4 Ways to make RBI's draft Charter on Customer Rights meaningful

The RBI should constitute a committee of experts with majority representation from  users of banks’ services to ensure that a fair, just and equitable charter is evolved


The draft Charter of Customer Rights proposed by the Reserve Bank of India (RBI) is only a half-baked product, serving no useful purpose. What is required is a foolproof comprehensive charter of rights in the interest of consumers, who are at the receiving end of never ending problems faced in their day to day dealings with banks in our country. The RBI has proposed to give the freedom to banks to decide on various issues concerning service quality suggesting only broad contours of the charter. The charter, in the words of Sucheta Dalal, Founder-Trustee of Moneylife Foundation is “a set of pious motherhood statements and the entire charter is meaningless unless there are specific and steep penalties” for non-compliance. The draft charter does not meet the expectations of harassed bank customers, who deserve a much better deal, more so when a large majority of people in our country are financially not literate and nearly 25% of our population is totally illiterate. Under these circumstances, giving total freedom to each bank to devise its own standards of service and provide for compensation for its own failures is asking for total chaos in the banking system in our country. The draft charter does not serve the ends of justice for the following reasons:

1. The drat Charter requires much more clarity both in its contents and in its implementation. In the present form, the charter will go the way of “Code of Bank’s commitment to Customers” introduced a few years ago under the aegis of Banking Codes and Standards Board of India (BCSBI). This code was more in the nature of showing lip sympathy to bank customers as it was only long on promise but very short on performance. It has virtually disappeared from the banking scene, causing considerable loss of face to the RBI. Therefore, the proposed Charter should not be a repetition of past mistakes, but should serve as ground rules for uplifting the quality of customer service in banks for ensuring complete customer satisfaction with no cause for complaints.

2. The Charter of Customer Rights, therefore, should list out standards of service in crystal clear terms and appropriate time norms for their compliance applicable for all banks in their day to day dealing with all customers. These rules should spell out what services are available to bank customers as a matter of right and free of all charges, and what services are available for a fee. And this fee should be capped at a reasonable level to ensure that there is no exploitation of customers who are weak, helpless and ignorant of banking terms and legal norms to follow. This will streamline the service levels at all banks and eliminate most of the complaints that are caused by the indifference of banks to meet the needs of bank customers.

3. In order to make the charter workable and effective, it should prescribe appropriate penalties for mal-implementation or non-implementation of the basic guidelines laid down in the charter. Besides it should provide for reasonable compensation to customers who suffer because of the laxity or negligence on the part of the banks, who blatantly violate the spirit of the charter, thereby giving a sense of justice and fair-play to aggrieved customers.

4. The charter should also provide for a prescribed time frame for resolving issues and there must be conditions. Under this, individual complaints should get converted into class-action suits providing for rectification without requiring every individual to file a complaint. This would not only help those who do not understand the nuances of making a complaint, but also considerably reduce the burden of redressing individual complaints. This will elevate the entire process of complaints redressal mechanism to a new level of customer convenience and fair-play.

It is appropriate to quote here what Dr Deepali Pant Joshi, Executive Director of RBI stated at the MR Pai Memorial Award function while handing over this year’s award to Moneylife Foundation earlier this week in Mumbai.

Dr Pant Joshi spoke about the need for an “ingrained suitability clause in financial products,” that would put the onus of suitability of the product on the banker or financial institution, instead of the customer. This would naturally mean that it was high time that the financial services and banking institutions move from the maxim of Caveat Emptor (Buyer Beware) to Caveat Venditor (Seller Beware), she added.

In the context of rampant mis-selling by banks prevailing today, the earlier you put into practice this doctrine of consumer rights, the better it is for the people of our country.

“The only watchword is the present customer experience should be better than the experience of the previous generation of customers,” said Dr Pant Joshi.

The present draft charter of customer rights appears to be an in-house exercise of RBI without any concrete consultation with the stake holders. Unless and until the charter is widened to cover the views of the vital stakeholders like depositors, borrowers and all other customers of banks, it would be futile to expect that this charter will be of any consequence to the consumers.

The RBI should, therefore, immediately constitute a committee of experts with majority representation from the users of banks’ services and other stake holders to ensure that a fair, just and equitable charter is evolved in the best interest of consumers.

If what is said by Dr Pant Joshi, is to be implemented, it requires a larger canvas of consultations and a stricter enforcement of rights of customers to make it an epoch making document that can change the face of Indian banking for the greater good of bank customers, in particular, and our economy in general.

(The author is a banking analyst and he writes for Moneylife under a pen-name ‘Gurpur’ )



Vaibhav Dhoka

2 years ago

Banking services are in pity here but leving penalty thus looThe service at bank is of extremely poor quality,and it seems bank is bent on looting customer by leving false charges.
1)SB.a/c 20135095616 Vaibhav Dhoka Cheque deposited on 1/9/2014 @ 10.40 AM credited on 6/9/2014.On enqiry with branc manager on 4/9/2014 he told that there is no staff andcheque will be credited when staff available.

2)SB.a/c 20135091735 Ms Sweena V Jain(Daughter) cheque for Rs deposited for Rs 100000=00 on 5/9/2014 at 9.30 AM at Model colony br.Credited on 9/9/2014.And this bank dishonoured cheque of Rs 100000=00issued on 10/9/2014 with note insufficient balance and looted customer by leving charges of Rs 169. This bank is famous for lowest service and cheating and duping customers.

3)Similarly bank levied Rs 6=00 to SB.a/c 20135160177 Vaibhav Dhoka for cheques issued to healthpolicy Manager is not giving proper replyt costmer in name of service.

SEBI to soon notify norms for REITs

New norms will enable listing and trading of Real Estate Investment Trusts -REITs as any other security on the stock exchange


Market regulator Securities and Exchange Board of India (SEBI) said it will soon notify norms for creation and listing of business trusts to help attract greater foreign and domestic investments into real estate.


Addressing a conference organised by Assocham in New Delhi, SEBI's Executive Director Ananta Barua said, "We will soon notify the new norms on Real Estate Investment Trusts or REITs."


Last month, SEBI board had approved regulations on REITs after receiving public comments.


According to experts, the new instrument has the potential of attracting $8-10 billion into the cash-starved real estate sector.


This trust would help in the progress of the real estate sector, Barua said.


Like mutual funds, REITs would pool in money from investors and issue units in exchange. Most of the money collected would be invested in commercial properties which are completed and generate income.


The new norms will enable listing and trading of REITs as any other security on the stock exchange and also help create new platform for raising of funds by real estate companies.


The guidelines, approved by SEBI board, have fixed the minimum requirement for asset sizes permitted to be listed in India at Rs500 crore. Earlier there was a minimum requirement of Rs1,000 crore in this regard.


REITs may invest directly in properties or through a special purpose vehicle (SPV). As per the norms, 80% of the value of a REIT shall be invested in completed and revenue-generating assets, and the remaining 20% may be invested in developmental properties and other assets.


In the Union budget, Finance Minister Arun Jaitley had announced significant tax incentives for this product.


The government feels the new investment avenue would reduce pressure on the banking system while also making available fresh equity in form of long-term finance from foreign and domestic sources including the NRIs for the real estate sector.


NPPA asks pharma companies to register for online database

According to the drug pricing regulator, creating a database is necessary for monitoring production and availability of scheduled formulations and the active pharmaceutical ingredients in the scheduled formulations, and monitoring the prices of non-scheduled formulations


The National Pharmaceutical Pricing Authority (NPPA) has asked all pharmaceutical companies to register themselves under its integrated pharmaceutical database management system (IPDMS) for online filing of returns for monitoring, fixing and revision of drug prices.


In a notice on its portal, the drug pricing regulator said, “Availability of reliable database is a necessary pre-requisite for carrying out the functions of price fixation and price revision in respect of scheduled drugs; price fixation in respect of new drugs.”


It further said such a step was also necessary for monitoring production and availability of scheduled formulations and the active pharmaceutical ingredients contained in the scheduled formulations, and monitoring the prices of non-scheduled formulations.


The registration process will be kept open till 30 October 2014 after which that data inputting facility shall be made available to all registered users for submission of online reports in respect of form II, III and V under drug price control order (DPCO) 2013.


Online filing of returns has to be done under the DPCO 2013, it added.


This is being done as “the objective of the DPCO 2013 is that the government should in due course come out with an appropriate mechanism of obtaining market-based data related to drugs,” NPPA said.


With the transition from DPCO 1995, which followed cost-based mechanism for price fixation, to the DPCO 2013, which follows market-based mechanism for price fixation, reference data and source of market based data has assumed critical importance, it added.


The IPDMS is being launched with immediate effect for the purpose of registration, NPPA said.


The reporting obligation on the manufacturers is a legal obligation, which they are required to carry out with full and correct disclosure of information in a timely manner at prescribed intervals, the regulator said.


“Any default in the reporting would be deemed to be an act of contravention of the DPCO 2013 and therefore attracts penalties under the Essential Commodities Act, 1955,” it added.


NPPA was established to fix or revise prices of controlled bulk drugs and formulations and to enforce prices and availability of the medicines in the country, under the Drugs (Prices Control) Order, 1995.


The organisation is also entrusted with the task of recovering amounts overcharged by manufacturers for the controlled drugs from the consumers and also monitors the prices of decontrolled drugs in order to keep them at reasonable levels.



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