Basic Rights Of Bank Customer

Five basic rights for bank customers laid down by RBI-Economic Times 22nd December 2014

If you feel your bank been unfair to you by making you invest in an unsuitable
product, there is redress in sight. Earlier this month the RBI released a Charter of Customer Rights specifying five  basic rights that bank customers enjoy. Though there is already a framework  outlining service standards, industry watchers feel a direct intervention from  the RBI in the form of the charter will make the process more robust.


"This will simplify matters for a layperson. Customers can now cite this charter to get their rights," says certified financial planner  Harshvardhan Roongta, CEO, Roongta Securities.

The central bank has also  advised the Indian Banks' Association ( IBA)
and the Banking Codes and Standards Board of India ( BCSBI) to formulate a 'Model Customer Rights  Policy' based on the charter's principles. These measures would ultimately  strengthen the customer service framework.

In case a bank violates any  right as laid down by the RBI, customer can approach the customer services division of the apex bank. "With this  charter, the RBI will have legislative powers to act against the errant banks,"  says a retired head of a large public sector bank. Here are the rights of  customers as notified by the RBI that you should be aware of.

1.
Right to fair treatment

This right prohibits banks from  discriminating against customers on grounds of gender, age, religion, caste and  physical ability  while offering products and services. Banks can, however, continue to offer  differential rates of interest or products to customers. "The financial services  provider may, however, have certain special products which are specifically  designed for members of a target market group or may use defensible,
commercially acceptable economic rationale for discriminating between its
customers," the central bank had elaborated in the draft charter released in
August.

2.
Right to transparency, fair and honest dealing

You can expect  language in bank documents to be simplified and transparent. The charter  requires banks to ensure that all contracts are transparent and easily  understood by the common person. The onus of sending out effective communication  will rest with banks. Information on the product's price, customer's  responsibilities and key risks will have to be clearly disclosed. "Any features  that may disadvantage the customer should be made known to him. Important terms and conditions should be clearly  brought to the notice of the customer," the charter says.

3.
Right to suitability

Despite several regulations, complaints
related to mis-selling continue to plague the distribution space, particularly
in case of life insurance policies. Lured by higher commissions, sales officials
tend to push products without ascertaining their suitability for the customer.
With this charter coming into force, such officials might find it difficult to palm off say  market-linked insurance products to senior citizens who are looking for stable  returns. The charter has now made it mandatory for banks to sell products after  keeping in mind customers' needs, financial circumstances and  understanding.

4. Right to privacy

Banks are
duty-bound to keep customers' personal information confidential, unless the
disclosure is required by law or customers have given their consent. "Customers have the right to protection from all kinds
of communications, which infringe upon their privacy," the charter states. Banks  cannot pass on your details to telemarketing companies or for cross-selling.
"There have been instances where bank officials, on the basis of transaction
details, have asked customers to route their investments through them (since
banks also act as distributors for mutual funds and insurance companies). This  is unethical," says Roongta.

5. Right to grievance redressal and  compensation

The right to grievance redressal is at your aid if  your bank fails to adhere to basic norms. The charter makes banks accountable
for their own products as well as those of third parties like insurance
companies and fund houses. They will no longer be able to wash their hands of  the responsibility once the product is sold. Banks will have to communicate the  policy for compensating for mistake on their part, lapses in conduct and non-performance or delays. The redressal  and compensation policy will have to state the rights of customers when such  events occur.

Read more at:http://economictimes.indiatimes.com/articleshow/45584445.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

 

 

 

Know Your Customer Guidelines

(updated up to December 22, 2014) (This is a summarised and simplified version of the Reserve Bank of India’s Know Your Customer guidelines. For further details, please refer to the links which are provided below.) Q 1. What is KYC? Why is it required? Response: KYC means “Know Your Customer”. It is a process by which banks obtain information about the identity and address of the customers. This process helps to ensure that banks’ services are not misused. The KYC procedure is to be completed by the banks while opening accounts and also periodically update the same. Q 2. What are the KYC requirements for opening a bank account? Response: To open a bank account, one needs to submit a ‘proof of identity and proof of address’ together with a recent photograph. Q3. What are the documents to be given as ‘proof of identity’ and ‘proof of address’? Response: The Government of India has notified six documents as ‘Officially Valid Documents (OVDs) for the purpose of producing proof of identity. These six documents are Passport, Driving Licence, Voters’ Identity Card, PAN Card, Aadhaar Card issued by UIDAI and NREGA Card. You need to submit any one of these documents as proof of identity. If these documents also contain your address details, then it would be accepted as as ‘proof of address’. If the document submitted by you for proof of identity does not contain address details, then you will have to submit another officially valid document which contains address details.

Link RBI Circulars To Know latest Guidelines on Know Your Customer