117

CHAPTER XIV
CODE OF BANKS COMMITMENT TO CUSTOMERS AND THE CODE OF
BANKS COMMITMENT TO MICRO AND SMALL ENTERPRISES - A BRIEF
OUTLINE

The Banking Codes and Standards Board of India (BCSBI) was set up in February 2006 as an
independent and autonomous body by Reserve Bank of India in association with Banks to
evolve Codes and Standards to be adopted by banks while dealing with customers. It had,
apart from the Code of Bank's Commitment to Customers which covers individual customers,
evolved and released the Code of Bank's Commitment to Micro and Small Enterprises (MSE
Code)
These Codes have been adopted by member banks of BCSBI which include scheduled
commercial banks, urban cooperative banks and regional rural banks
The Codes have been evolved by BCSBI in collaboration with the Reserve Bank of India,
Indian Banks Association and member banks. It is a Code of Customer Rights
The central objective of the Code is promoting good and fair banking practices, setting
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 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.
The Codes do not replace or supersede regulatory or supervisory instructions of the Reserve
Bank of India (RBI)
Provisions of the Codes may have set higher standards than those prescribed in the regulatory
instructions and such higher standards will prevail as the Codes represent best practices
voluntarily agreed to by the bank as its commitment to the customer.
The Code of Banks Commitment to Customers deals with customer rights, which sets
minimum standards of banking practices member banks have to follow while they deal with
individual customers. It provides protection to customers and explains how banks are
expected to deal with customers in their day-to-day operations.
The bank will endeavour to adopt higher standards of banking practices to extend better
customer service and achieve higher levels of customer satisfaction.
Objectives of the Code
The Code has been developed to:
(a) promote good and fair banking practices by setting minimum standards in Banks
dealings with customers;

118
(b) increase transparency so that customers can have a better understanding of what they can
reasonably expect from bank ;
(c) encourage market forces, through competition, to achieve higher operating standards;
(d) promote a fair and cordial relationship between the customer and its bank;
(e) foster confidence in the banking system.
Application of the Code
The Code applies to all the products and services listed below, whether they are provided by
the particular bank or agents acting on their behalf, whether across the counter, over the
phone, by post, through interactive electronic devices, on the internet or by any other
method.
Current accounts, savings accounts, term deposits, recurring deposits, PPF accounts
and all other deposit accounts;
Payment services such as pension, payment orders, remittances by way of Demand
Drafts, wire transfers and all electronic transactions e.g. RTGS, NEFT;
Banking services related to Government transactions;
Demat accounts, equity, Government bonds;
Indian currency notes/coins exchange facility;
Collection of cheques, safe custody services, safe deposit locker facility;
Loans, overdrafts and guarantees;
Foreign exchange services including money changing;
Third party insurance and investment products marketed through Banks branches and
/ or their authorised representatives or agents;
Card products including credit cards, debits cards, ATM cards, smart cards and
services (including credit cards offered by banks subsidiaries/companies promoted
by them).
Banks key commitments to the customer
To act fairly and reasonably in all their dealings with the customers
To help the customer to understand about the how banks financial products and
services.
To inform the customers about changes in the interest rates, charges or terms and
conditions.
Displaying in the web site and branches, for customers information banks policies
on deposits, cheque collection, grievance redressal, compensation, collection of dues
and security repossession and about the services the banks provide.
To deal quickly and sympathetically by correcting mistakes promptly and cancelling
any bank charges that is applied by mistake and compensate for any financial loss the
customer may have incurred due to banks mistake, in terms of their compensation
policy.
To treat customers personal information as private and confidential.
To provide the customer with a copy of the Code when they you open an account with
the bank and otherwise on request.
The MSE Code sets minimum standards of banking practices for banks to follow when they
are dealing with Micro and Small Enterprises (MSEs) as defined in the Micro, Small and
Medium Enterprises Development (MSMED) Act, 2006. The MSE Code reflects the

119
member bank's positive commitment to their Micro and Small Enterprise customers to
provide speedy and transparent access to banking services. The Code is not only a Charter of
Rights of the MSE customers but it also enshrines their obligations vis-a-vis their banks It
provides protection to the MSE in India and explains how banks are expected to deal with
them for their day to- day operations and in times of financial difficulty.
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 banking
services.
(b) To promote good and fair banking practices by setting minimum standards in dealing
with the MSE in India
(c) To increase transparency so that MSE in India can have a better understanding of what
they can reasonably expect of the services.
(d) To improve our understanding of their 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 them and the bank and also ensure
timely and quick response to their banking needs.
(g) To foster confidence in the banking system.