Scheme
We will display the Banking Ombudsman Scheme on our website. A

copy will be made available on request at a nominal charge. We will
display at our branch the name and contact details of the Banking
Ombudsman under whose jurisdiction the branch falls. In case the
Banking Ombudsman passes an award and we do not have any ground
to appeal against the award, we will comply with the Award within 30
days from the date of receipt of the acceptance in writing of the Award
by the complainant.
6.3 Customers’ Meetings
We shall endeavour to organize meetings of customers at periodic
intervals as a regular channel for exchange of ideas and suggestions.
6.4 Branch Level Customer Service Committee Meetings
We will display in our branch, the date of our monthly branch Level
Customer Service Committee meeting, which you may attend, if you so
desire.
7. COLLECTION OF DUES
a. Whenever we give loans, we will explain to you the repayment
schedule viz. amount, tenure and periodicity of repayment. However,
if you do not adhere to the repayment schedule, a defined process in
accordance with the laws of the land will be followed for recovery of
dues.
b. We will have a Board approved policy for Collection of Dues and
Security Repossession as also appointment of Recovery Agents.
c. All relevant laws, regulations, guidelines and conditions of approval,
licensing or registration will be taken into account while appointing
Recovery Agents.
d. We will ensure that our Recovery Agents are properly trained to
handle their responsibilities with care and sensitivity. We will also
ensure that they do not exceed their brief.

15
e. Our collection policy is built on courtesy, fair treatment and
persuasion. We believe in fostering customer confidence and longterm
relationship.
f. We will provide you with all the information regarding your dues
and will endeavour to give sufficient notice for payment of dues.
g. We will have a system of checks before passing on a default case to
recovery agencies so that you are not inconvenienced on account of
lapses on our part.
h. We will write to you when we initiate recovery proceedings against
you and will inform you of the name of the recovery agency / agent,
to whom your case has been assigned as also their address and
telephone numbers.
i. We will provide details of the recovery agency firms / companies
engaged by us on our website.
j. We will also make available, on request, details of the recovery
agency firms / companies relevant to you at our branch.
k. Our staff or any person authorized to represent us in collection of
dues and / or security repossession will identify himself / herself
and produce the authority letter issued by us and upon request show
you his / her identity card issued by the bank or under authority of
the bank.
l. All the members of our staff or any person authorised to represent us
in collection and / or security repossession would follow the guidelines
set out below:
i. You would be contacted ordinarily at the place of your choice
and in the absence of any specified place at the place of your
residence and if unavailable at your residence, at the place of

business / occupation.
ii. Their identity and authority to represent us would be made
known to you.
iii. Your privacy would be respected.
iv. Interaction with you would be in a civil manner.
v. Normally our representatives will contact you between 0700
hrs and 1900 hrs, unless the special circumstances of your
16
business or occupation require otherwise.
vi. Your requests to avoid calls at a particular time or at a particular
place would be honoured as far as possible.
vii. Time and number of calls and contents of conversation would
be documented.
viii. All assistance would be given to resolve disputes or differences
regarding dues in a mutually acceptable and in an orderly
manner.
ix. During visits to your place for dues collection, decency and
decorum would be maintained. Our officials / agents will not
resort to intimidation or harassment of any kind, either verbal
or physical against any person, including acts intended to
humiliate publicly or intrude the privacy of your family members,
referees and friends, making threatening and anonymous calls
or making false and misleading representations.
However, it is your responsibility to keep updating your contact
details. In case the bank is unable to contact you at the details
provided, the bank will access information available from public
sources and approach your friends / relatives to trace you.

x. Inappropriate occasions such as bereavement in the family
or other important family functions like marriages would be
avoided for making calls / visits to collect dues.
xi. We will investigate any complaint from you about unfair
practices of our recovery agents.
7.1 Collection of Dues and Security Repossession Policy
We will follow collection of dues and security repossession policy in
consonance with the law. The policy will be displayed on our website
and a copy of the same will be made available at our branch for perusal.
8. PRODUCTS AND SERVICES
8.1 Deposit accounts
a. You may open different types of accounts with us such as, savings
accounts, term deposits, current accounts, etc. You may open such
accounts in the following styles:
17
i. Single
ii. Joint
iii. Joint (Either or Survivor)
iv. Joint (Former or Survivor)
v. Joint (Latter or Survivor);
or
vi. In any other style.
b. We will make available ‘Basic Savings Bank Deposit Account’ (BSBD
Account) to you without the requirement of any minimum balance. We
will offer / provide minimum common facilities, including passbooks*
without any charges. The relevant details will be made known to you
in a transparent manner at the time of opening of the account.
*For Payment Banks and Small Finance Banks, the norms relating to

passbook / statement of account shall be as per Operating Guidelines
applicable. Payment Banks and Small Finance Banks are allowed to
provide statement of account in paper form / electronic form instead
of a passbook.
c. The above accounts may be opened by you with nomination facility,
wherever permissible. We will include, in the account opening form,
the option for nomination as also the option for indicating the name
of the nominee in passbooks / account statements / Fixed Deposit
Receipts (FDRs).
We will explain the implications of the foregoing accounts as also
the nomination facilities at the time of opening of the account.
d. We will acknowledge the receipt of your nomination details and
record the fact of nomination on the passbook / account statement
/ FDRs. At your written request, we will also indicate the name of
the nominee thereon.
e. We will provide information about deposit insurance cover in the
passbooks.
f. We will provide sufficient details of all transactions in the passbooks.
g. We will also inform you about liquid deposit facility, sweep account
and similar types of products offered by us and their implications
and procedures involved, at the time of opening of account.
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8.1.1 Account opening and operation of deposit accounts
Before opening any deposit account, we will:
a. carry out due diligence as required under “Know Your Customer”
(KYC) guidelines.
b. ask you to submit or provide necessary documents or proofs to do so.

c. obtain only such information to meet with our KYC, Prevention of
Money Laundering or any other statutory requirements. In case any
additional information is asked for, it will be sought separately and
we will explain the reason for obtaining such additional information.
Providing such information will be voluntary, unless required by law.
The information will be kept confidential, unless required by law
enforcing agency / banking regulator.
d. provide the account opening forms which will contain details of
essential information required to be furnished and documents to
be produced for verification and / or for record for meeting the KYC
requirements.
e. require you to submit documents in respect of KYC at periodic
intervals to enable us to update our records as required.
f. explain the procedural formalities and provide necessary
clarifications sought by you while opening a deposit account.
g. give you the Most Important Terms and Conditions (MITC) governing
the deposit facility you have sought to avail.
h. at the time of opening of the account, make available to you as part
of MITC, the details of the deposit insurance scheme, offered by
the Deposit Insurance and Credit Guarantee Corporation of India
(DICGC) and the terms and conditions thereof.
8.1.2 Changing your account
a. If you are not happy about your choice of current / savings account,
you may within 14 days of opening the account, approach us to switch
to any of our other account / products offered by us. Alternatively,
you may ask for closure of the account along with any interest it
may have earned. No penal charges will be applied in such cases.
b. If you decide to close your current / savings account we will do so

within three working days of receiving your instructions, subject to your
completing all formalities and submitting all required documents.
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c. If you want to transfer your active and operative account to another
branch of our bank, we will do so. On receiving your request, we will
transfer the account to the transferee branch within 3 (three) working
days without insisting on fresh proof of address and on the basis of a
self-declaration from you giving your current address. You will have to
submit documentary proof of this address within a period of six months.
We will intimate you as soon as the account is operationalised. The
transferee branch will be provided with information on your existing
standing instructions / direct debits, if any.
8.1.3 Savings / Current accounts
When you open a Deposit Account, we will:
a. inform you about number of transactions, cash / ATM withdrawals,
etc. that can be done free of charge in a given period.
b. inform you about the kind of charges, if any, in case of exceeding such
limits. Details of the charges will be included in our Tariff Schedule.
c. inform you of the rate at which interest is paid on your savings
deposits, how it is calculated and the periodicity of its payment.
8.1.3.1 Minimum balance
a. The minimum balance to be maintained in the Savings Bank
account will be displayed in our branch.
b. We will inform you in respect of deposit products like Savings Bank
Account and Current Account or any other type of Deposit Account:
i. the minimum balance to be maintained as part of terms and
conditions governing operation of such accounts.
ii. the charges which will be levied in case of failure to maintain

the minimum balance in the account by you. Details of the
charges will be included in the Tariff Schedule.
iii. 30 days in advance, of any change in minimum balance to be
maintained. During this Notice period, we will not levy any
charge for non-maintenance of such higher minimum balance
prescribed. Further, there will be an option to switch to BSBD
Account for which we will notify you before levying any charges.
iv. we will ensure that the balance in the savings account does
not turn negative solely on account of levy of charges for non20
maintenance of minimum balance. In case the account is to be
closed or revived, we will not seek payment of unpaid charges
levied due to non-maintenance of minimum balance.
v. the charges for non-maintenance of minimum balance to
be maintained by you will be proportionate to the extent of
shortfall observed.
8.1.3.2 Charges
Specific charges for issue of cheque books, additional / duplicate statement
of accounts, duplicate passbook, copies of paid cheques, folio charges,
debit card, ATM card, verification of signature, return of cheque, change in
mandate or style of account, closure of Savings Bank / Current accounts,
withdrawal / deposit of cash at home / non-home branches, cash / noncash
transactions at Bank’s own / other Bank’s ATMs / Micro ATMs, etc.,
will be included in our Tariff Schedule. Concessions or relief given will not
be withdrawn during the original validity period of the concession / relief.
8.1.3.3 Passbook / statements *
a. To help you manage your account and check entries in it, we will
provide you with a monthly statement / e-mail statement (subject to

your acceptance) of account unless you have opted for a passbook.
This can be available through digital channels also.
b. You can ask us to provide you with account statements more often
than is normally available for your type of account, at a charge. This
charge will be indicated in our Tariff Schedule.
c. We will indicate our MICR Code and IFS Code in cheque books,
passbooks and statements of accounts.
d. We will make available the Customer Care number of the bank / contact
number of the branch in passbooks and statements of accounts.
e. We will provide a detailed “Statement of Loan account” free of charge
once in a financial year. The statement shall be made available by
providing the facility of online access or by e-mail and in absence of
these channels, by post. In case you need duplicate or more copies
of the statement of loan account, charges will be payable, which will
be disclosed in the tariff schedule on our website and in the loan
related documents.
*For Payment Banks and Small Finance Banks, the norms relating to
passbook / statement of account shall be as per Operating Guidelines
21
applicable. Payment Banks and Small Finance Banks are allowed to
provide statement of account in paper form / electronic form instead
of a passbook.
8.1.3.4 Upgradation of deposit accounts and addition of value added
services.
In case your account meets the terms for upgradation or value added
services, we will do it only after obtaining your consent in writing or
through any other mode or where your consent is obtained through
authenticated electronic means after necessary validation.

8.1.3.5 Downgrading of deposit accounts
We will intimate you once the account gets downgraded from higher
product version to a lower product version. We will downgrade the account
after giving thirty days notice.
8.1.4 Accounts of minors
a. We will tell you, on request, how a Deposit Account can be opened
in the name of a minor and how it can be operated.
b. We will intimate the date on which the minor becomes major.
8.1.5 Inoperative / Dormant accounts
We will:
a. inform you when you open your account, the circumstances under
which your account will be classified as inoperative / dormant.
You will also be informed at least three months before your account
is classified as inoperative / dormant and the consequences thereof
at your last recorded address and / or e-mail.
b. also endeavour to send an SMS / e-mail advising that your account
is being classified as inoperative / dormant.
c. notify the joint holder/s also before an account is classified as
inoperative / dormant.
d. inform you of the procedure to be followed if you want to activate
the account.
e. not levy any charge merely because an account is inoperative /
dormant.
22
f. not charge you for activation of the inoperative account.
g. intimate you upon activation of Dormant account at your request
through various channels including SMS / e-mail or letter.

8.1.6 Closing your account
Under normal circumstances, we will not close your account without
giving you at least 30 days’ notice indicating the reasons for such closure.
In such cases, you will be required to make alternate arrangements
for cheques already issued by you and desist from issuing any fresh
cheques on such account.
8.2 Clearing cycle / collection services
a. We may provide a drop box facility to enable you to deposit cheques
to be sent for collection. Necessary precaution will be taken to
ensure that cheques deposited in the drop box are properly and
promptly accounted for. However, you may, if you so desire, hand
over cheques at the counter against acknowledgement instead of
depositing them in the drop box.
b. We will inform you about the clearing cycle for local and outstation
instruments, including details such as cut-off time for lodging
of instruments for same day clearing, when you can withdraw
money after lodging instruments and when you will be entitled to
earn interest on delayed collection as per our Cheque Collection
Policy.
c. We will pay you compensation, as per our Cheque Collection /
Compensation Policy for any delay in collection of instruments,
without waiting for a demand from you.
d. We will inform you immediately by SMS / e-mail when a cheque
deposited by you for collection is returned unpaid.
e. We will return a cheque unpaid / dishonoured along with a duly
signed return memo indicating the date of return as also the reason
for return / refusal of payment within 24 hours.
f. If immediate credit for outstation cheques is offered, we will provide

relevant information including the applicable terms and conditions,
such as the limit up to which instruments tendered by you can be
credited in satisfactorily operated accounts.
23
g. We will proceed as per our Cheque Collection Policy and provide
all assistance for you to obtain a duplicate cheque / instrument in
case a cheque / instrument tendered by you is lost in transit and
compensate you as per our Cheque Collection / Compensation Policy.
h. We will give the above information when you open your account
and whenever you ask for it. If there is any change in our Cheque
Collection Policy, the revised Policy will be displayed on our website
and will be made available at all our branches.
8.3 Cash transactions
a. We will accept and dispense cash at any of our branches under
core banking, subject to any restrictions on type of transaction or
charges, if any, applicable to such transactions.
b. We will exchange soiled / mutilated notes and / or small coins and
issue good quality, clean bank notes / coins at all our branches upto a
prescribed limit per day. We will extend this facility, within prescribed
limits to walk-in customers too.
c. For transactions above a specified amount, we will require you to
furnish your PAN.
8.4 Direct debits and standing instructions
We will:
a. at the time of opening the account tell you how direct debits / standing
instructions work and how you may record / cancel them and the
charges connected with them. Charges will be levied as per our Tariff
Schedule.

b. act upon mandates given by you for direct debits [Under National
Electronic Clearing Service (NECS)] / National Automated Clearing
House (NACH) and other standing instructions. In case of any delay or
failure in executing the mandate resulting in financial loss or additional
cost, we will compensate you as per the compensation policy of the
bank. If the mandate cannot be executed due to insufficient balance
in your account, we will levy charges as per our Tariff Schedule.
c. credit your account along with interest as soon as it is determined
that any amount has been unauthorisedly / erroneously debited from
your account and compensate you as per our Compensation Policy.
24
8.5 Stop payment facility
We will:
a. accept stop payment instructions from you in respect of cheques
issued by you. Immediately on receipt of your instructions, we will
give an acknowledgement and take action provided these cheques
have not already been cleared by us.
b. levy charges, if any, as indicated in our Tariff Schedule.
c. reimburse and compensate you as per our Compensation Policy in
case a cheque is paid subsequent to the receipt of stop payment
instructions by us.
8.6 Cheques / debit instructions issued by you
We will:
a. keep original cheques / debit instructions acted upon from your account
or copies or images of the cheques received from the presenting bank
under Cheque Truncation System (CTS), for such periods as required
by law.

b. give you the cheque / image of cheque / debit instruction acted upon
or a copy thereof as evidence as long as records are available with us.
If there is a dispute about a cheque paid / debit instructions from
your account and in case the request for such cheque, etc. is made
within a period of one year from the date of cheque / debit instruction,
no charge will be levied. In respect of requests received beyond this
period, charges will be levied as per the Tariff Schedule.
c. inform you how we will deal with unpaid cheques and out-of-date
[stale] cheques. The details of charges to be levied will be included
in our Tariff Schedule.
8.7 Term deposits
a. When you place a term deposit with us, we will obtain instructions
from you in the account opening form for the disposal of your
deposit at maturity.
b. Where there are no instructions for disposal of the deposit at
maturity, we will inform you well in advance through letter / e-mail
/ SMS about its impending date of maturity.
c. In case we still do not receive any instruction from you, we will
25
renew the deposit, excluding deposits like tax savings deposits, etc.,
for the same period as the matured deposit at the prevailing rate of
interest.
d. We will inform you the procedure for withdrawal of term deposits
before maturity. This information will also be made available in the
account opening form / MITC / reverse of the FDR.
e. We will inform you of the interest rates applicable and charges for
premature withdrawal of term deposits.
f. We will permit premature withdrawals of term deposits in accordance

with the mandate ‘Former or Survivor / Either or Survivor’, provided
a specific joint mandate from all the depositors has been given for
the purpose. We will provide for such a mandate in the account
opening form.
g. We will inform you, at the time of acceptance of the deposit, the terms
and conditions and interest rate applicable in case you renew the
deposits on a date after the date of maturity. This information will
also be made available in the account opening form / MITC / reverse
of the FDR.
h. We will advise you of provisions of Income Tax Act applicable to the
interest income accruing to you on your deposits, our obligations
under the Act and provisions available to you for seeking exemption
from Tax Deduction at Source.
i. We will accept Form 15 G or 15 H as applicable from you at the time
of application if you are not liable to pay tax on your interest income.
You may submit to us such Form as required, at the beginning of
the financial year, if you are not liable to pay tax on your interest
income. We will acknowledge receipt of such Forms.
j. We will issue the requisite certificate within the stipulated period if
we deduct tax from interest paid / accrued on your deposits.
8.7.1 Advances against term deposits
We will explain the facility of loan / overdraft available against term deposits.
8.8 Settlement of claims in respect of deceased account holders
a. The operational procedure for settlement of claims of deceased
depositors is available in our branch and on our website as a part
of our Deposits Policy.
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b. We will provide claim forms for settlement of claims of the accounts
of deceased persons, to those who approach us for the forms. We
will also place the claim forms on our website.
8.8.1 Accounts with survivor / nominee clause
a. In the case of a deposit account of a deceased depositor, where
the depositor had utilized the nomination facility and made a valid
nomination or where the account was opened with the survivorship
clause (“either or survivor” or “anyone or survivor” or “former or
survivor” or “latter or survivor”), payment of the balance in the
deposit account to the survivor(s) / nominee of a deceased deposit
account holder will be made, provided:
i. the identity of the survivor(s) / nominee and the fact of the
death of the account holder, is established through appropriate
documentary evidence.
ii. there is no order from the competent court restraining the bank
from making the payment from the account of the deceased.
In such cases, payment to the survivor(s) / nominee of the deceased
depositors will be made without insisting on production of succession
certificate, letter of administration or probate, etc. or obtaining
any bond of indemnity or surety from the survivor(s) / nominee,
irrespective of the amount standing to the credit of the deceased
account holder.
b. The survivor(s) / nominee would be receiving the payment from the
bank as a trustee of the legal heirs of the deceased depositor, i.e.,
such payment shall not affect the right or claim which any person may
have against the survivor(s) / nominee to whom the payment is made.
c. The payment made to the survivor(s) / nominee, subject to the foregoing
conditions, would constitute a full discharge of the bank’s liability.

d. In case of term deposits with “Either or Survivor” or “Former or
Survivor” mandate, premature withdrawal of the deposit, on death
of one of the depositors, by the surviving joint depositor will be
permitted only if there is a mandate from all the depositors to this
effect. The premature withdrawal will be allowed at the rate of
interest applicable on the date of deposit for the period the deposit
remained with us and without penalty.
e. It may be noted that in case of a joint deposit account, nominee’s right
27
arises only after the unfortunate event of death of all the depositors.
f. At the time of registration of nomination, you will have the option to
indicate or not to indicate the name of the nominee in the passbook
/ statement of account / FDR.
8.8.2 Accounts without the survivor / nominee clause
In case the deceased depositor had not made any nomination or for
the accounts other than those styled as “either or survivor” (such as
single or jointly operated accounts), we will adopt a simplified procedure
for repayment to the legal heir(s) of the depositor, keeping in view the
imperative need to avoid inconvenience and undue hardship to the
common person. In conformity with our risk management policy, we will
fix a minimum threshold limit (which will be made known on demand
at our branch) upto which claims in respect of the deceased depositor(s)
will be settled without insisting on production of any documents other
than a letter of indemnity.
8.8.3 Time limit for settlement of claims
We will settle the claims in respect of deceased depositors and release
payments to survivor(s) / nominee within a period not exceeding 15 days
from the date of receipt of the claim subject to the production of proof of

death of the depositor and suitable identification of the claimant(s), to
the bank’s satisfaction.
8.8.4 Premature termination of term deposit accounts
In the case of term deposits, we will incorporate a clause in the account
opening form itself to the effect that in the event of the death of the
depositor, premature termination of term deposits would be allowed.
The conditions subject to which such premature withdrawal would be
permitted would also be specified in the account opening form. Such
premature withdrawal would not attract any penal charge.
8.8.5 Treatment of flows in the name of the deceased depositor
In order to avoid hardship to the survivor(s) / nominee of a deposit
account, we will obtain appropriate agreement / authorization from the
survivor (s) / nominee with regard to the treatment of pipeline flows in
the name of the deceased account holder. In this regard, we will consider
adopting either of the following two approaches:
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i. We could be authorized by the survivor(s) / nominee of a deceased
account holder to open an account styled as ‘Estate of ________________,
the Deceased’ where all the pipeline flows in the name of the
deceased account holder could be allowed to be credited, provided no
withdrawals are made.
OR
ii. We could be authorized by the survivor(s) / nominee to return the
pipeline flows to the remitter with the remark “Account holder deceased”
and to intimate the survivor(s) / nominee accordingly. The survivor(s)
/ nominee / legal heir(s) could then approach the remitter to effect
payment through a negotiable instrument or through electronic transfer

in the name of the appropriate beneficiary.
8.8.5.1 PENSION ACCOUNTS*
i. We will inform you that Nomination facility is available for Savings
Bank Account opened for credit of pension.
ii. We will inform you that Banking Companies (Nomination) Rules, 1985
are distinct from the Arrears of Pension (Nomination) Rules, 1983.
iii. We will inform you that nomination exercised by you under Arrears
of Pension (Nomination) Rules for receipt of arrears of pension will
not be valid for the purpose of deposit accounts held by you with us.
For this a separate nomination is necessary in terms of the Banking
Companies (Nomination) Rules, 1985 in case you desire to avail of
nomination facility.
* [Note: Provisions of 8.8.5 of the Code does not apply in case of
deposit account held with us by pensioners]*.
8.9 Safe deposit lockers
a. We will give you the complete details of the rules and the procedures
applicable for allotment of the safe deposit lockers and also safe
deposit of valuables, in case we offer the service and will explain
the differences between the same and also the charges and unique
features of these services. We will allot lockers without linking it to
placement of fixed deposits. However, to ensure prompt payment of
locker rent, we may at the time of allotment, obtain a Fixed Deposit
which would cover 3 years’ rent and the charges for breaking open
the locker in case of an eventuality. We will send reminders for the
overdue rent of your safe deposit locker at the last recorded address
29
and / or e-mail. We would have the right to restrict operations of the
locker till the rent due is paid as per the locker agreement. We will

include this clause in the agreement.
b. We will advise you that hiring of a safe deposit locker creates relation
of a lessor and lessee and the lessee has the right for free access to
safe deposit locker in a safe and secure environment.
8.10 Foreign Exchange services
a. When you buy or sell foreign exchange, we will give you information
on the services, details of the exchange rate and other charges
which apply to foreign exchange transactions. If this is not possible,
we will tell you how these will be worked out.
b. If you want to transfer money abroad, we will inform you how to do
this and will give you:
i. a description of the services and how to use them.
ii. details of when the money you have sent abroad should get
there and the reasons for delays, if any.
iii. the exchange rate applied for conversion of the foreign currency
(if this is not possible at the time of the transaction, we will let
you know later what the rate was).
iv. details of any commission or charges, which you will have to
pay and a caution that the person receiving the money may
also have to pay the correspondent bank’s charges.
c. We will tell you if the information provided by you for making a
payment abroad is adequate or not. In case of any discrepancies
or incomplete documentation, we will advise you immediately and
assist you to rectify / complete the same.
d. If money is transferred to your bank account from abroad, we will
tell you the original amount received and charges, if any, levied.
Even if the sender has agreed to pay all charges, we shall still
deduct our charges / statutory taxes from the proceeds at the time

of crediting the money into your account.
e. We will guide you about the regulatory requirements or conditions
relating to foreign exchange services offered by us as and when
requested by you.
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f. In case of delay beyond the day when the amount is due for credit,
you will be compensated (i) for any loss on account of interest for
due period beyond the due date and (ii) also for adverse movement
of forex rate as per the Compensation Policy of the bank.
g. All certificates required to be issued under regulatory / statutory
instructions will be issued at nominal charges which will be displayed
on our website except the certificates which are statutory and to be
issued free of charge.
8.11 Remittances within India
If you want to remit money within India, we will inform you how to effect
it and
a. give a description of our services and how to use them.
b. suggest to you the best way to send the money to suit your needs.
c. disclose the details of all charges including commission that you
will have to pay for the service as per the Tariff Schedule.
d. send you an SMS / e-mail informing you of the fate / status of the
remittance made by you through Mobile Banking / NEFT / RTGS.
e. make available on our website updated contact details of our
Customer Facilitation Centres to handle your queries / complaints
regarding NEFT / RTGS transactions / digital banking.
f. In case of any delay we will compensate you for the delay and any
loss / additional expense incurred by you as per our Compensation

Policy.
g. We will extend remittance facilities within prescribed limits to walkin
customers too.
8.12 Lending
a. We will have a Board approved policy on Loans and Advances.
b. We will base our lending decisions on a careful and prudent
assessment of your financial position and capacity to repay.
c. We will not discriminate on grounds of sex, caste and religion in
the matter of lending. However, this does not preclude us from
instituting or participating in schemes framed for specified sections
of the society.
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8.12.1 Loans
8.12.1.1 General Information
We will:
a. give you the Most Important Terms and Conditions (MITC) governing
the loan / credit facility you have sought to avail.
b. give you information explaining the key features of our loan and credit
card products including applicable fees and charges while sourcing
the application and at the time of communicating the sanction of the
loan / credit card.
c. advise you about the information / documentation we need from you
to enable you to apply. We will also advise you what documentation
we need from you with respect to your identity, address, employment,
etc. and any other document that may be stipulated by statutory
authorities (e.g. PAN details), in order to comply with legal and
regulatory requirements.
d. verify the details mentioned by you in the loan / credit card application

by contacting you at your residence and / or on business telephone
numbers and / or through any alternative channels and / or physically
visiting your residence and / or business addresses through agencies
appointed by us for this purpose, if deemed necessary by us.
e. if we offer you an overdraft, or an increase in your existing overdraft
limit, we will tell you if your overdraft is repayable on demand
or otherwise. We will, if required, also advise about the method
of calculation of overdrawn amount and also the computation of
interest as well as penal interest.
f. in case we offer / approve a credit facility over the telephone, we
will credit your account with the amount only after receiving your
acceptance in writing or through any other mode such as sms /
e-mail and where your consent is obtained through authenticated
electronic means, after necessary validation.
g. not offer any unsolicited pre-approved credit facility in any form,
including enhancement of credit card limit and top up of personal
loan limits, etc.
8.12.1.2 Applications for loans and their processing
a. At the time of sourcing a loan product, we will provide as part of the
32
loan application form, information about the interest rates along
with the annualised rates of interest, whether floating or fixed, as
also the fees / charges payable for processing, the amount of such
fees refundable if loan is not sanctioned / disbursed, pre-payment
options and charges, if any, penal rate of interest for delayed
repayments, if any, conversion charges for switching your loan
from fixed to floating rates or vice-versa, existence of any interest

reset clause and any other matter which affects the interest of the
borrower, so that a meaningful comparison with those of other
banks can be made and an informed decision can be taken by you.
b. We will provide you with a checklist of the documents to be submitted
(compliant with legal and regulatory requirements) along with
the loan application form to enable you to submit the application
complete in all respects. If required, we will assist you in filling up
your loan application form.
c. We shall invariably provide you with an acknowledgement of your
loan application, whether submitted online or manually, indicating
therein the time frame within which the application will be processed.
d. We will convey our decision on your loan application as per our
prevailing policy, which is available on the website, provided your
application is complete in all respects and is submitted along with
all the documents as per ‘check list’ provided.
e. Normally all particulars required for processing the loan application
will be collected by us at the time of application. In case we need
any additional information, we will contact you immediately.
f. We will communicate, in writing, the reason(s) for rejection of your
loan application. We may communicate this through letter or e-mail
stating the reason(s) for such rejection of the loan application.
g. We will provide you the sanction letter detailing particulars of
amount sanctioned and the terms and conditions.
h. We will provide you an amortisation schedule (schedule of repayment
of principal and interest for the duration of the loan).
i. We will also inform you whether you have an option to let equated
monthly instalments stay constant and change tenure or vice-versa
when the interest rate changes.

j. We will, at your request, supply authenticated copies of all the loan
documents executed by you at our cost along with a copy each of
33
all enclosures quoted in the loan document as part of disbursement
welcome kit. However, reasonable charges will be levied for additional
authenticated copies as per our tariff.
k. We will give written receipt for all documents to title taken as
security / collateral for any loan.
l. We will endeavour to send you a communication through letter /
e-mail or SMS about the status of your account before it becomes a
Non Performing Asset (NPA).
m. We will give you notice, sufficiently in advance, if we decide to recall
/ accelerate payment or performance under the agreement or seek
additional securities.
n. We will provide you with an annual statement of account of your
term / demand loans.
o. We will provide you with the loan statement, more often, if required,
at a cost which will be indicated in the Tariff Schedule.
p. We will return to you all the securities / documents / title deeds
to mortgaged property within 15 working days of the repayment
of all dues agreed to or contracted and report to Central Registry
for Securitisation, Asset Reconstruction and Security Interest
(CERSAI) about satisfaction of our charge. If any right to set off
is to be exercised for any other claim, we will give due notice with
full particulars about the other claims and retain the securities /
documents / title to mortgaged property till the relevant claim is
settled / paid.
q. We will compensate you for any delay in return of securities / documents

/ title deeds to mortgaged property beyond 15 working days of the
repayment of all dues agreed to or contracted or in reporting to CERSAI
about satisfaction of our charge in line with our Compensation Policy.
r. In the event of our losing the securities / documents / title deeds
you have provided to us when you availed a loan, we will compensate
you for the loss. We will issue a certificate indicating the securities
/ documents / title deeds lost and extend all assistance to you for
obtaining duplicate documents, etc. at our cost.
s. We will process a request for transfer of borrowal account, either from
you or from a bank / financial institution, along with your explicit
consent in the normal course and convey our concurrence or otherwise
within two weeks of receipt of request.
34
t. We will not levy foreclosure charges / pre-payment penalties on all
floating rate term loans sanctioned to you (in your individual capacity)
irrespective of whether paid from own funds or takeover by other Banks.
u. where a loan is eligible to be covered under any subsidy schemes or
subvention scheme in force we will explain to you features of such
scheme and any requirement you will need to fulfill.
8.13 Guarantee
a. If you want us to accept a guarantee or other security from a third
party for your liabilities, we may ask you for your permission to give
confidential information about your finances to the person giving
the guarantee or other security, or to their legal adviser.
b. We will also:
i. encourage them to take independent legal advice to make
sure that they understand their commitment and the possible

consequences of their decision (where appropriate, the
documents we ask them to sign will contain this recommendation
as a clear and obvious notice).
ii. inform them that by giving the guarantee or other security they
may become liable instead of, or as well as, you.
iii. inform them what their liability will be.
iv. give a copy of the terms and conditions of the loan sanctioned
/ loan agreement, free of cost, to the guarantor(s) of the credit
facility availed by you.
c. When you are considering to be a guarantor to a loan, we will tell you:
i. your liability as guarantor;
ii. the amount of liability you will be committing yourself to the
bank;
iii. circumstances in which we will call on you to pay up your liability;
iv. whether we have recourse to your other monies in the bank if
you fail to pay up as a guarantor;
v. whether your liabilities as a guarantor are limited to a specific
quantum or they are unlimited;
vi. time and circumstances in which your liabilities as a guarantor
will be discharged as also the manner in which we will notify
you about this;
35
vii. of any material or adverse change in the financial position of
the borrower to whom you stand as a guarantor.
d. We will return to you all the securities / documents / title deeds to
mortgaged property within 15 days of the repayment of all dues agreed
to or contracted.
e. We will compensate you for any delay in return of securities / documents

/ title deeds to mortgaged property beyond 15 days of the repayment of
all dues agreed to or contracted.
f. In the event of our losing the securities / documents, we will compensate
you for the loss. We will issue a certificate indicating the securities /
documents lost and extend all assistance to you for obtaining duplicate
documents, etc.
8.14 Central Registry of Securitisation, Asset Reconstruction and
Security Interest of India (CERSAI)
When you avail of a loan facility involving immovable property and /
or movables as primary or collateral security, we will advise you the
functioning of the CERSAI and the fact that their records will be available
for search by any lender or any other person desirous of dealing with the
property / assets. We will notify our charge to CERSAI.
8.15 Settlement of dues
a. You should let us know, as soon as possible, if you are not able to
make your payments in time.
b. We will consider all cases of genuine financial difficulties
sympathetically and positively, in consonance with regulatory
guidelines and our policy.
c. We will try to help you overcome your difficulties.
d. In case we offer you a One Time Settlement (OTS) for repayment of
dues, we will explain to you the details of the offer.
e. We will spell out, in writing, the terms and conditions of the OTS
offered to you.
f. If the dues are settled under OTS, we will explain to you the
implications of such settlement on your credit history maintained
by the CICs.
36

8.16 Securitisation of loans / card dues
a. In case we securitise (sell) your loans / dues on your card to another
entity, we will advise you the name and contact details of such entity
along with the amount of your loan / dues transferred to them. In the
normal course, loans / credit card dues, which are Non Performing
Assets (NPAs) are considered for sale to Asset Reconstruction
Company (ARC) through assignments. Where dues are settled
through compromise, assigning such assets to ARC does not arise.
b. You will then be liable to pay the amount due to the entity to which
the loan / dues have been transferred.
c. The entity to which the loan / dues have been transferred will continue
to report your credit information to the CICs.
d. We will endeavour to assist you in case you have a grievance against
the entity to which your loan / dues have been transferred by us.
e. For all complaints against the entity to which your loan / dues have been
transferred by us, we will remain the Nodal Authority for resolution. We
will treat these complaints as if they are against us and ensure that
these are resolved promptly.
8.17. Electronic and Digital Banking
8.17.1 Internet and Mobile Banking
We will take appropriate measures to provide safe and secure Internet
and Mobile Banking. We will ensure that our systems and technology
are safe and secure and review and update them periodically.
a. We will implement robust and dynamic fraud prevention and
detection mechanisms to mitigate risks and protect customers from
liabilities arising from unauthorized transactions.
b. We will undertake various initiatives to educate you on Internet /

Mobile Banking security and on prevention from payment related
frauds, by way of:
i. Displaying relevant information on our website
ii. Displaying information at customer touchpoints like ATMs and
branches.
iii. Periodic educational e-mails
c. When you have access to Internet / Mobile Banking services, we
37
will also inform you of the applicable terms and conditions relating
to such services. All Internet / Mobile Banking related services and
associated charges, if any, will be displayed on our website and
made available to you.
d. We will also inform you where to find the information you need
to safeguard your online information and to protect yourself while
using computer / mobile handset from fraud, scams or unauthorised
transactions. This information will be updated from time to time.
e. We will carry out adequate authentication processes for financial
transactions, as prescribed by the regulator from time to time.
f. We will send you SMS / online e-mail alerts for all types of transactions,
irrespective of the amount, undertaken by you. These alerts will be
sent to the contact details registered with us.
g. We will ask you for additional factor authentication / validation
based on information not visible on the cards for all on-line card not
present transactions as well as IVR transactions.
h. We will send you an SMS / e-mail on all payee / biller registration
done on Netbanking.
i. In case we offer you the facility of fixing a daily cap on the value,
mode of transactions, number of transactions and beneficiaries

for electronic modes of transactions, we will require an additional
authorization in the event of your changing the options. We will send
you an alert when a request for change in the option is received.
j. Mobile Banking service is network independent, i.e. customers
having mobile phones of any network of operator can transfer funds
from account in one bank to any other account in the same bank or
any other bank.
k. If you opt for Mobile Banking services we will, prior to your
registration for the service, inform you of:
i. the security procedure adopted by us for user authentication;
ii. time taken between registration of customers and activation of
services;
iii. the applicability or otherwise of stop payment instructions and
the terms and conditions for the acceptance, if any, for the
same.
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l. You can apply for registration of Mobile Banking services through
multiple channels such as ATMs, Websites, Phone Banking, IVR,
SMS, etc. You need not come to branches for the same.
m. Mobile Banking transactions are completely instantaneous and are
incapable of being reversed. Thus stop payment privileges are very
limited.
n. You may opt out of Internet / Mobile Banking Services at any point
of time. However, you must keep us informed of your decision and
ensure that you complete the requisite formalities.
o. In any dispute about receipt of Passwords or security information
that are not issued to you in person, we will not rely merely on proof

of dispatch to your correct registered address as proof that they
have been received by you.
p. Online banking is safe and convenient as long as you take adequate
and simple precautions. Please make sure you follow the advice
given below:
i. Visit our secure Internet banking site directly. Avoid accessing
the site through a link from another site or an e-mail and verify
the domain name displayed to avoid spoof websites.
ii. Log out of Internet banking when your session is complete. Use
the ‘Log Out’ button to log out so that the session closes. Do
not just close the window to log off.
iii. Log off your PC when not in use.
iv. Avoid using Internet Banking on unsecured networks like airports,
railway stations, cyber-cafes or any other public network / wi-fi,
etc.
v. Update your computer / laptop with the latest version of your
browser (Internet Explorer, Google Chrome, etc.)
vi. Install security programmes to protect against hackers, virus
attacks or any malicious programmes. Update your security
programme or antivirus on regular basis.
vii. Install a suitable firewall to protect your device / laptop / mobile,
etc. and its contents from outsiders.
viii. Disable the ‘File and Printing Sharing’ feature on your operating
system.
39
ix. Preferably use virtual keypad while conducting electronic
financial transactions / internet banking.
q. Apart from your obligations when using Internet Banking, you will

need to take additional care to protect your device when using a
mobile application or any other form of social media to access banking
services:
i. Do not leave your device unattended and logged into a Mobile
Banking service
ii. Lock your device to prevent unauthorised use of your Mobile
Banking service
iii. Notify us as soon as possible if your device is lost or stolen
iv. Update your Mobile Banking App as and when a new version /
upgrade is released.
v. Update your mobile operating system to ensure that the latest
security patches are available on your mobile.
vi. Purchase your mobile phone from an authorized dealer.
vii. Ensure to check the authenticity of all Apps downloaded on
your mobile. Do not download Apps from untrusted sources.
r. Log out of Mobile Banking application once you are done using it.
Check your account and transaction history regularly.
s. Do not share your internet / Mobile Banking security information or
disclose your password as response to any e-mail (even if it appears
to have been sent from our bank). Please inform us of the same for
us to investigate. Neither the police nor we will ever contact you
to ask you to reveal your online banking or payment card PINs, or
your password information.
t. Customer complaints / grievances arising out of Mobile Banking facility
are covered under Banking Ombudsman (BO) Scheme.
8.17.2.1 PINs and Passwords
a. A password is a string of characters used to verify the identity of a user
during the authentication process. Passwords are important so that

sensitive data or a critical information does not fall into wrong hands.
b. We will conform to internationally accepted standards for methods
of generation, storage and terminal security relating to PINs and
40
Passwords to ensure their confidentiality and security for your
protection.
c. We will deliver your PIN in a sealed cover to you at the registered
address we have on record or at our branch after due identification.
You may, also at your convenience, generate PIN online / via IVRS or
at ATMs.
d. We will ensure that your recent contact details (mobile number, e-mail
ID and landline number) are registered and updated with the Bank.
e. In order to safeguard your account, you must choose a strong PIN
/ password and change it regularly.
8.17.2.2 You should also adopt the following safe practices /
precautions to protect your PIN or Password.
For creating PIN / Password:
a. Use the following guidelines to create a strong password:
• Do not use familiar names which are easily discoverable (self,
spouse, children, parents, pets, etc.)
• Avoid using commonly known facts about yourself (hobbies,
birthdays, favourite sports, etc.)
• Do not use words found in the dictionary as software
programmes can search for probable words and guess the
password. Instead combine misspelt words to prevent a
dictionary attack
• Use at least six or more characters. More the characters in a

password, the more secure it is
• Utilize a combination of letters and numbers to make it more
difficult for a person / software programme to guess your password
• Use special characters (@, #, %, $, etc.) to make the password
more difficult to crack
• Use a combination of upper- and lower-case letters which helps
to create a more secure password
b. Do not use the following to create a *PIN:
• birth dates, months or years;
• sequential numbers (e.g. 3456);
• number combinations that may be easily guessed (e.g. 1111);
41
• parts of your telephone number;
• parts of numbers in the order in which they are printed on any
of your cards;
• other easily accessible personal data (e.g. driving licence, your
vehicle number or other numbers easily connected with you)
*This is only an illustrative and not exhaustive list.
Precautions for preventing unauthorised transactions in your account:
Do not:
• Allow anyone else to use your card, PIN, password or other
security information.
• Write down or record your PIN, password or other security
information.
• Store your password(s) in your Browsers (such as Internet
Explorer, Google Chrome, Firefox, etc.) or on e-Commerce sites
or in mobile handset.
• Save your Mobile Banking Login and password on your phone

• Give your account details, password / PIN / OTP or other security
information to anyone, including those who claim to be authorized
representatives of the bank.
• Respond to any communication asking for your Bank account
credentials (Internet banking password, ATM PIN, CVV, Card
expiry date, etc.)
• Respond even if any message threatens discontinuation of
facility or makes an exciting offer or mentions any other reason.
All such communication through letters, e-mails, mobile
phones, SMSs, etc. should be ignored.
• Fall prey to fictitious offers / lottery winnings / remittance of cheap
funds in foreign currency from abroad by certain foreign entities
/ individuals. These could include Indian residents acting as
representatives of such entities / individuals.
These messages often appear to be from a friend, bank or other
legitimate source directing you to certain websites designed
to trick you into providing personal information such as your
user name and password or credit card information.
• Click a link in any suspicious e-mails / SMS, and don’t provide
42
your information unless you trust the source e-mail / SMS.
• Allow anyone else to see you enter your Password in a PC /
mobile handset or to see the PIN when you use your card at
ATMs or at Points of Sale (POS) counters.
Always:
• Change your PIN / Password at regular intervals – at least every
3 to 6 months. Do not repeat your previous passwords.

• Memorize your PIN, password and other security information
and destroy the written communication, if any, received by
you.
• Take reasonable steps to keep your card safe in your personal
custody and your PIN, password and other security information
secret at all times.
• Use different PINs or Passwords for different cards or devices
• Use a power-on / access password for your computer / laptop /
mobile and a screensaver password on your computer / laptop /
mobile so that no one else can use it without your consent.
Immediately inform (through authorized officials of bank or
authorized channel) your bank on change of your e-mail ID or
mobile number.
8.17.3 ATM / Debit and Credit Cards
a. We will offer you an ATM / Debit Card if it is normally issued with
the type of account you have opted for.
b. New Cards / Replacement cards (debit as well as credit cards) will be
essentially EMV Chip and PIN enabled card only. You may decline
to accept the card if you do not want it.
c. Where cards are delivered to you personally, we must be satisfied
about your identity before allowing cards to be delivered.
d. We will send a service guide / member booklet giving detailed terms
and conditions, losses on your account that you may be liable if your
card is lost / misused and other relevant information with respect to
usage of your card along with your first card.
e. We will inform you which of your accounts your card can access.
We will also inform you whether the card issued to you has more
than one function and if so, what those functions are.

43
f. We will advise you of the current transaction limits that apply at
POS counters, ATMs and forex transactions.
g. We will advise you of the fees and charges that apply to your card.
h. Please safeguard your card by taking the following measures:
• Sign your card as soon as you receive it
• Do not leave your card unattended (in a wallet / purse) or in
a location (e.g. your vehicle) from where it could be removed
without being noticed
• Do not give your card to anyone or let anyone else use your
card including at merchant establishments (e.g. restaurants,
petrol pump, etc.)
• Always remember to take your card back after using it
• Inform us if you change your address with documentary proof
so that, whenever required, a replacement card is sent to your
correct address.
• Complaints relating to disputed / failed ATM transactions are to
be lodged with card issuing bank (through authorized officials
or channel).
8.17.4.1 Reporting loss / theft / disputed transactions
a. We will inform you of the procedure you must follow to report the
loss, theft or unauthorised use of your card or PIN.
b. We will include in the terms and conditions what your liability will
be in relation to the loss or theft of your card or disclosure of your
PIN or Password.
c. We will provide the capability to register your mobile number and
wherever available, e-mail ID, before activating any electronic
transaction facility.

d. We will provide multiple channels for enabling you to report an
unauthorized transaction on 24 x 7 basis. These channels would
be helplines, SMS, e-mail, IVR, website, etc. You can also report
such transactions to your home branch during the working hours.
Further, we will also provide you the details of our channels
through which you can block your card. We will promptly send a
confirmation for having blocked usage of the card.
e. We will provide, if possible, inbuilt reply facility to SMS. However
44
all our SMS alerts will include alternate number / mobile number /
e-mail id to contact us immediately.
f. We will provide a direct link for lodging the complaints, on home
page of our website with specific option to report unauthorized
electronic transactions.
g. We will provide a loss / fraud reporting system that sends an immediate
response (including auto response) to you acknowledging the complaint
along with the registered complaint number.
h. You should inform us as soon as you discover that your card has been
lost or stolen or someone else knows your PIN, password or other
security information, apart from changing them immediately. On your
notifying us, we will take immediate steps (such as blocking of your
card or resetting the PIN, as the case may be) to prevent the misuse.
i. Once you have advised us that your card has been lost or stolen or
your PIN or Password disclosed, you will not be responsible for any
unauthorised use of your card after that time.
j. On receipt of your complaint of an unauthorised transaction, we will
take immediate steps to prevent further unauthorised transactions

in your account.
k. The liability for the losses due to an unauthorised transaction will
be based on the regulations from the regulator that are in force at
that time.
l. You will not be liable for losses before you receive your card or, if
applicable, your PIN and Password, provided you have notified us of
your current address.
m. We will display the telephone / Toll Free numbers of the help desk /
contact persons of the ATM owning bank at ATM locations for lodging
complaints and / or for reporting / blocking lost / compromised cards.
Please ensure to lodge complaints only to your card issuing bank for
redressal.
n. ATM Id has been displayed on all the ATMs. You should quote the
same while making a complaint / suggestion. Forms are available
within ATM premises for lodging ATM complaints.
o. We will reimburse amounts wrongly debited in failed ATM
transactions within the prescribed time limit. For any delay beyond
the prescribed time limit, we will pay compensation as prescribed,
45
provided the claim is lodged with us, (i.e. the ATM card issuing
bank) within 30 days of the transaction.
p. In case of disputed ATM transactions, we will retain the relevant
camera footage till the dispute is settled. Access to such footage
will be available only if the dispute is raised within the prescribed
preservation period of such records.
8.17.4.2 Limited Liability in respect of unauthorized electronic
banking transactions.
a. You will be entitled for Zero liability where the unauthorized

transaction occurs in the following events:
i. Contributory fraud / negligence / deficiency on our part.
ii. Third party breach where the deficiency lies elsewhere in the
system and you notify us within three working days of receiving
the communication from us regarding the unauthorised
transaction.
b. You shall be liable for the loss occurring due to unauthorised
transactions in the following cases:
i. In cases where the loss is due to your negligence such as where
you have shared the payment credentials, you will bear the
entire loss until you report the unauthorised transaction to
us. Any loss occurring after the reporting of the unauthorised
transaction shall be borne by us.
ii. In cases where the responsibility for the unauthorised
electronic banking transaction lies neither with us nor you, but
lies elsewhere in the system and when there is a delay (of four
to seven working days after receiving the communication from
us) on your part in notifying us of such a transaction, your per
transaction liability shall be limited to that transaction value or
the amount whichever is lower as mentioned in RBI guidelines
issued from time to time on the subject.
iii. Further, if the delay in reporting by you is beyond seven working
days, your liability shall be determined as per our Board
approved policy which will be available in public domain / our
website. We shall provide the details of our policy in regard to
your liability formulated in pursuance of the RBI directions on
the subject at the time of opening the accounts. We will inform all
the customers individually also about our policy on the subject.

46
8.17.4.3 Reversal Timeline for Zero Liability / Limited Liability
On being notified by you, we shall credit (shadow reversal) the amount
involved in the unauthorised electronic transaction to your account
within 10 working days from the date of such notification by you (without
waiting for settlement of insurance claim, if any). The credit shall be
value dated to be as of the date of the unauthorised transaction.
Further, we will ensure that:
i. your complaint is resolved and liability, if any, established within
such time, as may be specified in our Board approved policy, but
not exceeding 90 days from the date of receipt of the complaint and
you will be compensated as per RBI guidelines on the subject.
ii. where we are unable to resolve the complaint or determine your
liability, if any, within 90 days, the compensation as per RBI
guidelines will be paid; and
iii. in case of debit card / bank account, you will not suffer loss of interest,
and in case of credit card, you do not bear any additional burden of
interest.
8.17.5 Credit Card
a. When you apply for a credit card, we will explain the relevant terms
and conditions such as fees, interest and other charges, billing and
payment, method of computation of overdues, financial implications
of paying only ‘the minimum amount due’, renewal and termination
procedures, and any other information that you may require to
operate the card.
b. We will disclose the Most Important Terms and Conditions (MITC)
in a font of ten as below:

i. During marketing-MITCs on “Fees and Charges”
ii. At application / Welcome kit-All MITCs, including, inter-alia,*
iii. On Credit card Billing-MITCs on Fees & Charges, drawing limits.
iv. On an ongoing basis, any change of the terms and conditions.
* your liability in case of third party fraud or where you have not
contributed to the fraud.
c. We will advise you of our targeted turnaround time while you are
availing / applying for a credit card. We will quote annual fee and
Annualized Percentage Rates (APR) on card products (separately
47
for retail purchase and for cash advance, (if different) with equal
prominence). The method of calculation of APR, late payment
charges, and calculation of interest will be explained clearly with
examples. These aspects will be shown in the Welcome Kit in
addition to being shown in the monthly statement. A notice to the
effect making only the minimum payment every month would result
in the repayment stretching with consequent interest payment on
your outstanding balance will be prominently displayed in all the
monthly statements. We will also mention the rate of interest that
will be charged on the unpaid amount and other charges if you
choose to pay only the “minimum amount due” as mentioned in the
monthly credit card statement.
In MITC, we would specifically explain that the “free credit period”
is lost if any balance of the previous month’s bill is outstanding.
d. We may also issue a deactivated (not ready to use) credit card if
we consider your profile appropriate for issuing credit card and
such deactivated card will become active only after you convey your
acceptance of the card and take steps for its activation as required

and subject to such other conditions as may be specified.
e. In case we activate the card without your consent or bill you for the
card for which you have not given your consent, we will not only
reverse the charges forthwith but will also pay a penalty amounting
to twice the value of the charges reversed.
f. We will extend a loan / credit facility or enhance the credit limit on
your card only with your consent in writing. Consent received through
electronic means where you specifically validate the transaction and
having read the MITC and where digital records of such consent can
be retrieved as a proof of consent, will also be treated as consent.
g. We may issue an add-on card(s) to the person(s) nominated by
you. We will, at your request, set a credit limit (within the overall
limit) for the add-on card(s) issued to you. You will be liable for all
transactions made by such additional card holders.
h. If the limit on your credit card is proposed to be reduced, we will
give you thirty days notice unless at your request and also inform
you the reason therefor, by SMS / e-mail / letter .
i. We will ensure that we comply with your request for cancellation
/ reduction of limit and confirm cancellation / reduction of limit /
48
closure of the credit card to you within 7 working days of the request
being received in writing or through an e-mail id registered with us,
provided that the outstanding amount, if any, is settled / paid.
j. We will have right to place a lien and right to set off on all monies
belonging to you, being the card holder, standing to your credit, in
the same capacity, in any account whatsoever with the Bank or in
the possession or custody of the Bank if you are in default to us

in payment of our dues. We will send you intimation to this effect
by e-mail on your registered e-mail id / registered mobile number
or letter within three days from placing lien / hold on your deposit
account.
k. In case we are offering any insurance cover to our credit card holders,
in tie up with insurance companies, we will obtain in writing from
you the details of nominee/s for the insurance cover in respect of
accidental death and disablement benefits. We will ensure that the
relevant nomination details are recorded by the insurance company
which will handle the claims relating to the insurance cover.
l. To facilitate low value online Card Not Present (CNP) transactions,
the requirement of Additional Factor Authentication (AFA) has been
relaxed. Accordingly, we (card issuing bank) will offer the “payment
authentication solutions” to you on an optional basis. To seek your
consent and to activate your option, we shall provide a one-time
registration process facility. The relaxation for AFA under such
solutions shall be applicable for CNP transactions for a maximum
value of `2000/-per transaction (or as decided by regulator from
time to time). We will also facilitate you to set lower per transaction
limits.
m. We will bear the liability of any unauthorized electronic transaction
as per Clause 8.17.4.2 of this Code.
8.17.5.1 Credit card statements
a. To help you manage your credit card account and check details
of purchases / cash withdrawals, we will send you a monthly
statement, free of cost, with details of the transactions made
with / using your credit card. The credit card statement will be
dispatched on a predetermined date every month, by post / courier

to your mailing address or, if you so desire, by e-mail to the address
registered with us. The statement will also be made available for
viewing on internet banking.
49
We will ensure that wrong bills are not raised and issued nor will
we levy charges which have not been notified by us. In case, a
complaint is raised against any bill, we will provide explanation
and, if necessary, documentary evidence will also be provided to
you within a maximum period of sixty days with a spirit to amicably
redress the grievances. In case erroneous charges are reversed, the
reversal will not be deemed as settlement of dues.
b. In the event of non-receipt of this statement, we expect you to get in
touch with us so that we can arrange to resend the details to enable
you to make the payment and highlight exception, if any, in a timely
manner.
c. We will let you know / notify changes in the schedule of fees and
charges and terms and conditions. Normally, changes (other than
interest rates and those which are a result of regulatory requirements)
will be made with prospective effect after giving notice of at least
one month. The changes will be notified along with the monthly
statement of account or copy thereof. In case of a default, the same
will be reported to Credit Information Companies (CICs).
d. Before reporting to Credit Information Companies about default
status of a credit card holder, we will adhere to a procedure approved
by the Board, including issuing of sufficient notice to the card
holder. Notwithstanding the reversal of a wrong billing, unnotified
charges will not be the cause of reporting to CICs. In case we treat
the reversal of charges as SETTLED, we will inform CIC about the

settlement and inform you of the same being reported to CIC.
8.18 Third Party Products
We distribute third party products like pension funds,mutual funds
and insurance etc. under corporate agency arrangements in terms
of Certificate of Registration issued by respective regulators viz SEBI
(mutual fund) and IRDAI (insurance products). We have Board approved
policy for sale of insurance products in line with IRDAI (Registration of
Corporate Agents) Regulations 2015.
a. We will inform you if we, as agents of any investment / asset
management company or insurance company, offer any type of
investment products including mutual funds or insurance products.
We are responsible for any person using our premises for selling or
marketing third party products on our behalf.
b. We will ensure that all investment and insurance products we sell
50
are in accordance with extant rules and regulations.
c. When you avail a banking service or product from us, we will not
compel you to purchase / subscribe to any third party product as a
quid pro quo.
d. In the case of securities provided by you for loans availed from us, we
will not insist on your obtaining insurance cover from any particular
provider / same organisation. Obtention of insurance products, if
any, offered by us will be purely on voluntary basis. You will be free
to obtain insurance cover from a service provider of your choice.
e. We will, at regular intervals, educate you by way of advertisement /
notice board / information on website / distribution of pamphlets
etc. the benefit of the products being sold at our branch, and also

through e-mails and SMS, unless you have opted not to receive such
information.
f. We will ensure that all investment and insurance products sold
at the branch will be explained to you by personnel who are duly
qualified and trained to sell the products.
g. We will provide detailed terms and conditions of the product which
is being offered to you (Key information Memorandum in case of
mutual fund and product brochure, sales illustration in case of
insurance products).
h. We will apply appropriate customer due diligence measures before
selling investment / insurance products to you.
i. We will sell a product to you only if we believe it is suitable and
appropriate for you.
j. We will obtain the requisite application and documentation for a
product offered only after you have consented to subscribe / avail of
the product, in writing or through authenticated electronic means /
after necessary validation.
k. We will ensure that the statement / policy documents will be delivered
to you within 30 days from the completion of all the formalities
(including medical examination) as per the scheme.
l. We will arrange to provide maximum possible “After Sales Service”
like reminder of SIP, latest NAV, date of maturity, due date of
payment of premium, etc.
m. The service providers will be providing you periodical information
51
on the performance of the scheme / products you have availed from
them. In case you require any specific service, we will facilitate the
same on receiving specific request from you.

n. We will disclose details of all commissions / other fees received, if any,
from mutual fund / insurance / other financial companies on the Bank’s
website for distributing their products.
o. We will adhere to RBI guidelines on para banking activities like sale
of insurance / mutual fund / other third party investment products.
p. We will ensure that the charges for related services for selling of
various products will be displayed and made available to you.
8.19 Credit Counselling Facility
We will endeavour to provide credit counselling facility. Wherever such
facility is available, we will display, at our branch in a particular centre,
the address, timings, etc. of the counselling centres set up by any bank
at that centre to enable you to avail of the service.
8.20 G etting Records
We will, on request, make available to you, at a cost, records pertaining
to your transactions, provided this is within the prescribed preservation
period of such record.
9. BRANCH CLOSURE / SHIFTING
a. If we plan to close our branch or if we move our branch or we are not
able to continue to provide banking services to you, we will give youi.
Notice of two months if there is no branch of any bank
functioning at that centre;
ii. Notice of one month in all other cases.
b. In case we shift the branch, we will inform you of the complete
address of the new location of our branch.
c. We will inform you of any change in the timings of the working of
the branch.
10. FINANCIAL INCLUSION
a. We will make available ‘Basic Savings Bank Deposit Account’

(BSBD Account) / Small Account and Jan-dhan Account without
52
the requirement of any minimum balance subject to compliance
with the instructions on Know Your Customer (KYC) / Anti-Money
Laundering (AML) for opening of bank accounts issued by RBI /
Government of India(GOI) from time to time. We will also offer /
provide minimum common facilities including the facility of ATM
card or ATM-cum-Debit Card without any charges, which will be
made known to you. The relevant details will be made known to you
in a transparent manner at the time of opening of the account.
b. We will also extend the facility of opening such accounts on the basis
of simplified KYC norms. However, such accounts will be additionally
treated as “Small Accounts” and subjected to restrictions which will
be made known to you in an easy to understand manner and in the
local language.
c. We will also prominently display at all our branches in bilingual /
trilingual, the requirements for opening “Basic Savings Bank Deposit
Account” and also the documentation required under simplified
KYC norms for opening “Small Account” / Jan-dhan account.
d. We will also take steps, including training, to create awareness
about the above among our staff, particularly the frontline staff.
e. We will make available, free of cost, basic banking facilities like
maintaining of accounts with a specified number of withdrawals in
a month, General Credit Card and transfer of benefits from State
and Central Governments through electronic platforms.
f. We will provide value added services, if so desired, by you either free
of cost or with low charges, to be notified upfront in the language

known and understood by you.
g. If there are any changes in the services, transactions or the charges,
these will be made known at least one month prior to these becoming
effective.
h. The changes, if any, will be communicated through means appropriate
to you such as by display on the Notice Board of the branch, or
through the Business Correspondent or through letters, etc.
i. Where we do not have a branch, we will endeavour to have a Business
Correspondent (BC) / Business Facilitator (BF) in unbanked areas
as per guidelines and road map agreed to, if any, with RBI to enable
the opening of accounts, deposit and withdrawal of money, subject
to amount and number of transactions, balance enquiry, etc., as
also to facilitate transfer of money from one place to another.
53
j. We will also endeavour to provide Mobile Banking facilities.
k. We will also endeavour to provide other modes of remittance including
mobile phones, electronic platforms like NECS, NEFT, etc.
l. We will be responsible for all acts of omission and commission of
Banking Outlet / BC / BF and any complaint lodged against them
will be investigated.
m. We will offer, in case of need, a credit facility at affordable cost,
subject to terms and conditions which will be made known to you
at the time of applying for the credit facility.
n. We will explain to you the various credit plans available, including
minimum information which the bank may need for processing
your loan application, the most important terms and conditions
applicable to such loans, the security which may be charged to
the bank, the manner and periodicity of application of interest,

repayment procedure, etc.
o. We will not insist on collateral security for credit limits up to Rupees
One lakh for Government sponsored schemes under Priority Sector
Lending except loans to MSE customers where higher collateral
free limit of ` 10 lakh is applicable. We will not insist on collateral
security for education loans, upto ` 4 lakh or as revised from time
to time under Education Loan Scheme.
p. In case you face any financial difficulty in relation to the credit
facility availed by you, we will consider such cases sympathetically
and positively.
q. You may keep us informed of any financial difficulty you may face,
as above, to help us assist you overcome your difficulties. While
processing your loan application we will not insist on obtaining
“No Dues” Certificate from you (individual borrowers and Self Help
Groups (SHGs) & Joint Liability Groups (JLGs) for all types of loans
unless a particular Government sponsored scheme itself provides
for obtention of “No Dues” Certificate.
r. We will endeavour to help you to overcome your difficulties by,
where desirable, drawing up a revival package, if such package is
considered desirable in the interest of both of us.
s. We will educate and guide the account holders the manner of
operating bank accounts either under normal branch or through
alternate channel including using devices under Information and
Communication Technology (ICT) enabled platforms.
54
t. We will undertake financial literacy activities to educate customers.
u. We will organize camps, stalls and town hall events to promote the

cause of financial inclusion in towns and villages with participation
by the target group.
v. We will introduce a mechanism in the bank to educate our staff
across levels about the financial inclusion efforts in the country in
general and in the bank, in particular.
w. We will put in place a system of regular / ongoing visits by the bank’s
officials to the unbanked areas where financial inclusion initiatives have
been undertaken to ensure end-implementation of the bank’s efforts.
x. We will endeavour to attend promptly to your complaints, if any,
and resolve them at the earliest.
y. In case you have any grievance about the bank or its Banking Outlet
/ BC / BF, we will make known the manner of lodging complaints
and the mechanism in the bank for resolution of complaints, as
also the Banking Ombudsman Scheme, in case your complaint is
not resolved or resolved to your satisfaction by the bank.
z. We will give wide publicity to the financial inclusion programme and
educate the customers about various products and services.
11. SENIOR CITIZENS AND DIFFERENTLY
ABLED PERSONS
a. We will make our best efforts to make it easy and convenient for our
special customers like senior citizens, differently abled and illiterate
persons to bank with us. This will include making convenient
policies, products and services for such applicants and customers.
b. We will endeavour to develop systems and procedures to improve
access to banking services by you.
c. We will endeavour to make physical access to our branches and ATMs
convenient to you. We will endeavour to provide ramps and hand
railings at bank branches and ATMs to make it easier for senior citizens

and differently abled persons to access various banking facilities.
d. We will sensitise our staff interacting with you to assist you in
carrying out your banking transactions.
e. In addition to all the other commitments made in this Code:
i. We will accord due priority to you. We will endeavour to
55
provide you personalized services for banking transactions and
redressal of grievances.
ii. We will endeavour to provide seating arrangements in the
banking hall.
iii. We will endeavour to provide you our services through a Single
Window mechanism.
iv. We will permit withdrawal of your funds, up to limits set
by you, by persons authorized by you on production of the
authorization letter and passbook.
v. We will endeavour to provide ‘Doorstep’ banking (pick up of cash /
instruments for credit to the account or delivery of cash / demand
drafts against issue of cheque / requisition in writing) in special
circumstances like ill health, inability to come to the branch, etc.
For senior citizens more than 70 years of age and differently
abled or infirm persons (having medically certified chronic
illness or disability) including those who are visually impaired,
we will make concerted effort to provide door step banking for
basic banking facilities such as pick up of cash and instruments
against receipt, delivery of demand drafts, submission of KYC
documents and Life Certificate at the premises / residence of
such customers.
vi. We will issue a pension slip to you (pensioners) containing

details of the pension credited to your account.
vii. We will endeavour to arrange to disburse the pension at the
doorstep, in special circumstances.
viii. We will accept the Life Certificate that is required to be
submitted by you (pensioners) at any branch of our bank by
maintaining centralized data for the same.
ix. We will guide relatives / parents of disabled persons on how
to appoint a legal guardian, under the National Trust Act,
1999, for disabled persons with autism, cerebral palsy, mental
retardation and multiple disabilities who can then open and
operate accounts for such persons.
x. We will ensure that all the banking facilities such as cheque
book facility, ATM facility, net banking facility, locker facility,
retail loans, credit cards etc., are invariably offered to the
visually challenged without any discrimination.
56
xi. We will render all possible assistance to the visually challenged
for availing various banking facilities.
xii. We will endeavour to arrange regular meetings so that you may
voice your concerns and benefit from collective experience.
12. PROTECTING YOUR ACCOUNTS
12.1 Secure and reliable banking and payment systems
a. We will make best efforts to ensure that you enjoy secure and
reliable banking and payment systems which you can trust.
b. We will install CCTV, wherever feasible, for close surveillance as
part of security arrangements.
12.2 Keeping us up to date

a. Please make sure you register your current address, phone number,
mobile phone number and / or e-mail id with us to enable us to
send you necessary alerts.
b. Please make sure you let us know, promptly, when you change your
name, address with supporting documents of change of name and
address proof as required, phone numbers and e-mail id so that we
are able to contact you when required.
12.3 Checking your account
a. We recommend that you check your statement or passbook
regularly. If there is an entry, which seems to be wrong, you should
tell us as soon as possible so that we can investigate the same.
Regular checks on direct debits and standing orders will help you
ensure the money is going where you want it to.
b. If we need to investigate a transaction on your account, you should
co-operate with us and with the police / other investigative agencies
if we need to involve them.
12.4 Taking care
Taking care of your cheques, passbook and other security information is
essential to help prevent fraud and protect your accounts. Please make
sure that you follow the advice given below:
a.
i. Do not keep your cheque book and cards together.
57
ii. Do not keep the blank cheque leaves signed.
iii. Do not give your account details, password or other security
information to anyone.
b. We will advise you what you can do to protect your card / cheque
book from misuse.

c. In the event your cheque book, passbook or ATM / Debit card has
been lost or stolen, or that someone else knows your PIN or other
security information, we will, on your notifying us, take immediate
steps to try to prevent these from being misused. You should also
change your PIN / Password if someone else knows them.
d. It is essential that you tell us as soon as you can if you suspect or
discover that your cheque book, passbook, card has been lost or
stolen or someone else knows your PIN, password or other security
information.
e. You could tell us about the loss of the above by phone at our 24 hour
toll free number given to you and send us a written confirmation to
that effect immediately. Alternatively, you may advise us by e-mail
to the address we have given you for this purpose.
f. You may be liable for misuses until the time that we have been notified.
12.5 Cancelling payments
a. To stop payment of a cheque or cancel standing instruction given,
or cancel a direct debit instruction, you must tell us in writing.
b. We will accept any instruction on withdrawal of mandate by you
without necessitating you to obtain the prior concurrence / approval
for withdrawal from the beneficiary / user institution.
c. It may not be possible to cancel payments if you do not give notice
of your decision to cancel.
d. Cancellation of credit card payments will be subject to other terms
and conditions as may be stipulated.
12.6 Liability for losses
If you act fraudulently, you will be responsible for all losses on your
account. If you act without reasonable care, which results in losses, you
may be responsible for them.

**********
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Annexure – Glossary
These definitions explain the meaning of words and terms used in the
Code. They are not precise legal or technical definitions.
Aadhaar Pay:
A mobile app which enables digital payments using biometric card.
App:
App is an abbreviated form of the word “application”. An application is
a software programme that is designed to perform a specific function
directly for the user.
ATM
An Automated Teller Machine [ATM] is a machine in which a customer
can use his card along with PIN to get cash, information and other
services.
Banking Ombudsman
An independent dispute resolution authority set up by the Reserve Bank
of India to deal with disputes that individuals and small businesses have
with their banks.
Banking Outlet
A fixed point service delivery unit, manned by either Bank’s staff or
it’s business correspondent where services of acceptance of deposits,
encashment of cheques / cash withdrawal or lending of money are provided
for a minimum of four hours per day for at least five days a week.
BHIM: Bharat Interface for Money is a mobile App developed by National
Payments Corporation of India (NPCI) based on the Unified Payment
Interface (UPI).

Card
A general term for any plastic card, which a customer may use to pay for
goods and services or to withdraw cash. In this Code, it includes debit,
credit, smart and ATM cards.
Credit Card
A Credit Card is a plastic card with a credit facility, which allows you to
pay for goods and services or to withdraw cash.
Cheque Collection Policy
Cheque Collection Policy refers to the policy followed by a bank in respect
59
of the various local and outstation cheques and instruments deposited
with the bank for credit to an account. The policy inter alia deals with
• cheque purchase requests
• timeframe for credit of cheques
• payment of interest in case of delay in collection of cheques
• instant credit of local and outstation cheques
• cheques / instruments lost in transit and charges for such collection.
Customer
A person who has an account [including a joint account with another
person or an account held as an executor or trustee or as a “Karta” of an
HUF, but not including the accounts of sole traders / proprietorships,
partnerships, companies, clubs and societies] or who avails of other
products / services from a bank.
Current Account
A form of demand deposit wherefrom withdrawals are allowed any
number of times depending upon the balance in the account or up to a
particular agreed amount.
Deceased Account

A Deceased account is a deposit account in which case either the single
account holder has deceased or in case of joint accounts one or more of
joint account holders has / have deceased.
Demat Account
A Demat account refers to dematerialised account and is an account in
which the stocks of investors are held in electronic form.
Deposit Accounts
• “Savings deposit” means a form of demand deposit which is subject
to restrictions as to the number of withdrawals as also the amounts
of withdrawals permitted by the bank during any specified period.
• “Term deposit” means a deposit received by the bank for a fixed period
withdrawable only after the expiry of the fixed period and includes
deposits such as Recurring / Double Benefit Deposits / Short Deposits
/ Fixed Deposits / Monthly Income Certificate / Quarterly Income
Certificate, etc.
• “Notice Deposit” means term deposit for specific period but
withdrawable on giving at least one complete banking day’s notice.
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Equity
Equity means a part of capital of a corporate entity which is represented by
the shares of the company whether in physical or in dematerialised form.
Electronic Clearing Service
It is a mode of electronic funds transfer from one bank account to another
bank account using the services of a Clearing House.
Fixed rate of interest
Fixed Rate of Interest on a loan means that interest rate is fixed for the
entire period of the loan or it may be revised after the first few years

depending upon the terms and conditions of loan.
Floating rate of interest
Floating Rate of Interest on a loan means that interest rate is not fixed
but is linked to Reference Rate and would vary with changes in the latter.
Guarantee
An undertaking in writing to assure the payment or performance of
another person’s debt or obligations in the event of a default by the
person primarily responsible for it.
Government Bond
Government bond means a security created and issued by the
Government for the purpose of raising a public loan.
Inoperative / Dormant Account
An inoperative / dormant account is a savings bank or current account
in which there are no transactions for over a period of two years.
IMPS
Immediate Payment Service is an interbank electronic instant mobile
money transfer service through mobile phones.
National Electronic Clearing Service
It is a system introduced by Reserve Bank of India (RBI) for electronic
fund transfer within India.
National Automated Clearing House
It is a web based platform to facilitate interbank, high volume electronic
transactions for bank, financial institutions, corporate and government.
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NEFT
National Electronic Funds Transfer (NEFT) system is a nationwide funds
transfer system to facilitate transfer of funds from one bank branch to
any other bank branch in the country.

Nomination facility
The nomination facility enables the bank to: make payment to the
nominee of a deceased depositor, of the amount standing to the credit
of the depositor; return to the nominee the articles left by a deceased
person in the bank’s safe custody; release to the nominee of the hirer, the
contents of a safe deposit locker, in the event of the death of the hirer.
Out-of-date [stale] cheque
A cheque, presented for collection, three months after the date of issue
of the cheque.
PAN (Permanent Account Number)
The Permanent Account Number is an all India unique number having
ten alphanumeric characters allotted by the Income Tax Department,
Government of India. It is issued in the form of a laminated card. It is
permanent and will not change with change of address of the assessee
or change of Assessing Officer.
Part time Banking Outlet
A Banking Outlet which provides delivery of service for a minimum of
four hours per day and for at least five days a week.
Password
A word or numbers or a combination on an access Code, which the
customer has chosen, to allow him to use a phone or Internet banking
service. It is also used for identification.
PIN [Personal Identification Number]
A confidential number, use of which along with a card allows customers
to pay for articles / services, withdraw cash and use other electronic
services offered by the bank.
PoS (Point of Sales)
PoS or Swipe Machine as it is popularly known is a technological

instrument provided to a Merchant Establishment (ME) to carry out the
sale of goods or services to customers in a cashless environment. All the
customer has to do is swipe his / her Debit, Credit or Prepaid Card
62
RTGS
The acronym ‘RTGS’ stands for Real Time Gross Settlement. RTGS
system offers the fastest means of transfer of funds through banking
channel. Settlement of transactions under RTGS takes place on one-toone
basis, which is termed as ‘Gross’ settlement and in ‘real time’ i.e.
without any waiting period.
Reference rate
It is the benchmark rate of interest of a bank to which interest on loans
sanctioned under floating rate of interest is linked. The Reference rate
of interest is determined / modified by individual banks in accordance
with their policies.
Senior Citizen
Senior Citizen is a person of over sixty years of age.
Settled account
A loan account which is settled under “One Time Settlement” (OTS)
Scheme offered by a Bank for repayment of overdues. This suggests
that while the borrower paid some amount it probably was not the full
amount originally agreed to. Such settled accounts are reported to CICs
for updating the credit history of the borrower.
Smart Card
A smart card is a plastic card about the size of a credit card, with an
embedded microchip which can process data. It provides a secure way
of identification, authentication and storage of data. It can be used for

telephone calling, electronic cash payments, and other applications.
Tariff Schedule
A schedule detailing charges levied by a bank on the products and
services offered by it to its customers.
Unified Payment Interface (UPI)
A payment system that allows money transfer by using predefined e-mail
id, between any two bank accounts by using a smart phone.
Unpaid Cheque
This is a cheque, which is returned ‘unpaid’ [bounced] by the bank.
63
Code of Bank’s Commitment to Micro and

Small Enterprises – August 2015
Introduction
This Code sets the minimum standards of banking practices that banks
will follow when they are dealing with Micro and Small Enterprises
(MSEs) as defined in the Micro, Small and Medium Enterprises
Development (MSMED) Act, 2006. It provides protection to you and
explains how banks are expected to deal with you in your day-to-day
operations and in times of financial difficulty.
The Code does not replace or supersede regulatory or supervisory
instructions issued by the Reserve Bank of India (RBI) and we will comply
with such instructions / directions issued by the RBI from time to time.
The provisions of the Code may have set higher standards than those
prescribed in the regulatory or supervisory instructions and such higher
standards will prevail, as the Code represents best practices agreed to
by us as our commitment to you.
In the Code, ‘you’ denotes the MSE Customer and ‘we’, the bank that
you deal with.
1.1 Objectives of the Code
The objectives of the Code are –
a. To give a positive thrust to the MSE sector by providing easy access
to efficient and appropriate banking services.
b. To promote good and fair banking practices by setting minimum
standards for dealings with you.
c. To increase transparency so that you can have a better understanding
of what you can reasonably expect of the services.
d. To improve our understanding of your business through effective
communication.
e. To encourage market forces, through competition, to achieve higher
operating standards.
f. To promote a fair and cordial relationship between you and us.
g. To ensure timely and quick response to your banking needs.
h. To foster confidence in the banking system.
The standards of the Code are covered by the key commitments in
Section 2.
2
Code of Bank’s Commitment to Micro and Small Enterprises – August 2015
1.2 Application of the Code
As defined in the MSMED Act, 2006, MSEs cover Micro and Small
Enterprises engaged in the manufacturing or production or processing
or preservation of goods and those engaged in providing or rendering of
services.
Unless it says otherwise, this Code will apply to all the products and
services listed below, under current regulatory instructions, provided by
our branches, subsidiaries, joint ventures or agents, whether across the
counter, over the phone, by post, through interactive electronic devices,
on the internet or by any other mode. However, all products discussed
here may not be offered by us.
a. Loans and other credit facilities which include fund based such as
cash credit, overdraft, cheque and bill purchase / discounting
(both inland and foreign), negotiation under reserve of documents
tendered under Letter of Credit (both inland and foreign) and
non-fund based such as establishment of inland and / or foreign

Letter of Credit (D/P or D/A), issuing of Guarantee (both inland
and foreign), inland or foreign bill or cheque for collection, Coacceptance
and avalisation of bills, buyer’s credit, etc.
b. Foreign Exchange Services as permitted under Foreign Exchange
Management Act, 1999 (FEMA) / Reserve Bank of India’s guidelines,
including money changing.
c. Third party insurance and investment products marketed through
our branches and / or our authorized representatives or agents.
d. Factoring services.
e. Merchant Services.
The meanings of words in bold black have been given in the Glossary.
2. KEY COMMITMENTS
2.1 Our Key Commitments to you
2.1.1 To act fairly and reasonably in all our dealings with you by
a. Providing banking facilities of receipt and payment of cash / cheques
at the bank’s counter.
b. Providing speedy and efficient credit and service delivery.
3
c. Meeting the commitments and standards set in this Code, for the
products and services we offer, and in the procedures and practices
we follow.
d. Making sure our products and services meet relevant laws and
regulations in letter and spirit and are appropriate to your needs.
e. Ensuring that our dealings with you rest on ethical principles of
integrity and transparency.
f. Operating secure and reliable banking and payment and settlement
systems.
g. Considering cases of financial difficulty sympathetically (see
paragraph 5.8 below).
2.1.2 To help you understand how our Financial Products and
Services work by
a. Giving you information about our financial products and services in
Hindi, English and the concerned regional language.
b. Ensuring that our advertising and promotional literature is clear
and not misleading.
c. Ensuring that you are given clear and full information about our
products and services, the terms and conditions and the interest
rates / service charges, which apply to them.
d. Ensuring that there is no mis-selling of our / third party products.
e. Giving information on the facilities provided to you, how you can
avail of these and whom and how you may contact for addressing
your queries / grievances.
2.1.3 To help you use your Accounts or Service by
a. Providing you regular appropriate updates.
b. Keeping you informed about changes in the interest rates, charges
or terms and conditions.
c. Displaying in our branches for your information:
i. The services we provide.
ii. Minimum balance requirement for Current Accounts and
charges for non-maintenance thereof.
4
iii. Name of the official at the branch whom you may approach if
you have a grievance.
iv. Name and address of the Regional / Zonal Manager / Principal

Nodal Officer (PNO) whom you can approach if your grievance
is not redressed at the branch.
v. Name, address and contact No. of Chief Vigilance Officer of our
Bank.
vi. Name and contact details of the Banking Ombudsman under
whose jurisdiction the branch falls.
vii. List of policies / documents available in booklet form.
d. Displaying on our website our policies on :
i. Deposits
ii. Cheque Collection
iii. Grievance Redressal
iv. Compensation
v. Collection of Dues and Security Repossession.
2.1.4 To deal quickly and sympathetically when things go wrong by
a. Correcting mistakes promptly and cancelling any bank charges that
we may have applied by mistake and pay compensation for any
financial loss you may have incurred due to our mistake in terms of
our compensation policy.
b. Acknowledging receipt of your complaint and handling your
complaints promptly.
c. Telling you how to take your complaint forward if you wish to do so.
d. Providing suitable alternative avenues to alleviate problems arising
out of technological failures of the bank.
2.1.5 To treat all your personal and business information as private
and confidential
We will treat all your personal and business information as private and
confidential subject to matters mentioned in paragraph No. 4 below.
5
2.1.6 To publicise the Code
We will:
a. Provide existing customers with a copy of the Code, free of cost, on
request, over the counter or by electronic communication or mail.
b. Provide all new customers with a copy of the Code, free of cost,
when credit facilities are granted to them.
c. Make available this Code for perusal at every branch and on our
website.
d. Ensure that our staff are trained to provide relevant information
about the Code and to effectively put the Code into practice.
e. Take other steps to increase awareness of the customers about the
Code and its provisions.
2.1.7 To adopt and practice a Non-Discrimination Policy By
Not discriminating on the basis of age, race, gender, marital status,
religion or disability, if any, of the promoter / proprietor/ partner/s of
the enterprise.
3. INFORMATION - TRANSPARENCY
You can get information on interest rates, fees and charges through any
one or more of the following:
a. Contacting our branches or help-lines.
b. Through our website.
c. Contacting our designated staff / help desk.
d. Referring to the Tariff Schedule (see paragraph 3.3 below), which
is available at our branches and on our website.
3.1 General
We will:
a. Give you information on all schemes offered by us specifically for

MSEs.
b. Give you information and explain the key features of our loan and
products, viz. cash credit, term loans, bill discounting / purchase,
guarantees, letters of credit and our fees and charges.
6
c. Endeavour to customize the product and service that you choose, to
suit your needs.
d. Tell you if we offer products and services in more than one way
(for example, through ATMs, on the Internet, over the phone, in
branches and so on) and tell you how to find out more about them.
e. Tell you what information we need from you to prove your identity
and address, for us to comply with legal, regulatory and internal
policy requirements.
3.2 Interest Rates
We will give you information on:
a. The interest rates which apply to your deposit and loan accounts.
b. In case of loans at fixed rate of interest, details of interest reset
clause, if any, in the loan agreement and the effective date thereof.
c. In case of loans at floating rate of interest, the reference rate to
which your floating rate will be linked and the premium or discount
applied to the reference rate for determining the actual rate of
interest on your loan.
d. Whether you have the option for converting your loan from fixed
rate to floating rate and vice versa and, if so, the charges therefor.
e. Periodicity at which we pay interest on your deposits or charge
interest on your loan accounts.
f. How we apply interest to your deposit and loan accounts and how
we calculate interest thereon.
3.2.1 Changes in Interest Rates
We will inform you of changes in interest rates on our loan products
and changes in the reference rate to which the floating rate of interest is
linked within a fortnight of the decision by any of the following means:
i. Letter
ii. e-mail
iii. SMS
We will also display this information on the Notice Boards in our branches
as also on our website.
7
3.3 Tariff Schedule
3.3.1 Fees & Charges
a. We will make known to you all charges applicable to the products
and services chosen by you.
b. We will ensure that our fees and service charges for various services
are approved by the bank’s Board or any competent authority, duly
authorized by the Board to take decisions in this regard and that
they would be reasonable and non-discriminatory for similar class
of customers.
c. We will place our Tariff Schedule on our website and make a copy
available at every branch for your perusal.
d. We will display on our website and in our branches a list of services
which are rendered free of charge.
e. We will also provide you information about the penalties leviable in
case of non-observance / violation of any of the terms and conditions
governing the product / services chosen by you.

f. We will not levy any charge on account of the bank / branch
upgrading its technology.
3.3.2 Changes in Fees & Charges
If we increase any fee or charge or introduce a new fee or charge, it will be
notified through statements of accounts / e-mail / SMS alerts / notice
board at branches, one month prior to the revised charges becoming
effective. This information will also be made available on our website.
3.4 Terms and Conditions
a. We will advise you the relevant terms and conditions for the
products/ services you have asked us to provide.
b. All terms and conditions will be fair and will set out respective
rights, liabilities and obligations clearly and as far as possible in
plain and simple language.
3.4.1 Changes to Terms and Conditions
a. We will tell you of changes in terms and conditions through any one
or more of the following channels one month prior to the revised
terms and conditions becoming effective:
8
i. Letter
ii. Statements of account
iii. SMSs
iv. e-mail
If the change is applicable to customers in general, such information
will also be made available on the Notice Boards in our branches
and our website.
b. Normally, changes will be made with prospective effect giving notice
of one month.
c. If we have made any change without notice, we will notify the
change within 30 days. If such change is to your disadvantage, you
may within 60 days of the notice, close your account or switch to
any other eligible account without having to pay revised charge or
interest.
4. PRIVACY AND CONFIDENTIALITY
a. We will treat all your personal and business information as private
and confidential (even when you are no longer a customer), and shall
be guided by the following principles and policies. We will not reveal
any information or data relating to your accounts, whether provided
by you or otherwise, to anyone, including other companies/ entities
in our group, other than in the following exceptional cases:
i. If we have to disclose the information as required by law or if
required by the banking regulator.
ii. If there is a duty towards the public to reveal the information.
iii. If our interests require us to give the information (for example,
to prevent fraud). However, we will not use this as a reason for
giving information about you or your accounts (including your
name and address) to anyone else, including other companies
in our group.
iv. If you authorise us to reveal the information.
b. We will not use your personal and business information for
marketing purposes by anyone including ourselves unless you
specifically authorize us to do so.
9
4.1 Credit Information Companies
a. When you apply for a credit facility, we will explain to you the role of

Credit Information Companies (CICs) as also the checks we may
make with them and the effect that the information they provide
can have on our decision to grant credit facilities to you.
b. When you avail of a credit facility from us, we will report the loan
details to CIC/s.
c. Updated information about credit availed from us will be reported
by us to the CIC/s at periodic intervals.
d. Information reported to CIC/s will also include personal debts you
owe us even when:
i. You have fallen behind in your payments
ii. The amount owed is in dispute
e. If your loan account has been in default and thereafter regularised,
we will update this information with the CIC/s in the next report.
f. We shall keep the CIC/s updated of your account details when your
account becomes ‘standard’ after a period of being ‘sub-standard’
and / or immediately after the account is regularized / closed to our
satisfaction.
g. We will on request, and on payment of prescribed fee, furnish you a
copy of the credit information obtained by us from the CIC.
h. We will explain to you the repercussions of adverse credit information
record with CIC and their impact on your ability to get credit in
future from us or other banks, when you make a settlement under
One Time Settlement with us and close your account/s with us.
5. LENDING
a. Our loan policy will be reflective of the objectives and spirit of the
National Policy and the Regulatory Prescription. We will endeavour
to provide facilities through a Single Window Mechanism.
b. We shall place the Policy relating to Lending to Micro and Small
Enterprises and Rehabilitation on our website and also make it
available to you at the branch for perusal. On request we will make
available a copy at a nominal charge.
10
c. We will inform you, if applicable, about the salient features,
including benefits available and charges payable and terms of
Credit Guarantee Scheme of Credit Guarantee Fund Trust for Micro
and Small Enterprises which is extended by eligible banks and is
popularly known as CGTMSE guarantee scheme for MSEs and
which is available at present to new as well as existing Micro and
Small Enterprises including Service Enterprises with a maximum
credit cap of `100 lakh (Rupees One hundred lakh) per borrower,
excluding retail trade, educational institutions, training institutes
and Self Help Groups (SHGs) as per the said Scheme.
d. Where a loan is eligible to be covered under any other credit
guarantee scheme or any subsidy schemes in force, we will explain
to you the features of such scheme and any requirement you will
need to fulfill.
e. We will endeavour to conduct programmes to enhance knowledge
on financial management of prospective borrowers.
f. We shall endeavour to organize meetings of MSE customers at
periodic intervals as a regular channel for exchange of ideas and
suggestions.
5.1 Application
We will:
a. Make available, free of cost, simple, standardized, easy to
understand, application form(s) for loans.

b. Provide you with a ‘check list’ of documents to be submitted
(compliant with legal and regulatory requirements) along with
the loan application form to enable you to submit the application
complete in all respects. If required, we will assist you in filling up
your loan application form.
c. At the time of making available the application form, provide you
information about the interest rates applicable along with the
annualized rates of interest and the fees / charges, if any, payable
for processing, pre-payment options and charges, if any, and any
other matter such as availability of CGTMSE guarantee, so that
a meaningful comparison with rates / fees of other banks can be
made and an informed decision can be taken by you.
11
d. Acknowledge the receipt of your loan application, whether submitted
manually or online, indicating therein the time frame within which
the application will be disposed off.
e. Normally collect all particulars required for processing the
application for credit facility at the time of application. In case we
need any additional information, we will contact you within seven
working days from receipt of application.
f. At the time of renewal of an existing loan facility, which has been
satisfactorily conducted, we will endeavour to obtain from you only
such additional information which are already not in our possession.
g. Give you the Most Important Terms and Conditions (MITC) governing
the loan / credit facility you have sought to avail.
h. Endeavour to enable you to know the status of your application.
i. Not charge any processing fee for loans up to `5 lakh, whether
sanctioned or not.
j. Dispose of your application for a credit limit or enhancement in
existing credit limit up to `5 lakh within two weeks; and for credit
limit above `5 lakh and up to `25 lakh within 3 weeks; and for credit
limit above `25 lakh within 6 weeks from the date of receipt, provided
your application is complete in all respects and is accompanied by
documents as per ‘check list’ provided.
5.2 Credit Assessment
a. We will:
i) Verify the details mentioned by you in your application by
contacting you through staff / agencies appointed by us for
this purpose at your business address / residence.
ii) Before lending you any money or increasing your overdraft or
borrowing limit/s, we shall carry out proper assessment of
your loan application undertaking detailed due diligence and
appraisal.
iii) Satisfy ourselves about the reasonableness of the projections
made by you.
iv) While assessing your credit requirement, take into account the
seasonality or cyclicality of your business and, where required,
fix separate peak and non-peak credit limits.
12
b. We may require the following information to enable us to make a
fair assessment:
i) Purpose of borrowing.
ii) Your business plan.
iii) Your business’ cash flow, profitability and existing financial

commitments supplemented, if necessary, by account
statements.
iv) Your personal financial commitments.
v) How you have handled your finances in the past.
vi) Information from Credit Information Companies.
vii) Ratings assigned by reputed credit rating agencies, if any.
viii) Information from others, such as other lenders / creditors.
ix) Market reports.
x) Wherever Plant & Machinery or immovable property is offered
as security, Valuation report and Legal Scrutiny report on the
same will be required from Engineer / Advocate empanelled by
us.
xi) Whether the customer is agreeable to cover the loan under
CGTMSE guarantee where applicable.
xii) Any other relevant information.
c. We will:
i) Not accept collateral security where prescribed for loans up to
`10 lakh or up to the limits specified by the Reserve Bank of
India, from time to time.
ii) Consider, if applicable, providing collateral free loans up to
`25 lakh if we are satisfied about your track record and financial
position being good and sound.
iii) Seek your consent, if applicable, to cover the credit facilities
sanctioned to you within credit cap of `100 lakh (Rupees One
hundred lakh) under the Credit Guarantee Scheme of Credit
Guarantee Fund Trust for Micro and Small Enterprises and
accordingly will not insist on collateral security and / or
Third party Guarantee for facilities within a maximum limit of
13
`100 lakh (Rupees One hundred lakh) if the facility approved
by us is an eligible facility and has been covered under the
CGTMSE scheme and for which you have agreed to.
iv) Provide you (manufacturing units) working capital limits
computed on the basis of a minimum of 20 per cent of your
projected annual turnover.
v) Consider your request for suitable enhancement in the working
capital limits in cases where the output exceeds the projections
or where the initial assessment of working capital is found
inadequate and you have provided necessary evidence therefor.
d. Guarantees
If you want us to accept a guarantee or other security from someone
else for your liabilities, we will ask you for your permission to give
confidential information about your finances to them or to their
legal adviser. We will also
i. Encourage them to take independent legal advice to make
sure that they understand their commitment and the possible
consequences of their decision (where appropriate, the
documents we ask them to sign will contain this recommendation
as a clear and obvious notice).
ii. Tell them that by giving the guarantee or other security they
may become liable for the credit facilities availed of by your
firm / you.
iii. Give a copy of the terms and conditions of the loan sanctioned/
loan agreement to the guarantor(s).
iv Send a copy of the annual statement of account of your term

loans / demand loans to the guarantor(s) of the loan.
5.3 Sanction / Rejection
We will:
a. Not insist on any deposit as ‘quid pro quo’ for sanctioning credit
facility/ies.
b. While offering you an overdraft, or an increase in your existing
overdraft limit tell you if your overdraft is repayable on demand or
otherwise.
14
c. Put down in writing the terms and conditions and other caveats
governing credit facilities agreed to and duly certify the same and
give you a copy thereof.
d. Supply, at our cost, authenticated copies of all the loan documents
executed by you, with a copy each of all enclosures quoted in the
loan document and the list thereof.
e. Convey in writing the reasons for not acceding to your request for a
loan or credit facility.
f. Follow a rating system, the parameters of which will be shared with
you.
g. Permit prepayment of fixed rate loans up to `50 lakh without levying
any prepayment penalty.
h. Permit prepayment of floating rate loans without levying any
prepayment penalty.
i. Ensure disbursal of the loan sanctioned within two working days
from the date of compliance with all terms and conditions governing
such sanction.
j. Provide you an amortization schedule (schedule of repayment of
principal and interest for the duration of the loan).
k. Ensure periodic review and renewal of facility as per terms and
conditions in the sanction letter given to you.
5.4 Central Registry
When you avail of a loan facility involving immovable property, as primary
or collateral security, we will advise you the functioning of the Central
Registry and the fact that their records will be available for search by
any lender or any other person desirous of dealing with the property.
5.5 Post Disbursement
We will:
a. Refrain from interference into your business affairs except as may
be required in terms of sanction of loan, loan agreement or when
new / adverse information comes to our knowledge.
b. Endeavour to be constructive in our monitoring process and
sympathetically deal with genuine difficulties that you may face in
your dealings with us.
15
c. Require you to inform us of any subsequent credit facility you avail
of from any other lending institution.
d. Obtain the following information from you on an ongoing basis:
i) Stock and other statements at periodical intervals.
ii) A comparison of the forecasts made in your business plan with
the actual results.
iii) Progress on important aspects of your business plan.
iv) Annual accounts such as Balance Sheet and Profit and Loss
Account and other supporting documents.
v) Age-wise break up of your creditors and debtors and the

amounts involved.
e. Allow drawals against your limits as per usual safeguards.
f. If your business circumstances change, talk to you about any new
information we will need from you.
g. Convey our consent or otherwise within two weeks of receipt of a
request for transfer of the borrowal account, either from you or
from the bank / financial institution that proposes to take over the
account.
h. Release all securities immediately on repayment of loan and in any
case within fifteen days of the repayment of all dues agreed to or
contracted. If any right to set off is to be exercised for any other
claim, we will give due notice with full particulars about the other
claims and retain the securities / documents/title to mortgaged
property till the relevant claim is settled / paid.
i. Effect pledges/deliveries on the same day of receiving your request.
j. Grant you increase in the drawing power, subject to sanctioned
limit, within 24 hours of lodgment of security.
k. In addition to providing periodical statements for operating
accounts, provide you with an annual statement of account of your
term loans / demand loans.
l. Provide you with the loan statement, more often, if required, at a
cost which will be indicated in the Tariff Schedule.
m. Monitor the progress made by you through any or more of the
following modes:
16
i) Scrutinising periodic statements of stocks you hold.
ii) Watching the transactions in your account with us.
iii) Visits by either our staff or authorised representative to your
premises for verification of the stocks and / or assets financed.
iv) Obtain wherever necessary market reports on how your
business is going on.
n. If your account is continuously irregular and shows signs of
becoming a Non-performing Asset [NPA], endeavour to send you
timely alerts on not only transaction related but also on other
related critical parameters through letter / mail or SMS including
the status of your account.
o. Give you notice, sufficiently in advance, if we decide to recall /
accelerate payment or performance under the agreement or seek
additional securities.
5.6 Non-Fund Based Facilities
We may offer non-fund based facilities for purchase of capital equipment
or raw materials / consumables, etc. through issuance, advising,
confirmation of Letters of Credit (LCs) or by issue of Guarantees. Facilities
such as Letters of Credit and Guarantees are governed, besides national
laws, by relevant rules and applicable publications of the International
Chamber of Commerce (ICC) brought out from time to time.
5.7 Insurance
a. We will inform you if we, as agents of any insurance company, offer
any type of insurance.
b. We will ensure that we have your written consent to avail of these
insurance products.
c. In case of securities lodged with us for loans availed by you, we will
not insist on your obtaining insurance cover from any particular
provider.
5.8 Financial Difficulties

How we can help
5.8.1 We will consider cases of financial difficulty sympathetically and
positively. You will usually identify problems first and should let us
17
know about these as soon as possible. If we become aware of problems,
we will let you know of it in writing. If speedy action is warranted, we
may contact you by phone, fax or e-mail.
5.8.2 The following are a few examples of what will be of concern to us,
particularly when you do not inform us:
a. Delay in commencement of commercial production and there is cost
overrun etc.
b. Inordinate delays in submission of periodic information like stock
statement, renewal data, audited financial statements, etc.
c. High incidence of cheque returns in your Cash Credit / Current
Accounts.
d. Exceeding your sanctioned limits frequently.
e. Large changes in your business turnover without proper clarification
from you.
f. Any stoppage/ suspension of work for an unreasonably long time.
g. The business is incurring loss.
h. Sudden loss of a business partner or co–promoter or a key customer
or employee.
i. Change in the primary activity or sale of a large part of your business.
j. Use of credit facility/ies for purposes other than those agreed
with us or diversion of the funds for purposes other than intended
business.
k. Not servicing interest at prescribed intervals.
l. Failure to adhere to the agreed loan repayment schedule.
m. Bills drawn by you on your customers are returned unpaid
frequently.
n. Not honouring bills drawn on you by your suppliers frequently.
o. Guarantees issued by us on your behalf are frequently invoked.
p. Increase in book debts / debtors out of consonance with turnover
in your account.
q. Sale proceeds are not routed through your account.
r. Non-compliance with conditions set out in the loan agreement.
18
s. The agreed information is not furnished on time.
t. Any creditor bringing a winding-up petition or other legal action
against your business.
5.8.3 We will do all we can to help you overcome your difficulties. With
your active co-operation, we will develop a plan for dealing with your
financial difficulties and we will tell you, in writing, what we have agreed
to.
5.8.4 We will endeavour to provide you with credit counseling services
so that we can be of help to you in dealing with your financial problems.
5.8.5 a. If you are in difficulties, we will work with your advisers, if you
ask us to. It is important that you act in good faith, keep us
informed about developments, keep to your agreement with us
and are prepared to make necessary changes early enough.
b. We may ask you for more financial information / commitments
to help us work together to understand your problems.
5.9 Nursing Sick MSEs and Debt Restructuring
5.9.1 We will consider a nursing / debt restructuring programme in

case any of your borrowal account remains NPA for three months or
more or there is erosion in the net worth due to accumulated losses to
the extent of 50% of net worth during the previous accounting year.
5.9.2 For considering your request for rehabilitation / debt restructuring
we will:
a. Examine whether your unit / project is viable / potentially viable
and advise you about our view within three months of the unit
becoming sick.
b. If your unit is found to be viable / potentially viable, initiate timely
corrective action for its revival.
c. In case your unit is potentially viable and is under consortium /
multiple banking arrangement, and if we have maximum share of
outstanding, work out the restructuring package.
d. Work out a rehabilitation package which will also include your
contribution in accordance with RBI stipulations and implement
the same within a maximum period of 60 days from the date of
receipt of your request.
19
e. In case your unit is declared unviable, you will be given an
opportunity to present your case before our next higher authority.
5.9.3 If we do not think that the rehabilitation plan will succeed, we
will explain the reasons why and help you and your advisors consider
other options.
5.9.4 If we cannot reach an agreement, we will make it clear why we feel
unable to continue to support you and tell you when we will withdraw
our financial support.
5.10 One Time Settlement
a. In case the bank comes out with a “One Time Settlement” scheme,
wide publicity will be given by placing it on the bank’s website and
through other possible means of dissemination.
b. In case we offer you a One Time Settlement (OTS) for repayment of
dues, we will explain to you the details of the offer.
c. We will spell out, in writing, the terms and conditions of the OTS
offered to you.
d. We shall allow reasonable time to you to submit the application and
make payment of the dues so that you may avail of the benefits of
the scheme.
e. If the OTS proposal is agreed to, we will explain to you the
implications of such settlement on your credit history maintained
by the Credit Information Companies (CICs).
5.11 Securitisation of Loans / Dues
a. In case we securitise (sell) your loans / dues to another entity, we will
advise you the name and contact details of such entity along with
the amount of your loan / dues transferred to them. In the normal
course, loans / dues, which are not standard are considered for sale
to an Asset Reconstruction Company (ARC) through assignments.
b. In such a case, you will be liable to pay the entire amount due to the
entity to which the loan / dues have been transferred.
c. The entity to which the loan / dues have been transferred will
continue to report your credit information to the CICs.
d. We will endeavour to assist you in case you have a grievance against
the entity to which your loan / dues have been transferred by us.
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6. COLLECTION OF DUES AND POLICY ON

SECURITY REPOSSESSION
6.1 Collection of Dues
a. Whenever we give loans, we will explain to you the repayment
process viz. amount, tenure and periodicity of repayment. However,
if you do not adhere to repayment schedule, a defined process in
accordance with the laws of the land will be followed for recovery of
dues.
b. We will have a Board approved policy for Collection of Dues and
Security Repossession as also appointment of Recovery Agents.
c. All relevant laws, regulations, guidelines and conditions of approval,
licensing or registration will be taken into account when appointing
Recovery Agents.
d. We will ensure that our Recovery Agents are properly trained to
handle their responsibilities with care and sensitivity. We will also
ensure that they do not exceed their brief.
e. The process will involve reminding you by sending you a notice or by
making personal visits before any decision to repossess the security
is taken.
f. In case of default, we may refer the case to the recovery agent. We
will inform you that recovery proceedings have been initiated.
g. On initiating recovery proceedings, we will also tell you that in case
you have a complaint to make in this regard you may contact our
helpline number.
h. We will investigate your complaints about unfair practices by our
recovery agents. In the event of receipt of any complaint from
you that the bank’s representative / recovery agent has engaged
in any improper conduct or acted in violation of the Code, we will
investigate the matter and communicate the findings to you within
one month from the date of receipt of complaint and wherever
justified, compensate you for losses, if any.
6.2 Policy on Collection of Dues and Security Repossession
We will follow the collection of dues and security repossession policy in
consonance with the law. The policy will be displayed on our website and
a copy of the same will be made available at our branches for perusal.
21
a. Our collection policy is built on courtesy, fair treatment and
persuasion. We believe in fostering customer confidence and longterm
relationships. As part of our policy -
i. We will provide you with all the information regarding your
dues and will endeavour to give sufficient notice for payment of
dues.
ii. We will write to you when we initiate recovery proceedings
against you and will inform you the name of the recovery
agency/ agent, to whom your case has been passed on, as also
their address and telephone numbers.
iii. We will post details of the recovery agency firms / companies
engaged by us on our website.
iv. We will also make available, on request, further details about
the recovery agency firms/companies at our branches.
v. Our staff or any person authorized to represent us in collection
of dues or / and security repossession will identify himself /
herself and display the authority letter issued by us and upon
request display to you his / her identity card issued by us or
under our authority.
vi. We will have a system of checks before passing on a default

case to collection agencies so that you are not harassed on
account of lapses on our part.
b. All the members of the staff or any person authorised to represent
our bank for collection or / and security repossession who would be
subjected to due diligence, will follow the guidelines set out below:
i. You would be contacted ordinarily at the place of your business/
occupation and, if unavailable thereat, at your residence or
in the absence of any specified place, at the place of your
authorized representative’s choice.
ii. Their identity and authority to represent us would be made
known to you.
iii. Your privacy and dignity would be respected.
iv. Interaction with you would be in a civilised manner.
v. Normally our representatives will contact you between 0700
hrs and 1900 hrs, unless the special circumstances of your
business or occupation require otherwise.
22
vi. Your requests to avoid calls at a particular time or at a particular
place would be honoured as far as possible.
vii. Time and number of calls and contents of conversation would
be documented.
viii. All assistance would be given to resolve disputes or differences
regarding dues in a mutually acceptable and in an orderly
manner.
ix. During visits to your place for dues collection, decency and
decorum would be maintained. Our officials / agents will not
resort to intimidation or harassment of any kind, either verbal or
physical against any person, including acts intended to humiliate
you or intrude into the privacy of your family members, referees and
friends, making threatening and anonymous calls or making false
and misleading representations.
However, it is your responsibility to keep updating your contact
details. In case the bank is still unable to contact you, the bank
will access information available from public sources and approach
your friends / relatives to trace you.
x. Inappropriate occasions such as bereavement in the family or other
calamitous occasions would be avoided for making calls / visits to
collect dues.
**********
23
Glossary
Avalisation
To add an Aval is the specific endorsement on a Bill of Exchange or Draft
by a bank, which guarantees payment, should the Drawee (the Importer)
default on payment of the bill at maturity.
Bank Guarantee
Bank Guarantee is a promise by a bank on behalf of its customer to a
third party to pay an amount specified in the guarantee deed in case the
customer fails to perform the obligation as stipulated in the deed.
Banking Ombudsman
Banking Ombudsman is an independent dispute resolution authority
set up by the Reserve Bank of India to redress customer complaints
against deficiency in certain banking services.
Bills

Bills are financial negotiable instruments such as Bills of Exchange or
Promissory Notes. Bill of Exchange is issued by a seller to his buyer
directing him to make payment for the goods supplied/ services rendered.
Bill in the form of a promissory note is issued by a buyer to his seller
undertaking to make payment for the goods received/ services rendered.
Bill Purchase / Discounting
Bill purchase / discounting are modes of extending credit to the seller of
goods who has raised demand / usance bill of exchange. Demand bills
are purchased and usance bills are discounted.
Cash Credit / Overdraft
Cash credit/overdraft is a form of credit facility in which a borrower is
sanctioned a pre-arranged limit with the freedom to borrow as much
money as he requires. In case of flow of credit to the account, he can
withdraw afresh subject to the limit sanctioned. As such, the limit works
as a revolving line of credit. Bank charges interest on the outstanding
balances.
24
Compensation Policy
Compensation Policy refers to the policy followed by a bank for
compensating its customers for the financial losses incurred by them
(the customers) due to the acts of omission or commission on the part
of the bank.
Credit facilities/ Bank Loan
Credit facilities from the bank may be in the form of a term loan or
in the form of overdraft or cash credit that is extended by a bank to
its customer for a specified period and he is charged interest on the
outstanding balances.
Credit Information Companies (CICs)
Credit Information Companies are companies formed and registered
under the Companies Act, 1956 and which have been granted a
Certificate of Registration by the Reserve Bank. These companies are
empowered to collect data on credit from credit institutions who are its
members and disseminate the same after analysis, to its members and
specified users.
Factoring
Factoring is a financial option for the management of receivables. It is
the conversion of credit sales into cash.
Fixed rate of interest
Fixed Rate of Interest on a loan means that interest rate is fixed for the
entire period of the loan or it may be reset at specified intervals as per
the reset clause stipulated in the terms and conditions of the loan.
Floating rate of interest
Floating Rate of Interest on a loan means that interest rate is not fixed
but is linked to a Reference Rate and would vary with changes in the
latter.
Guarantee
A promise given by a person.
25
Letter of Credit
A letter of credit is a document issued by a bank, which usually
provides an irrevocable undertaking for payment to a beneficiary against
submission of documents as stated in the Letter of Credit.
Micro and Small Enterprises
Micro and Small Enterprises are those enterprises engaged in

manufacturing or rendering services.
A micro enterprise is defined as:
An enterprise engaged in the manufacture or production of goods
pertaining to any industry where the investment in plant and machinery
does not exceed `25 lakh
or
An enterprise engaged in rendering services where investment in
equipment does not exceed `10 lakh.
A small enterprise is defined as :
An enterprise engaged in manufacture or production of goods pertaining
to any industry where the investment in plant and machinery is more
than `25 lakh but does not exceed `5 crore
or
An enterprise engaged in rendering services where investment in
equipment is more than `10 lakh but does not exceed `2 crore.
Net worth
Net worth means sum of Capital and free reserves minus accumulated
losses and intangible assets.
Non-Fund based facility
Non-fund based facilities are such facilities extended by banks which
do not involve outgo of funds from the bank when the customer avails
the facilities but may at a later date crystallise into financial liability if
the customer fails to honour the commitment made by availing these
facilities. Non-fund based facilities are generally extended in the form of
Bank Guarantees, Acceptances and Letters of Credit.
26
Non Performing Asset
A Non Performing Asset (NPA) is a loan or an advance where
i) interest and/ or installment of principal remain overdue for a
period of more than 90 days in respect of a term loan.
ii) the account remains ‘out of order’ in respect of an Overdraft/Cash
Credit (OD/CC).
iii) the bill remains overdue for a period of more than 90 days in the
case of bills purchased or discounted.
‘Out of Order’ status
An account should be treated as ‘out of order’ if the outstanding balance
remains continuously in excess of the sanctioned limit/drawing power.
In cases where the outstanding balance in the principal operating
account is less than the sanctioned limit/drawing power, but there are
no credits continuously for 90 days as on the date of Balance Sheet or
credits are not enough to cover the interest debited during the same
period, these accounts should be treated as ‘out of order’.
Overdue
Any amount due to the bank under any credit facility is ‘overdue’ if it is
not paid on the due date fixed by the bank.
Payment and Settlement System
Payment and Settlement System means financial system creating the
means for transferring money between suppliers and user of funds
usually by exchanging debits or credits among financial institutions.
PIN
A confidential number, use of which along with a card allows customers
to pay for articles / services, withdraw cash and use other electronic
services offered by the bank.
Reasonable
Governed by or being in accordance with reason and sound thinking;

being within the bounds of common sense; not excessive or extreme.
27
Reference rate
It is the benchmark rate of interest of a bank to which interest on loans
sanctioned under floating rate of interest is linked. The Reference rate
of interest is determined / modified by individual banks in accordance
with their policies.
Repossession
Repossession is the process by which a creditor with a loan secured on
house or goods (e.g. car) takes possession of the security, if the debtor
does not repay as per the terms of the loan agreement.
Rehabilitation Package
Rehabilitation package is the package drawn for the rehabilitation of
a sick unit. The package has to be drawn in accordance with the RBI
stipulations and it usually consists of
i) Working Capital with relaxation in the rate of interest in terms of
regulatory guidelines
ii) Funded Interest Term Loan
iii) Working Capital Term Loan
iv) Term Loan
v) Contingency Loan Assistance
Security
Represents assets used as support for a loan or other liability. In the
event of the borrower defaulting on the loan, the lender bank can claim
these assets in lieu of the sum owed.
Primary security is the asset created out of the credit facility extended
to the borrower and / or which is directly associated with the business/
project of the borrower for which the credit facility has been extended.
Collateral security is any other security offered for the said credit facility.
For example, hypothecation of jewellery, mortgage of house, etc.
Services
i) In respect of small and micro service enterprises, services refer
to small road and water transport operators, small business,
professional and self-employed persons, and all other service
enterprises.
28
ii) Services rendered by the banks include various facilities like
remittance (issue of DDs, MTs, TTs, etc.), receipt and payment of
cash, exchange of notes and foreign exchange etc. provided by the
banks to the customers.
Sick Unit
Sick unit refers to a unit whose borrowal account remains NPA for
three months or more or there has been erosion in net worth due to
accumulated losses to the extent of 50% of the net worth during the
previous accounting year.
Tariff Schedule
The schedule containing charges levied by a bank on the products and
services offered by it to its customers.
**********
29
NOTES
30

NOTES
The Code has been evolved by the Banking Codes and
Standards Board of India (BCSBI) in consultation with the
Reserve Bank of India, Indian Banks’ Association and Member
Banks. The central objective of the Code is to promote good
and fair banking practices, set minimum standards, increasing
transparency, achieving higher operating standards and above
all, promoting cordial banker-customer relationship which would
foster confidence of the common man in the banking system.
BCSBI was set up in February 2006 as an autonomous institution
“to monitor and ensure that the Banking Codes and Standards
adopted by the banks are adhered to in true spirit while delivering
their services”. BCSBI has evolved two sets of Codes – Code of
Bank’s Commitment to Customers and the Code of Bank’s
Commitment to Micro and Small Enterprises. These Codes
have been adopted by member banks of BCSBI which include
scheduled commercial banks, urban cooperative banks and
regional rural banks. BCSBI by its design and mandate is not a
grievance redressal forum. However, BCSBI looks at complaints
with a view to identifying systemic deficiencies, if any, in terms
of gaps in policies, procedures and practices at the banks and
initiates action for their rectification.
Referance BCSBI website

www.bcsbi.org.in
BCSBI recollected question and Exam Tips:
Very basic questions from IIBF prescribed book

Kindly visit BCSBI site for Latest Update’s
QUESTIONS ASKED IN TODAYS BCSBI.. ( based on memory) PART 2
1. Case studies based on nominee
2. two nominees applicable in which clause.. E OR S.. or F OR S
3.BSCBI is compulsry for banks to follow or not
4. educational. loan for 25 lakhs with 10 percnt margin... how much you insist for collateral
5. same. partners for different companies... wthr right of sett off can be applied or not for one of the firms
debts
6. questions on HUF KARTA
7.BANKS CHALLENGE IN IMPLEMENTING DIGITAL TECHNOLOGY
8.banks time for calling customers over phone
9. mobile phone ettiquete
10.norms.for customers to approach BCSBI for guidance for geting loan.. a the limit of the loan
11.questions on customer orientation
12. under which sectn of NI act cheques has to be paid by the bank.... to be continued
1. Customer is defined in
a. RBI Act b. NI Act c. BR Act d. KYC Policy

2. Partnership firms M/s ABC and M/s CBA has same three partners. Account of M/s ABC is overdrawn
by Rs. 75,000 and the other firm’s account has Rs. 90,000 as credit balance. Can bank use the right of
set off? (2 marks)
a. Can use as same partners b. Cannot set off as two different firms
Don’t remember the other options
3. In which of these circumstances bank should not disclose customer details?
a. Request under Banker’s Books Evidence Act 1891
b. Under Section 133 of Income Tax Act
c. When asked by State /Central Govt official
d. In public interest
4. A non-customer deposits Rs. 3000 to be credited to the account of Mr. Z in another station by NEFT.
He had wrongly mentioned the account number and the amount is now in Bank’s suspense Account.
What is the relationship between bank and Z?
a. Debtor-Creditor
b. Trustee etc
5. A document duly stamped and given by a customer authorising another person to act on his behalf
a. Power of attorney
b. Mandate
6. Incorrect statement about HUF
a. Lady member can perform the role of Karta
b. Karta and coparceners may possess self-acquired properties other than HUF property and these can
be attached for HUF dues
c. On death of a coparcener, his share may be handed over to his wife, daughters and other female
relatives
7. Two of three trustees approach bank to open an account and allow the two of them to operate as the
third trustee is abroad. As per trust deed, trust is to be jointly operated by three of them
a. Get power of attorney from third trustee
b. Account cannot be opened since trust deed mandates operation by three trustees.
8. Borrowing powers of the Board of Directors in a company are mentioned in which document?
a. Articles of Association
b. Memorandum of association
c. Certificate of Incorporation
d. Board resolution
9. In case of fixed deposit, interest can be charged as
a. Daily basis on customer request
b. Applied monthly or bimonthly as required provided that compounded amount does not exceed the
amount to be paid quarterly
c. Any periodicity requested by customer
d. Only at the end of maturity
10. FCNR accounts can be opened in ---------------- and for a period of --------
a. Any freely convertible currency with period of 5 years
b. Any freely convertible currency with period of 3 years
11. Full form of DICGC
12. Amount eligible to be transferred to DEAF
a. Any amount unclaimed in deposit account for a period of 10 years or more
b. Any amount remaining unclaimed in any account for a period of 10 years
c. Both a and b
d. Any amount unclaimed for a period of two years or more
13. In order to meet implied needs of a customer, ------------- is required from banker
a. Creativity and presence of mind
14. Good delivery constitutes which all elements ?
a. Speed, timeliness , accuracy, courtesy and concern
15. Transaction cap of mobile banking for purchase of goods and services
a. As per each bank’s rule
16. Mobile banking can be provided through
a. Mobile banking App

b. USSD
c. SIM Kit
d. SMS service
17. An asset can be classified as NPA when
a. Interest or Principal is overdue for 90 days or more
b. When CC Account is out of order for 180 days
c. When bill of exchange not honoured for 120 days etc
18. Maximum amount that can be granted under Skill Loan Scheme?
1.5 lakhs
19. In order to set up extension counter in a hospital in a Tier I city, bank needs to take approval from
a. RBI
b. No permission required
c. Ministry of Finance etc
20. Demat account can be used to hold
a. Shares
b. Mutual funds
c. Debentures
d. All of these
21. Demat account cannot be use to hold
a. Deposit to be handed over to broker
b. Exchange traded funds
c. Mutual funds etc
22. Other negotiable instruments
a. Interest warrant
b. Bankers draft etc
23. Which section of NI Act says that Bank should honour customer’s cheques?
a. Section 31
24. Not a characteristic of negotiable instruments.
a. in writing
b. date of payment must be certain
c. Transferrable
d. Duly stamped
25. Which one of the following is not a structural difference between marketing of goods and services?
a. Intangibility
b. inseparability
c. Homogeneity
d. perishability
26. Marketing Mix does not contain
a. Product
b. Price
c. Place and promotion
d. Image of the organisation
27. Which one of the following are not permitted to carry out regular transactions for customers?
a. Business correspondents
b. Business facilitators.
28. Which one of the following is not a difference in marketing goods and services?
a. Services are produced and consumed simultaneously
b. Services are intangible
c. Services provided are uniform
29. Constraints in digital banking
a. Embracing of new technology
b. Customer education
c. Safe and friendly environment
Choices are combinations of above
30. Biometric authentication in micro ATMS done by
a. Business Correspondents

b. UIDAI by biometric association with its database
31. In mobile banking for debit transactions following checks are made
a. Face to face interaction with users
b. Two factor authentication
c. End to end encryption of mPIN
Choices are combinations of above
32. Estimates committee has made recommendation that succession certificate should not be insisted
where amount of credit to the depositor does not exceed Rs. 25,000. What is the correct instruction?
a. If nomination/Survivor clause is present then succession certificate should not be insisted for any
amount.
33. Account opened with Anyone or survivor clause, all three of the account holders die together in an
accident, the nominee has produced the death certificate and amount outstanding in account is Rs.
20,000. Action to be taken by bank
a. Ask nominee to provide Succession certificate
b. Ask nominee to provide letter of administration
c. Probate to be given
d. Transfer the money without asking for documents (a) to (c).
34. As per Goiporia committee, Enquiry or May I Help You counter should be present in
a. Head Office
b. Regional Office
c. All Urban and Metro branches
d. All branches except very small branches
35. ---------------is a matrix of different components like source of funds, level of income, volume and
frequency of transactions, origin and destination of funds etc.
a. Transaction profile
b. Organisation Profile
c. Marketing Profile etc
36. Main grievances of small depositors does not include
a. Difficulty in opening of account
b. Delay in updating of passbook
c. Difficulty in closing of account
d. Account being classified as dormant/inoperative without any notice.
37. What is meant by Grievance Escalation System?
If the customer is not satisfied with the reply offered by bank, then he can approach higher authorities for
redressal of grievances
38. If branch manager is not able to respond to a complaint within how many days should he escalate the
matter to regional office?
7 days
39. In order to reduce the complaints filed to Banking Ombudman, what is suggested?
Appointment of internal Ombudsman
40. What all functions does not fall under customer service committee of the board?
a. Triennial audit of customer satisfaction surveys
b. Formulation of Comprehensive Deposit Policy
c. Annual Survey of customer satisfaction
d. Salary increase to employees for better customer service
41. Which of the following is not part of mandatory displays in branches?
a. Information available in booklet form
b. Details of CEO of the bank
c. Banking Ombudsman details
d. Details of Regional Manager etc
42. What does not come under COPRA Act?
a. Right against unfair trade practices
b. Right to have access to variety of goods
c. Right to free education
43. Which of the following needs are most important for a person?
a. Emotional needs

b. Interpersonal needs etc
44. Which are the three interpersonal needs?
a. Need for inclusion, Need for control and Need for affection
45. What is meant by encoding of message ?
Sender needs to use the appropriate language or expression
46. Correct order for communication.
a. Conceiving the message, Encoding the message, decoding the message and providing feedback
47. Which of the following about BCSBI is wrong?
a. Membership in BCSBI is compulsory
b. Membership is voluntary
c. Its an independent and autonomous body
d. Registered as society
48. Who has authority to approve research activities in BCSBI?
Governing Council
49. Function of Chief Executive Officer in BCSBI
a. Preparation of annual budget for submission to the Society
b. Sanction expenditure and investments of BCSBI
c. Financial and managerial powers etc
50. Who is the raison d’etre (main purpose) of BCSBI ?
a. RBI
b. common man
c. Customer service
51. BCSBI modelled on basis of which country?
UK
52. BCSBI rating of member banks is using a scoring scale of
a. High, Above average, average and below average
53. In order to get credit counselling from BCSBI which is correct
a. A fee has to be paid
b. Can apply only through member banks
c. Concerned bank is free to accept the debt restructuring plan in full or with modifications
54. Customer of a bank not a part of BCSBI can escalate complaint to
a. BCSBI
b. Banking Ombudsman
c. Customer Service Department of RBI
55. Which of the following not included under Code of Bank’s Commitment to Customers?
a. Deposit accounts
b. Remittances within India
c. Foreign Exchange services
d. Merchant banking
56. BCSBI puts following obligations on the customers?
a. No obligations
b. Obligation of customers varies from bank to bank
57. Objectives of Code of Bank’s commitments to customers?
a. Fair treatment of customers
b. Increase transparency
c. foster confidence in banking system
Choices are combinations of three
58. As per BCSBI Code regarding Do Not Call registry (Correct One)
a. Bank will not transmit unsolicited commercial information if you have registered with ‘Do not call
registry’
b. Bank will enrol customer in Do Not Call Registry after 6 months of opening account etc
59. Change in interest rate on loan products will be informed within
a. Fortnight
b. One-month etc
60. As per BCSBI Code, if there is any change in fee or new fee is introduced, it will take effect
a. Retrospectively if needed

b. revised charges retrospectively and new charges after one month
c. Prospective effect after giving notice of one month
61.As per BCSBI code, In case of revision in fees it will be communicated to customer by( Incorrect option)
a. Account statements
b. Email and SMS alerts
c. TV advertisements
d. Notice board at branches
62. As per BCSBI code regarding privacy of customer(Incorrect option)
a. Bank will treat personal information as private and confidential till he is a customer of the bank
b. Bank will treat personal information as private and confidential even when he is no longer a customer
of the bank.
63. As per BCSBI code on CICs, which of the following is wrong
a. Bank will provide information about credit availed by customer to CIC at periodic intervals
b. On request, will give information about CIC(s) to which details are shared
c. Bank will not share copy of credit information obtained from CIC
64. In BCSBI Code,
a. You denotes the customer and we denotes the bank
b. ‘You’ denotes the member bank and ‘We’ denote BCSBI etc
65. As per BCSBI Code, when customer makes a complaint Bank will inform the customer
a. how to do so
b. where a complaint can be made
c. Whom to approach for redressal
d. same complaint is not raised again by customer
options are combinations
66. As per BCSBI Code, for collection of dues customers should be contacted between
a. 7 hrs and 1900 hours
67. Nominee can be two persons in the case of accounts opened as
a. Either or Survivor
b. Former or survivor
c. Joint accounts with joint operation etc
68. in case of revision in minimum balance to be maintained in current account and as customer’s current
account does not meet the minimum balance in the last quarter bank as per BCSBI code should
a. Inform customers 30 days in advance of any change in minimum balance
69. As per BCSBI Code, in case of inoperative/dormant accounts
a. Bank should inform three months before account is made as inoperative
b. Inform when account is made inoperative etc
70. In case of cheque collection policy, we will provide you compensation for delay in collection of
instruments as per
a. Compensation policy of respective bank
b. Compensation policy of RBI
c. compensation policy of IBA etc
71. In case a cheque is lost in transit as per cheque collection policy,
a. Bank will help in obtaining duplicate cheque and offer compensation
72. In case of a cheque issued by B to A, amount in figures is Rs. 10,000 and in words is ten thousand
which is striked off and written as five thousand. Alteration is duly signed by B. In that case, bank should
a. Honour the cheque and pay the amount given in figures
b. Return the cheque as material alteration is not allowed
73. As per BCSBI Code, while opening a Term deposit we will (incorrect one)
a. Get instructions from you for disposal of deposit at maturity
b. Inform about procedure to withdraw deposit before maturity
c. None of these
74. As per BCSBI code, on receiving a loan application (incorrect one)
a. acknowledges the receipt of application
b. Communicate in writing reasons for rejection of loan application
c. Provide a provisional sanction letter on receipt of loan proposal

75. As per BCSBI code, bank will return all securities/documents/title deeds to mortgaged property within
--- days of the repayment of all dues
a. 15 days
76. In the event of unauthorized transaction in internet banking after customer has received means to
access Internet banking, maximum liability will be
a. Full amount
b. Nil
c. Rs, 10,000/-
77. Request for cancellation/closure of credit card will be processed in
a. 7 days
78. As per BCSBI Code, prepayment penalty of fixed rate loans is waived till
a. 10 lakhs
b. 5 lakhs
c. 10 lakhs etc
79. For a unit to be classified as a sick unit, it should remain as ------------for three months or more or if
there is erosion in the net worth due to accumulated losses to the extent of --- of net worth
a. NPA ,50%
b. Doubtful,50%etc
80. In small accounts, balance at any time should not exceed ---------- and total credits in a year not to
exceed ----------
a. Rs. 50,000/- and Rs. 1,00,000
81. Banks can allow small accounts to operate for a period of
a. up to 1 year
b. up to 2 years
82. A customer approaches a bank for opening an account without any of the required KYC documents,
bank can open
a. Small account
b. Refused to open the account
83. As per Consumer Protection Bill of 2015, cases not admitted within --- days will be deemed admitted
a. 21 days
84. Customer orientation means
85. As per BCSBI Code, when customer avails a safe deposit locker (incorrect one)
a. Bank will not link fixed deposit to allocation of lockers
b. explains all the rules of allocating a locker
c. Explain the lesser and lessee relation created
86. In case of illiterate persons, nomination can be given
a. Thumb impression to be attested by two witnesses
b. No need to authenticate thumb impression
c. Authorized official should authenticate in the presence of customer etc
87. Number of grids in grid based cheque truncation system
a. Six
b. Ten
c. Three
d. Four
88. In order to provide customer satisfaction, bank should
a. Hire new staff in place of retirees
b. Staff to be trained in handling complaints
c. Deploy more staff in counters
etc
Recollected questions of BCSBI on 20-Oct

1. No PF for MSME units limit
2. Waiver of collateral up to what limit
3. Consumer forum are....
4. Award max. limit by BO
5. Appeal against award time limit for consumer
6. Customer delight
7 Cases relating to F/S and E/S (nomination)
8. Powers of CEO of BCSBI
9. Holder in due course means
10. Question on Marketing of services
11. Recover agents questions
12. NI Act questions
13. Sick units MSME questions
By Arshad mirza
14. OVD question
15. BCSBI objective
16. Working capital assessment for MSME by Projected Turnover method
17. Skill development initiatives questions
18. Moratorium period for skill development
19. Shifting/closing of branch notice period
BCSBI recollected question.

15-09-2018 (Many are Repetitive)
1) Educational loan for 3.5 lakhs what is percnt margin?

2) Guarantor ask bank for customer details, will bank provide?
3) A is a customer want deposits Rs. 10000 on 10-05-2017 to Mr. B account, where
bank got information that Mr. B have died on 8-05-2017, what would should bank do?
4) FCNR accounts can be opened for a period of maximum?
5) Which one of the following is not a structural difference between marketing of
goods and services?
Intangibility/inseparability/Homogeneity/perishability?
6) If bank is not responding to a complaint within how many days’ customer should
escalate the matter to Banking ombudsmen?
7) Who has authority to approve research activities in BCSBI?
8) Function of Chief Executive Officer in BCSBI
9) BCSBI rating of member banks is using a scoring scale of

10) As per BCSBI Code regarding Do Not Call registry
11) Change in interest rate on loan products will be informed within?
12) As per BCSBI Code, for collection of dues customers should be contacted
between
13) As per BCSBI Code, in case of inoperative/dormant accounts prior to when
customer should have informed about this.?
14) In case a return cheque is lost in transit what should bank do?
15) In case of a cheque issued by B to A, amount in figures is Rs. 10,000 and in words
is ten thousand which is strike off and written as five thousand.
16) Alteration is duly signed by B. In that case, what bank should do?
17) As per BCSBI code, bank will return all securities/documents/title deeds to
mortgaged property of the repayment of all dues
18) though customer has guaranteed someone whose ac is in other branch, can bank
retain his property?
19) For a MSE unit to be classified as a sick unit, for what
20) In small accounts, balance at any time should not exceed ----------
21) In order to provide customer satisfaction, bank should
22) Governing Council has max no of member?
23) After 2017 maximum amount claimed in Banking Ombudsman?
24) Bank receive a chq, where everything written in pen except signature in pencil,
what bank will do?
25) Power of CEO of BCSBI?
26) Quasi Judicial
27) A gave a chq to B ,who is in different location and after a day A wants to see his
chq as he cant recall which amount he had paid..what bank would do ?
28) A comes to Bank with a Minor to open Current account ..what bank do ?
29) What is the % security in MSE loan
30) Maximum collateral free loan amount in MSE
BCSBI Recollected questions on 04.08.2018
1.Banker customer relationship 2 question

2.Punishment of cheque bouncing
3.Can cheque signed by pencil
4.Banking ombudsman max award
5.Gurnishee order
6.Power of appropriation
7.Power of CFO of bcsbi
8.Codes for msme customer 5 question
9.Ni act 2questions

10Corpa dist level how many female member
11.Transfer of account in another branch
12.Notice period for shifting branch

Notice period for changing interest
**BEST OF LUCK **
Disclaimer
While every effort has been made by me to avoid errors or omissions in this publication, any error or
discrepancy noted may be brought to my notice through e-mail to
[email protected] which shall be taken care of in the subsequent editions. It is also
suggested that to
clarify any doubt colleagues should cross-check the facts, laws and contents of this publication with
original Govt. / RBI / Manuals/Circulars/Notifications/Memo/Spl Comm. of our bank.

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IIBF & NISM Adda

Customer Service & Banking Codes and Standards

(IIBF & Other Exams)

Srinivas Kante B.Tech, CAIIB

Compiled by Srinivas Kante Email: [email protected]

• Simulation program on Customer Service developed in association with Tata

Cut-off Date of Guidelines /Important Developments for Examinations

The table given below further Cut-off Date of Guidelines / Important

Compiled by Srinivas Kante Email: [email protected]

Customer Service in a country like India - Changing Expectations and Perceptions

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Compiled by Srinivas Kante Email: [email protected]

ii) Secondary functions

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Compiled by Srinivas Kante Email: [email protected]

Compiled by Srinivas Kante Email: [email protected]

Compiled by Srinivas Kante Email: [email protected]

Compiled by Srinivas Kante Email: [email protected]

Compiled by Srinivas Kante Email: [email protected]

Compiled by Srinivas Kante Email: [email protected]

Compiled by Srinivas Kante Email: [email protected]

Banking Regulation Act 1949:

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Compiled by Srinivas Kante Email: [email protected]

Compiled by Srinivas Kante Email: [email protected]

Compiled by Srinivas Kante Email: [email protected]

Compiled by Srinivas Kante Email: [email protected]

i)All cash transactions of the value of more than `10 lakhs.

Suspicious Transaction Report (STR)

_ Large cash transactions

Counterfeit Currency Report (CCR)

As and when counterfeit currency is found at branch/currency

Compiled by Srinivas Kante Email: [email protected]

Non Resident Indians – Products

N R O – Non Resident Ordinary Account

Who Can Open

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N R E – Non Resident External Rupee account

Who Can Open

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Foreign Currency Non Resident account – F C N R (B)

Who Can Open

Simple interest is paid for one year deposit. However,

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R F C – Resident Foreign Currency Accounts

Who Can Open

RFC Domestic Account

Who Can Open Any person resident in India

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Period of Term Dep. Term Deposits are not permitted to be opened

Exchange Earner’s Foreign Currency Accounts (EEFC)

Who Can Open

Compiled by Srinivas Kante Email: [email protected]

account holder on conversion of shares held by him to ADRs / GDRs

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No Category Interest Rate

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Banking Related Laws

Introduction to SARFAESI Act, 2002