CO-OP BANKS
UCBs permitted
to market Mutual Fund Units
The Reserve Bank has decided to permit UCBs registered
in states, which have signed memorandum of understanding and those registered
under the Multi-State Co-operative Societies Act, 2002 to enter into agreements
with mutual funds (MFs) for marketing their units. The permission to market
MF units is, however, subject to the conditions indicated below -
(i) The bank should act as an agent
of the customers, forwarding the investors’ application for purchase/sale of
MF units to the mutual fund/Registrar/transfer agents.
(ii) The MF units should be purchased at the customers’
risk and without the bank guaranteeing any assured return.
(iii) The MF units should not be acquired from
the secondary market.
(iv) The MF units should not be bought back from
the customers.
(v) UCBs holding custody of MF
units on behalf of customers should ensure that their own investments and their
customers’ investments are kept distinct from each other.
(vi) Retailing of MF units should be confined to certain selected branches to
ensure better control.
(vii) The extant ‘know your customer’
(KYC)/anti-money laundering (AML) guidelines in respect of the applicants should
be complied with.
UCBs have been further advised
to report the details of the tie-up together with a copy of the agreement entered
into with the mutual fund, to the Reserve Bank’s respective regional office
within a period of ten days from the date of entering into the arrangement.
Regional rural banks (RRBs) have
also been permitted to undertake marketing of units of mutual funds with the
approval of their board of directors and subject to the conditions enumerated
above.
Installation
of ATMs by UCBs
The Reserve Bank has revised the eligibility norms
for setting up of automated teller machines (ATMs) by UCBs. To be eligible to
set up on-site/off-site ATMs, the UCB should have -
i) minimum deposits of Rs. 100 crore;
ii) complied with the prescribed capital
to risk weighted assets ratio (CRAR);
iii) net non-performing asset (NPA) of less than 10 per cent; and
iv) consistent record of profitability and compliance with cash reserve ratio
(CRR)/statutory liquidity ratio (SLR).
Accordingly, UCBs satisfying these eligibility
norms may apply to the Reserve Bank’s regional office for prior approval for
installing on-site and/or off-site ATMs. UCBs registered under the Multi-State
Cooperative Societies Act may apply to the Reserve Bank’s regional office under
the jurisdiction of which the registered/head office of the UCB is situated.
Scheduled UCBs, other than those
classified as Grade II to IV, do not require the Reserve Bank’s prior approval
for setting up on-site ATMs. UCBs should install off-site ATMs approved by the
Reserve Bank, only within the area of their operation. Shifting and relocation
of ATMs would require the Reserve Bank’s prior approval.
Scheduled and non-scheduled UCBs
permitted to have ATMs, both under the automatic and approval route, may also
issue ATM-cum-Debit Cards.
The Reserve Bank has further advised
that UCBs now need not obtain the Reserve Bank’s prior approval to share/interlink
with other banks, the ATMs/BTMs installed at their branches/ extension counters.
CUSTOMER
SERVICE
RBI Instructions
on Customer Service
The Reserve Bank has been, for the past couple
of years, endeavouring towards having the banks to deliver quality service to
their customers at a reasonable price. It has also taken several measures towards
financial inclusion, so that basic banking facilities are made available to
a larger Indian population. Some recent initiatives that the Reserve Bank has
taken are : l With effect from January 1, 2006, the Reserve Bank has put in
place a revised Banking Ombudsman Scheme for redressal of grievances of banking
customers. The scope of the scheme has been enlarged to cover customer complaints
in areas, such as, levying service charges without prior notice to the customer,
non-adherence to the fair practices code as adopted by individual banks, credit
card complaints, deficiencies in providing the services assured by banks and
banks’ sales agents, etc.
The Reserve Bank has also set up an independent
Banking Codes and Standards Board of India in February 2006. The Board
has been set up as an independent watchdog to ensure that banks deliver services
in accordance with the Codes and Standards to which they have agreed.
Though the Reserve Bank has deregulated levy
of service charges by commercial banks, banks have been advised to fix reasonable
service charges in line with the average cost of providing these services.
Further, the Reserve Bank has made it obligatory
for banks to display and update, in their office/branches, as also, on their
websites, the details of various service charges
in a format approved by the Reserve Bank (please see page 3).
Apropos the credit card guidelines, it has become
mandatory for the banks to maintain a Do Not Call Registry containing the phone
numbers of customers as well as non-customers (non-constitutes) who have informed
the bank that they do not wish to receive unsolicited calls/short messaging
service (SMS) for marketing of its credit card products.
Public sector banks have put in place several
measures which would lead to better facilities to customers, such as, computerisation
of branches, installation of ATMs, single window concept, time norms for important
services, any branch banking, delivery channels like electronic clearing service,
electronic funds transfer, telebanking, internet banking services, etc.
The Reserve Bank has issued instructions to all
scheduled commercial banks on implementation of core banking solutions and has
advised that the pace of internal computerisation of bank branches and their
interconnectivity, providing for core banking solutions or centralised database
access/clustered solutions need to be expedited. So far seven public sector
banks have reported that they have fully implemented the core banking solution.
The Monetary and Credit Information
Review will, from this issue, regularly cover the Reserve Bank’s instructions
useful to common bank customers.
Banks advised
to display Service Charges
In order to ensure transparency
in banking services, the Reserve Bank has advised banks to display and update,
on their website, the details of various service charges levied by them for
the services provided/products offered to their customers.
Banks have also been advised to
display the charges relating to certain services (please see page 3)
in their offices/ branches. These charges should also be displayed in the local
language.
Banks are required to furnish the
details of service charges presently applicable, to the Reserve Bank by May
31, 2006 to enable the Reserve Bank to place them on its website.
It may be recalled that the Reserve
Bank has deregulated the levy of service charges by commercial banks and the
decision to prescribe service charges has been left to the discretion of individual
banks’ boards. While fixing service charges, banks have been advised to ensure
that the charges are reasonable, consistent with the cost of providing these
services and that customers with low value/volume of transactions are not penalised.
The Reserve Bank had been receiving
representations from the public about the unreasonable and non-transparent service
charges being levied by banks indicating that the existing institutional mechanism
in this regard is not adequate.
Service
Charges to be displayed on Bank's Websites/at Branches
Minimum Information to be put on the Bank’s website
Savings Bank Account/No Frills Account
* Minimum balance
* Charges for non-maintenance
Savings Bank Account with Cheque Facility
* Minimum balance
* Charges for non-maintenance
Savings Bank Account without Cheque Facility
* Minimum balance
* Charges for non-maintenance
Other Savings Bank Account Facilities
* Issue of duplicate statement
* Issue of loose cheque leaves
* Issue of duplicate pass book
* Mode of calculation of minimum balance
Remittance Facilities through Own Bank
* DD - Issue, cancellation, duplicate and
revalidation
* PO - Issue, cancellation, duplicate and
revalidation
* TT - Issue, cancellation, duplicate and
revalidation
* EFT - Inward and outward
* RTGS - Inward and outward
* Collection of Cheques
Remittance Facilities through other Bank
* DD - Issue, cancellation, duplicate and
revalidation
* PO - Issue, cancellation, duplicate and
revalidation
* TT - Issue, cancellation, duplicate and
revalidation
* EFT - Inward and outward
* RTGS - Inward and outward
* Collection of Cheques
Foreign Exchange Transactions
* Remittance - Inward and outward
* TC - Selling, encashing and foreign currency
Cheque Collection
* Local
* Outstation through own bank
* Outstation through another bank
* Bouncing of cheque - local
* Bouncing of cheque - outstation - through
own bank
* Bouncing of cheque - outstation - through
another bank
Retail Loan
* Loan processing charges
* Pre-payment charges
* No due certificate
* Solvency certificate
* Late payment of EMI
* Changing from fixed to floating rates of
interest
* Changing from float to fixed rates of interest
ATM Card
* Membership fee
* Annual fee
* Renewal charges
* Late payment charges
* Interest charges
* Replacement charges
* Transaction charge for partner banks
* Transaction charge for non-partner banks
Credit Card
* Membership fee
* Annual fee
* Renewal charges
* Late payment charges
* Interest charges
* Replacement charges
* Cash withdrawal
Debit Card
* Membership fee
* Annual fee
* Renewal charges
* Late payment charges
* Replacement charges
* Cash withdrawal
Miscellaneous
* Balance enquiry
* Balance certificate
* Interest certificate
* Account closure
* Use of fax/telephone/modem
* Photo attestation
* Signature attestation
* Stop payment charges
* Inoperative account
Minimum Information to be displayed at Bank Branches
A. Services rendered free of charge
B. Others
* Minimum balances to be maintained in savings
bank account
* Charges for non-maintenance of minimum
balance in savings bank account
* Charges for collection of outstation cheques
* Charges for issue of demand draft
* Charges for issue of cheque books, if
any
* Charges for account statement
* Charges for account closure, if any
* Charges for deposit/withdrawal at ATM
locations, if any
FEMA
Limit for
Overseas Branch Office Expenses raised
The remittance limits for incurring
initial and recurring expenses of branch offices opened abroad have been raised
to ten per cent and five per cent respectively, of average annual sales/income
or turnover during the last two accounting years of the Indian entity. The earlier
limits for such remittance were up to two and one per cent respectively.
Realisation
of Export Proceeds
As a measure of further liberalisation,
it has been decided that henceforth, authorised dealer banks may grant extension
of time for realisation of export proceeds beyond the prescribed period from
the date of export, up to the invoice value limit of USD 1 million. The earlier
invoice value limit for such relaxation was USD 100,000.
Working
Group for Distressed Farmers
The Reserve Bank has constituted
a Working Group to Suggest measures to assist distressed farmers including provision
of financial counselling services and introduction of a specific Credit Guarantee
Scheme under the Deposit Insurance and Credit Guarantee Corporation of India
(DICGC) Act for such farmers.
It may be recalled that paragraph
152 of the Annual Policy Statement 2006-07, observed that despite the spread
of banking facilities in rural areas and availability of bank finance at reasonable
rates, farmers in several areas are still in distress.
BRANCH BANKING
Commission
Rates for Government Business revised
The rates of agency commission
payable to banks for conduct of government business have been revised from July
1, 2005 as indicated below :