Money & Banking
Code of Bank’s commitment to Customers: Long on promise but short on performance!

Despite core banking and full scale computerization, the quality of service in banks has generally deteriorated and the Code of Bank’s Commitment to Customers has done precious little to improve it. It is only by making the minimum level of quality of service mandatory that public can hope to get trouble-free, stress free and tension free banking, which they rightly deserve

Banking Codes and Standards Board of India (“the Board”) has issued an advertisement in newspapers recently, inviting suggestions for improving the Code of Bank’s Commitment to Customers (“the Code”) introduced by the Board in August 2009 for compliance by banks and which is now due for review.  

The whole exercise was initiated by the Reserve Bank of India (RBI) with the good intentions of improving customer service in banks by getting a commitment from member banks to provide a minimum level of service as listed in the code, but over a period of time, both the customers and the banks appear to have lost sight of the code and the commitments it contained, so much so, it is hardly visible both in its printed form and in its implementation. It was mentioned in the advertisement that copy of the Code was available at bank branches, websites of banks and on the Board’s website. To get a copy of the Code, I visited couple of branches of both the public and private sector banks nearby, but as expected, most of the counter staff in all these branches had no knowledge about the Code, much less its contents. However, every one of them directed me to their managers, who had fortunately heard about the Code, but could not provide me with a copy of the Code as it was not readily available in the branch. They, however, asked me to look up on their bank’s website, where it is available in its full form. Finally, at my request, one of the banks downloaded the entire Code, running into 40 pages, from its website and handed it over to me.

Background of the Code:

The RBI set up the Board in 2006 as an independent and autonomous watchdog to monitor and ensure that the banking codes and standards adopted by the banks are adhered to in true spirit while serving the public. The main objects of this Board, as mentioned in its preamble are: “To plan, evolve, prepare, develop, promote and publish voluntary comprehensive codes and standards for banks for providing for fair treatment to their customers.”  With this very limited mandate, this Board was set up with great paraphernalia and expectations that it would create a metamorphosis in the way in which the banking services are provided in our country. 

During more than six years of its existence, the Board came out with two model codes namely, Code of Banks’ Commitment to Customers and a Code of Banks’ Commitment to Micro & Small Enterprises. These two codes lay down minimum standards of banking practices for banks to follow, promise to act fairly and reasonably in all their dealings with the public and to ensure that their dealings rest on ethical principles of integrity and transparency. The elaborate manner in which the entire Code has been spelt out does indicate the earnestness with which the whole exercise was started by the RBI, which expected to derive supervisory comfort by making banks realize their responsibilities and thus bring down customer complaints in the banking industry.

The Code is long on promise but short on performance:

The Code makes several commitments to customers and banks are expected to follow not only in letter but in spirit also. But many of the commitments are vague in nature and there is no mechanism by which the promises made in the Code could be enforced either by the customers or by the Board. Initially the copies of the Code were printed and distributed by most of the banks to their customers but with the passage of time, both the banks’ staff and the customers have forgotten about the code and the commitments contained therein. This is borne out by the survey conducted by the Board and published in its latest annual report, which showed a very tardy and poor implementation of the Code by the banks. In fact one of the leading private sector banks has got the entire Code printed in a very narrow leaflet with such small letters/fonts that it is impossible to read it with your normal spectacles, which makes a mockery of the whole exercise.

The main reason for laxity in implementation of the Code is because it is a “voluntary code”, meaning that the banks are free to follow them, notwithstanding the voluntary commitment made by them to the Board. Therefore, there is a basic contradiction in the method in which the Board has tried to implement the Code among banks. The Board’s powers to enforce the Code are perfunctory because its constitution does not give the Board any concrete powers to penalize the banks, which violate the commitments contained in the Code. The maximum penalty it can impose on a recalcitrant bank is a public censure of the member bank, by notifying the media of the findings in respect of the breach and posting the press release on the Board’s website. It means that the Board can only bark, but cannot bite. Surprisingly, the website of the Board does not provide any information as to whether it has censured any bank in the past six years for non compliance of the code, though its own annul report mentions partial or lack of implementation of the Code on various parameters in several banks surveyed by the Board during 2011-12.  In a nutshell, the Code has proved to be long on promise but considerably short on performance. {break}

How to make the code workable and useful to the public?

This Board and the concept of the Code were modeled after the similar structure set up by the British Bankers Association in the UK where it was in force for a couple of years. Finding that a voluntary code has its own limitations, the Banking Code and Standards Board of UK was scraped in the then existing form in 2009 and the responsibility for the regulation of deposit and payment products was transferred to the Financial Services Authority. However, a Lending Standards Board was continued under the aegis of the British Bankers Association.

In India too, the Code in its present form has its own limitations as anything voluntary does not go beyond extending lip sympathy to the cause. As the Board was set up under the aegis of RBI, banks perforce had to exhibit obeisance, without any strong commitment to the cause. The Code too lacked brevity and clarity due to which it could not get the response it deserved from the banking public, who considered it as eyewash and an exercise in futility.

It, therefore, requires complete overhaul to make it workable and useful to the banking public and following are a few suggestions in this respect for the consideration of the Board and the RBI.

1. The Code should be made mandatory and not voluntary: First and foremost, the Code should be made mandatory for all the banks to comply without exception. A simple fiat from the RBI giving it a status as a directive issued under the Banking Regulation Act is enough to make it compulsory for all banks to follow at least in letter, if not in spirit.

2. The Code should be brief and to the point. The Code should convey the intentions intelligently, briefly and as efficiently as possible. By making it short and sweet, the banks would be able to co-relate their functions with the commitments made in the Code and thus be able to comply with it more easily and with a bit more honesty.

3. All commitments should be crystal clear with time norms for compliance: All the commitments made in the Code should be clear, concise and not vague, and should be benchmarked with time norms, to enable the banks to follow them with precision and comply with all their services within the stipulated time norms. This will help the banking public to clearly point out the deficiencies, if any, observed in the compliance of the Code by the banks.

4. Prescribe penalties for non-compliance or mal-compliance: The Code should contain penalties for non-compliance of any of the commitments made and the customer should be able to demand compensation for any such laxity on the part of the banks. Recently, the RBI has introduced a system of penalty whenever a customer fails to get cash from his account through the ATM due to its mal-functioning, but his account gets debited without dispensing cash. In such cases, if banks do not re-credit the amount within 10 days of the receipt of a compliant, banks are liable to pay to the customer, Rs100 for each day’s delay, as compensation, without even any demand from the customer. This has really warmed up the banks, which are now prompt in re-crediting the amount wrongly debited to customers’ accounts. These types of penal provisions should form part of the code, so that banks do justice to the Code.

5. Strict compliance of the Code at all levels in banks: The Code should be strictly enforced and wherever banks are found to be lax in implementing it, the Board should be vested with powers to recommend to the RBI to impose financial penalties on the banks concerned and the RBI on proper verification should levy penalties, if the bank is found guilty of non-compliance.

Despite introduction of core banking and full scale computerization of banks, the quality of service in banks has generally deteriorated and the introduction of the Code of Bank’s Commitment to Customers has done precious little to improve the service quality in general and the level of commitment in particular. It is only by making the minimum level of quality of service mandatory, coupled with penal provisions for non-compliance, that public can hope to get trouble free, stress free and tension free banking, which they rightly deserve.             

(The author is a banking analyst and writes for Monelylife under the pen-name ‘Gurpur’.)




4 years ago

In what way is this different from the Citizen Charter we had earlier ? Anyway, all these commitments will provide only benchmarks that the Banks can try to achieve and measure their performance against, there will always be some failures, glitches and misses !


4 years ago

I am not sure if even a mandatory Code of Conduct, as very justifiably suggested, will really relieve bank customers of the banking hassles. One important area in this regard is the proper credit of the TDS effected by the Banks and uploading the same onto the IT Deptt.'s website in Form 26A so as to enable the taxpayers get their rightful credit for the TDS so effected. Most often, even the TDS certificates, if at all issued, are not communicated in the prescribed format. Most banks even do not care to issue TDS certificates at all. There are too many areas of inconvenience and harassment which need proper study and by a committee comprising inter alia of some account holders who are aware of the problems. In any case, the managements are hardly bothered about the problems and miseries of common account holders who fall in the category of "retail banking" sector and hence relegated to a low priority area. I hope the affected persons take advantage of this site and communicate their sufferings.

Vaibhav Dhoka

4 years ago

The code of conduct must be made mandatory for all banks along with details of penalty that has to be levied on banks for its failure to adhere,whereas bank is increased service charges to unimaginary level that too without giving due information on board.Usually petty customers stand to loose about 500 to 1000 for not maintaining minimum balnce.Banks like Bank of Maharshtra levy minimum balance every quaterly.Some banks levy half yearly some levy on average maintance of balanve whereas some lvy it even if in a quarter the minimum balanve falls by just a rupeee for a day.It is Ziziya Kar in modern era.

United India Insurance uses mobile tech for collecting premiums but in other ways it is in a pre-computer era!

United India Insurance has launched M-Power so that you can pay your premium by mobile easily. But its technology is so poor that renewal of mediclaim information may not reach the TPA for as much as two months. Also, cashless claim will not be approved during this time. Ease in hospitalisation intimation using SMS is the need, not mobile premium payment

United India Insurance Company (UIIC) was the winner of CNBC TV18 Best General Insurance Provider–Public Sector award declared earlier this week. Maybe it is an outstanding company but customers may have a different view. United India has just launched ‘M-Power’—a mobile application that can be used by customers to pay their premiums using a mobile phone. But, ‘M-power’ is only for raking in premium. There are two major flaws in UIIC’s processes which need to be addressed with simple technology.


One, hospitalisation intimation to Third Party Administrator (TPA). United India has set an unrealistic deadline of 24 hours for this. Even this can be made easier for the policyholder if he or she is allowed to intimate the TPA with an SMS; the TPA can acknowledge it with a return SMS and/or a phone call.


Two, United India is possibly living in the era of a horse-driven carriage. It may take two months for information about policy renewal to be communicated from the branch office to the TPA. This has come out in a Right to Information (RTI) reply to Dr Anshu Agrawal.  It means that the cashless feature is denied to customer during this period even when policy is renewed. UIIC can easily get “cheque credited” data from a bank electronically and transfer policy data electronically to the TPA. UIIC Chief Public Information Officer (CPIO) told the Information Commissioner that the TPA visits the branch office once a week to get information on mediclaim policies in-force. According to Dr Agrawal, “In an era of net-banking and e-mails, UIIC is living in medieval era.”


Of course, it is using mobile technology. But only to collect its premium income, where it has suddenly become tech-savvy.


In today’s technology-driven world, how does United India justify a time gap of one to two months for policy renewal information to reach from branch office to the TPA? The company selectively develops mobile technology for premium collection, but the TPA still visits branch office on a weekly basis when customer data could easily be transmitted electronically.

A delay of two to two months to give renewal information to the TPA and/or TPAs not updating their systems with renewal information leads to denial of cashless approval under an inexplicable excuse that the customer has not renewed the policy even though the insurer has cashed the premium payment cheque one to two months back—now via mobile. This is nothing less than short-changing the customer. What’s more disturbing is that this can even impact the reimbursement claim.

At the launch of ‘M-Power’, media reports quotes G Srinivasan, CMD, UIIC, saying “This is very aptly called M-Power; empowering customers to make their premium payments through mobile phone. I think in the next two years, at least 5% to 7% of our customers will use this platform to pay their premiums.” When asked if they would also look into paying claims through this mode, he said, “That will be the next step”.


What it means is that UIIC is more interested in making it easy for itself to collect premium; ease of hospitalisation intimation and filing of claims does not seem to be the priority. After all, paying claims cannot be as welcome as collecting premium. Many times TPAs play dumb about getting hospitalisation intimation by email or say that the fax message was illegible. TPAs also keep you on hold forever or may not be available 24x7, as they promise.

Read—CIC asks United India Insurance to disclose information that may help close a loophole – I

Dr Anshu Agrawal had a sweet victory in June 2012 when Central Information Commission (CIC) took the liberty of looking at the issue in the larger public interest of the insurance policyholders and not just confined to the UIIC Bareilly office, about which he had complained. The CIC recommended to the chairman and managing director of United India to give directions to all branch managers to put up on the company's website the following information by 16 August 2012: Mediclaim policy number (no names are required to be given), policy date of issue, date of transfer of the said policy to the TPA.

Read - United India CPIO defies CIC order, gives irrelevant data to RTI petitioner

Stay tuned for the second part of the article which you will be interested to know the latest update on the case. Did United India really comply with CIC order? Where do they stand with respect to Comprehensive Online Real-Time Environment (CORE) software? What are the proposed steps to streamline the process of getting cheque credit information from bank to insurer and then passed to TPA?



Rakesh Goyal

4 years ago

1. Most of the awards are managed.
2. If this is the condition of best (sic) General Insurance company, what other will be?
3. One shit is saying to other that I am more perfumed.

High drama at Thiruvananthapuram Airport, pilot presses hijack button

Protesting passengers allegedly entered the cockpit of the aircraft after having waited in the plane for over four hours to go to Kochi and then the pilot pressed hijack button

Thiruvananthapuram: High drama unfolded at the city airport on Friday when the pilot of an Abu Dhabi-Kochi Air India flight pressed the hijack button in panic after passengers created a ruckus in the cockpit following diversion of the plane to Thiruvananthapuram, reports PTI.


According to airport officials, protesting passengers allegedly entered the cockpit of the aircraft after having waited in the plane for over four hours to go to Kochi.


The pilot then pressed the hijack button, they said.


Following the message, police and other security personnel surrounded the aircraft which was parked at the airport.


The plane was diverted to Thiruvananthapuram due to bad weather, the officials said.


Passengers refused to deboard the aircraft despite repeated requests by the airlines.


Aviation regulator Directorate General of Civil Aviation (DGCA) has ordered a probe into the incident, official sources said in New Delhi.


Premjit, one of the passengers, said the flight was supposed to land at Kochi at 3:30am but due to fog at the airport, the plane, which had already been delayed from Abu Dhabi, landed at Thiruvananthapuram at 6:30am.


Nothing was done to take the passengers to Kochi and they were told that the plane had to wait at the Thiruvananthapuram airport for refuelling, he said.


"The passengers kept waiting," he said.


Sources said police was unlikely to register case against passengers and felt a humane approach should be taken.


Police felt the passengers were upset because they had to wait for a long time and there was no security issue, the sources said.


They said another pilot had been sent to the aircraft and "there is no emergency of hijack as claimed by the previous pilot".


As per rules, pilots can press three separate transponder codes for different emergencies. One code is pressed in case of "unlawful interference" in the operation of the aircraft which in effect means hijack.


The second code is pressed in case of loss of communication between the aircraft and the authorities on the ground while the third code is pressed for a situation of emergency on board.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)