CONSUMER EDUCATION AND PROTECTION

The Reserve Bank’s approach to customer service focusses on protection of customers’ rights, enhancing the quality of customer service, spreading awareness and strengthening the grievance redressal mechanism in banks and also in the Reserve Bank.

Information pertaining to Commercial Banks


RIA No Information Sought Reply given/ Information provided Date of Reply

1
RIA 406/05-06
DBOD

Guidelines issued by the Reserve Bank of India to prevent fraudulent use of ATMs.

The report on Information Systems Security Guidelines for the Banking and Financial Sector headed by Dr. R. B. Barman dated March 11, 2002, had indicated that to detect and prevent fraudulent use of ATMs, banks have to install video cameras at the site for capturing the images of all the users of the ATM. Copy of the report, which was sent to all the banks, is available on our website http://rbidocs.rbi.org.in/rdocs/publicationReport

March 22, 2006

2
RIA 411/05-06
DBOD

Can any bank, on its own, recover the loan amount by operating the savings account of a living depositor, without the express instructions of the depositor/without the orders of a Recovery Tribunal?

The account holder of NRE savings deposits can withdraw the savings deposit at any time and therefore, banks should not mark any type of lien, direct or indirect, against these deposits.(as regards domestic savings deposits, banks may follow the guidelines issued by IBA/existing practices approved by their Board in this regard).

April 13, 2006

3
RIA 420/05-06
DBOD

The definitions/ criteria for classifying non-performing assets (NPAs) as ‘doubtful’ and ‘loss’ assets as on 1.4.1994, and what are the subsequent amendments in this regard

Definitions/criteria for classifying NPAs as doubtful and loss assets as on April 1, 1994 are furnished in our circular no.DBOD.No.BC.129/21.04.043/92 dated April 27, 1992, and the subsequent modifications to these definitions are incorporated in our Master Circular on 'Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances' issued every year. The latest Master Circular containing the definition/criteria for classifying NPA as 'doubtful/ and 'loss asset' is DBOD.No.BP.BC.15/21.04.048/2006-07 dated July 1, 2006, which is available on our website www.rbi.org.in

April 5, 2006

4
RIA 434/05-06
DBOD

‘Ration Card’ as a document for proof of residence, for the purpose of opening of bank accounts.

As per RBI Circular DBOD.AML.58/14.01.001/ 2005-06 dated November 29, 2004 (copy available on our website at http://rbi.org.in/scripts/NotificationUser.aspx ration card is a valid document in support of residential address

March 21, 2006

5
RIA 477/05-06
DBOD

Guidelines issued by RBI to declare an a/c non-performing.

These instructions are given in the Master Circular DBOD.BP.BC. 12 / 21.04.048 / 2005-06 dated July 2, 2005, which is available on our website www.rbi.org.in under 'Notification' and the path is http://rbidocs.rbi.org.in/rdocs/notification/PDFs/78400.pdf

April 26, 2007

6
RIA 483/05-06
DBOD

Circulars / Guidelines issued regarding issue of cheque books

Two circulars were issued. DBOD.108/09.07.007/97-98 dated September 25, 1997 and DBOD .LEG .BC . 74/ 09.07.005 / 03-04 dated April 10, 2004. Also refer to our Circular DBOD.No.Leg.BC.87/c.466(IV)-89 dated March 3, 1989 wherein banks have been advised that they may issue cheque books with larger number of leaves(20-25) if a customer demands the same and also ensure that adequate stocks of such cheque books are maintained with all the branches to meet the requirements of the customers. The circular is available on our website

May 10, 2006

7
RIA 614/05-06
DBOD

What are the instructions /guidelines for nomination and settlement of claims of deceased depositors/locker hirers?.

Reserve Bank of India has issued Circular no DBOD.Leg.BC.95 dated June 9, 2005 in this matter and is available on our website at http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=2284&Mode=0 Banking Companies Nomination Rules, 1985 have been framed in terms of Sections 45ZA to 45ZF of the Banking Regulation Act, 1949.

May 19, 2006

8
RIA 693/05-06
DBOD

RBI rules /guidelines on Credit Cards

RBI has issued circular DBOD.FSD.BC.17/24.01.011/2007-08 dated July 2, 2007 which is available on our website at http://rbi.org.in/ Notification

June 9, 2006

9
RIA 10/06-07
DBOD

Guidelines / Rules regarding premature withdrawal of term deposits.

A bank, on request from the depositor, should allow withdrawal of a term deposit before completion of the period of the deposit agreed upon at the time of making the deposit. The bank will have the freedom to determine its own penal interest rate of premature withdrawal of term deposits. The bank should ensure that the depositors are made aware of the applicable penal rate along with the deposit rate. While prematurely closing a deposit, interest on the deposit for the period that it has remained with the bank will be paid at the rate applicable to the period for which the deposit remained with the bank and not at the contracted rate. No interest is payable, where premature withdrawal of deposits takes place before completion of the minimum period prescribed. However, the bank, at its discretion, may disallow premature withdrawal of large deposits held by entities other than individuals and Hindu Undivided Families. The bank should, however, notify such depositors of its policy of disallowing premature withdrawal in advance, i.e., at the time of accepting such deposits.

(ii) In the case of premature withdrawal of NRE term deposits for conversion into Resident Foreign Currency (RFC) Account, the bank should not levy any penalty for premature withdrawal. If such a deposit has not run for a minimum period of 1 year, the bank may, at its discretion, pay interest at a rate not exceeding the rate payable on savings deposits held in RFC accounts, provided the request for such a conversion is made by the NRE account holder immediately on return to India.

(iii) Conversion of NRE deposit into FCNR(B) deposit and vice versa before maturity should be subject to the penal provision relating to premature withdrawal.

(iv) Conversion of NRSR / NRNR deposit into NRO deposit before maturity will be subject to the penal provision relating to premature withdrawal.

(v) In view of the discontinuance of NRNR / NRSR schemes with effect from April 1, 2002, the proceeds of NRNR deposits can be credited to NRE accounts on maturity but not to FCNR(B) accounts, while proceeds of NRSR accounts can be credited on maturity to NRO accounts only. In case of premature withdrawal of NRNR / NRSR deposits, the proceeds should be credited to NRO accounts only.

With effect from February 13, 2004, all aspects concerning renewal of overdue deposits may be decided by individual banks subject to their Board laying down a transparent policy in this regard and the customers being notified of the terms and conditions of renewal including interest rates, at the time of acceptance of deposit. The policy should be non-discretionary and non-discriminatory

August 2, 2006.

10
231/06-07
DBOD

Credit Card Statements indicate a minimum Amount due, which is a percentage of the total outstanding due, the Due Date etc. However, when the credit card is suspended/closed, for what ever reason, the credit card customer receives monthly statements which shows the Total Amount due as the Minimum Amount Due. It also does not specify any Due Date for Payment. The Due Date is shown as IMMEDIATE.

It has been observed that when the Bank’s representatives/agents contact the customer for payment, and the customer is not in a position to pay the entire amount in one go, they (the bank’s representatives) verbally specify an amount which they claim to be the Minimum Amount Due. Unfortunately, in the subsequent statement it is noticed that

a. Even if the verbally specified Minimum Amount Due is paid and

b. Even if the amount is paid soon after the Statement is received, the Bank invariably levies interests and penalties such as LATE PAYMENT FEE

Questions

i. Is the above procedure in conformity with Rules, Regulations and is it a standard procedure? It not what should be the correct procedure in such cases?

ii. In such cases, as cited above, can the bank charge Late payment Fee?

In terms of Master circular on credit card operations of banks dated July 2, 2007, (available on our website www.rbi.org.in athttp://rbidocs.rbi.org.in/rdocs/notification/PDFs/78385.pdf ), the overall procedure to be adopted has been advised to the banks. as under:

a. Card issuers should ensure that there is no delay in dispatching bills and the customer has sufficient number of days (at least one fortnight) for making payment before the interest starts getting charged.

b. Card issuers should quote annualized percentage rates (APR) on card products (separately for retail purchase and for cash advance, if different). The method of calculation of APR should be given with a couple of examples for better comprehension. The APR charged and the annual fee should be shown with equal prominence. The late payment charges, including the method of calculation of such charges and the number of days, should be prominently indicated. The manner in which the outstanding unpaid amount will be included for calculation of interest should also be specifically shown with prominence in all monthly statements. Even where the minimum amount indicated to keep the card valid has been paid, it should be indicated in bold letters that the interest will be charged on the amount due after the due date of payment.

c. The banks /NBFCs should not levy any charge that was not explicitly indicated to the credit card holder at the time of issue of the card and getting his / her consent. However, this would not be applicable to charges like service taxes, etc. which may subsequently be levied by the Government or any other statutory authority.

d. The terms and conditions for payment of credit card dues, including the minimum payment due, should be stipulated so as to ensure that there is no negative amortization.

e. Changes in charges (other than interest) may be made only with prospective effect giving notice of at least one month. If a credit card holder desires to surrender his credit card on account of any change in credit card charges to his disadvantage, he may be permitted to do so without the bank levying any extra charge for such closure.

Sept 13, 2006.

11
44/2007-08 DBOD

What is the licensing policy of MNC Banks?

RBI has issued a press release and notification on February 28, 2006 indicating a roadmap for presence of foreign banks. The same has been placed on RBI website www.rbi.org.in. RBI has also issued a Master Circular DBOD.No.BL.BC.16/22.01.001/2007-08 dated July 2, 2007 on the subject. The branch authorization policy for Indian Banks shall also be applicable to foreign banks subject to other conditions laid out in paragraph 19 of this Master Circular.

 

12
67/2007-08
DBOD

Whether incidental charges for preparing Bank are not uniform for all banks. Are there any guidelines by RBI in this context?

Banks have been given the freedom to fix service charges for banking transactions, which includes incidental charges for issue of bank drafts, with the approval of their Boards. While fixing service charges, they should ensure that the charges are reasonable and not out of line with the average cost of providing these services. In order to ensure transparency, banks are required to display and update on their websites the details of various service charges in a prescribed format. A Working Group constituted by the Reserve Bank to formulate a scheme for ensuring reasonableness of bank charges has in its recommendations identified 'Demand Draft – Issue ' as one of the basic services for levying of service charges in a transparent manner.

Based on the recommendations of the Working Group, RBI has issued necessary instructions to the banks vide circular DBOD.DIR.BC.No.56/ 13.03.00/ 2006-07 dated February 2, 2007 (available on our website at http://rbidocs.rbi.org.in/rdocs/notification/PDFs/75608.pdf) on levying of charges for basic banking services.

Aug 13, 2007

13
RIA 106/
07-08 DBOD

Notifications/circulars issued regarding time limit within which all nationalized banks are required to encash Cheques deposited with them and give due credit in the concerned account.

Our instructions on immediate credit of local/outstation cheques, time frame for collection of local outstation instruments and interest payment for delayed collection have been withdrawn and banks have been advised vide our Circular DBOD.No.Leg.BC.55/09.07.005/2004-05 dated November 1, 2004 ( available on our website at http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=1997&Mode=0 ) to formulate a comprehensive and transparent cheque collection policy taking into account their technological capabilities, systems and processes adopted for clearing arrangements for collection through correspondents.

August 7, 2007

14
RIA 119/
07-08 DBOD

Whether justice can be sought in the matters of bank finance and where can a complaint be filed?

To file a complaint in banking service rendered by banks, as per the Banking Ombudsman Scheme 2006, you may approach the Banking Ombudsman of your area. The list of Banking Ombudsman is available on our website www.rbi.org.in at the link http://www.rbi.org.in/commonman/English/Scripts/AgainstBankABO.aspx

Aug 23, 2007

15
RIA128/
2007-08 DBOD

Standard rules for opening of proprietorship firm’s account

Operation instruction for instruction ‘Either or Survivor’

What about instructions for payment of interest on renewal of FDRs after due date(after 15 days).

What about rates for renewal of FDRs prescribed for as of date or after 15 days or more?

Banks have been advised to follow certain customer identification procedures for opening accounts of customers that are legal persons or entities such as corporates, companies, partnership firms, trusts etc., vide paragraph 3 of the Guidelines on ‘Know Your Customer" norms and Anti Money Laundering Measures of circular DBOD.No.AML.BC.58/14.01.001/2004-05 sated November 29, 2004 ( on the website at http://rbidocs.rbi.org.in/rdocs/notification/PDFs/64686.pdf ).

Such operational matters are decided by the banks themselves and therefore, you may refer to banks/Indian Bank’s Association in this regard.

In terms of paragraph 2.13 of Reserve Bank of India’s Master circular on interest rates on Rupee Deposits DBOD.NO.DIR.BC.7/13.03. 00/2007-08 dated July 02, 2007 (which is available on our website), all aspects concerning renewal of overdue deposits may be decided by individual banks subject to their Boards laying down a transparent policy in this regard and the customers being notified of the terms and conditions of renewal including interest rates, at the time of acceptance of deposit. The policy should be non-discretionary and non –discriminatory.

Aug 10, 2007.

16
RIA 372/
07-08
DBOD/
DBS

If a bank acquires an NPA from another bank, what are the reporting norms stipulated by the RBI for the Assignee Bank (i.e the acquiring bank).

What are the RBI guidelines issued to Banks for declaring an Asset as NPA?

What are the norms stipulated by the RBI for Assignee banks (i.e acquiring banks) qualified to buy and deal in NPAs? Is there any norm stipulated by the RBI when a public sector bank, like the State Bank of India, wants to sell its NPAs to a private sector bank?

What are the norms stipulated by the RBI for the valuation of NPAs when sold as a cluster/basket.

What are the norms stipulated to the Assignee Bank (i.e the acquiring bank) of NPAs regarding the subsequent sale of NPAs and how should the profits be treated in their books.

Does the RBI specifically stipulate any requirements and competencies of the NPA acquiring banks. Please provide a copy of such guidelines.

All guidelines/instructions/ public notices issued by RBI from time to time regarding various aspects of NPAs and treatment of NPAs after their assignment.

RBI has prescribed 'Disclosure Requirements' for banks which purchase NPAs from other banks, vide paragraph 7 of Annexure to circular DBOD,BP.BC.16/21.04.048/2005-06 dated July 13, 2005 available at http://rbidocs.rbi.org.in/rdocs/notification/PDFs/64686.pdf .
RBI guidelines for classifying an asset as NPA is contained in our Master Circular on 'Prudential Norms on Income Recognitions, Asset Classification and Provisioning Pertaining to the Advances Portfolio' issued vide our circular DBOD. No. BP.BO.12 /21.04.048 / 2007-08 dated July 2, 2007 available at http://rbidocs.rbi.org.in/rdocs/notification/PDFs/78399.pdf

The norms for sale/purchase of Non Performing Assets between banks are stipulated in our circular DBOD.No.BP./BC.16/21.04.148/2005-06 dated July 13, 2005 as amended vide our circular DBOD,No.BP.BC.97/21.04.148/2006-07 dated May 16, 2007 and DBOD.No.BP.BC.34/21.04.048/2007-08 dated October 4, 2007, available at http://rbidocs.rbi.org.in/rdocs/notification/PDFs/64686.pdf , http://rbidocs.rbi.org.in/rdocs/notification/PDFs/77377.pdf and http://rbidocs.rbi.org.in/rdocs/notification/PDFs/80478.pdf respectively.

You may please refer to paragraph 5(i) of the above circular dated July 13, 2005, regarding the valuation norms.

You may please refer to paragraph 6 of the above circular dated July 13, 2005, regarding the valuation norms.

You may please refer to paragraph 5 of the above circular regarding the valuation norms.

The 'Guidelines on sale of financial assets toSecuritisation Company/ Reconstruction Company (created under Reconstruction of Financial Assets and Enforcement ofSecurity Interest Act, 2002) and related issues issued vide our circular DBOD, NO. BP.BC.96/21.04.048/2002-03 dated April 23, 2003 is available at http://rbidocs.rbi.org.in/rdocs/notification/PDFs/35918.pdf.
The norms for sale/purchase of non performing Assets between banks are stipulated in our circular, DBOD. No.BP.BC.16/21.04.048/2005-06 dated July 13, 2005, as amended vide our circular DBOD.NO.BP.BC.97/21.04.048/2006-07 dated May 16, 2007, and DBOD.No.BP.BC.34/21.04.048/2007-08 dated October 4, 2007, copies of which are available at http://rbidocs.rbi.org.in/rdocs/notification/PDFs/64686.pdf and http://rbidocs.rbi.org.in/rdocs/notification/PDFs/80478.pdf and Master Circular on 'Prudential Norms on Income Recognitions, Asset Classification and Provisioning Pertaining to the Advances Portfolio' issued vide our circular DBOD.No.BP.BO.12/21.04.048/2007-08 dated July 2, 2007 may be referred at http://rbidocs.rbi.org.in/rdocs/notification/PDFs/78399.pdf

Sep 18, 2007

17
RIA1495/
2007-08 DBOD

"What is the period for encashment of outstation cheque and what is maximum period prescribed by the RBI guidelines? What are the rights of the customer in case the cheque is encashed beyond the prescribed date?"

Banks have been advised by us vide our circular DBOD.No.Leg.BC.55/09.07.005/2004-05 dated November 1, 2004 (copy enclosed) that they may formulate a comprehensive and transparent Cheque Collection Policy taking into account their technological capabilities , systems and processes adopted for clearing arrangements for collection through correspondents. We had issued further instructions to the Indian Bank Association to issue suitable instructions to the banks to incorporate the following points in the cheque collection policy formulated by them:-

(i) In respect of cheques lost in transit or in the clearing process or at the paying bank's branch, banks should immediately bring the same to the notice of the account tholder so that the accountholder can inform the drawer to record stop payment and can also take care that other cheques issued by him are not dishonoured due to non-credit of the amount of lost cheques / instruments.

(ii) The onus of such loss lies with the collecting banker and not with the account holder.

(iii) The banks should reimburse the account holder related expenses for obtaining duplicate instruments and also interest for reasonable delays occurred in obtaining the same.

(iv) If the cheque / instrument has been lost at the paying bank’s branch, the collecting banker should have a right to recover the amount reimbursed to the customer for the loss of the cheque / instrument from the paying banker.

Further the Indian Bank Association has issued a circular to the banks in this regard vide No. OPR/Misc.3/107 dated May 6, 2005.

March 26, 2008.

18
RIA1576/
2007-08 DBOD
/DBS

"Whether interest can be charged after NPA?'

"Whether interest can be charged after NPA under one Time Settlement Scheme. If yes, what will be the rate of interest and on which amount it will be charged?'

"Whether there is any Notification that a bank can make recovery equal to double the capital amount?"

Instructions issued by us in this regard are available in paragraph No. 3 of the Mater Circular DBOD.BP.BC.12/ 21.04.048/ 2007-08 dated July 2, 2007, which is available on our website under 'Notification'. It may be added that the Reserve Bank of India has not issued any circular stating that interest should not be paid after declaration of an account as Non Performing Assets

We have no information on rate of interest charged by banks under their own ‘One Time Settlement Scheme’ as the interest rates have been deregulated by the Reserve Bank of India.

April 8, 2008.

19
RIA1578/
2007-08 DBOD
/DBS

Under which Sections of RBI Act 1934 and Banking Regulation Act, 1949 are all the circulars/notifications/guidelines of Reserve Bank of India issued?

The circulars issued by the Reserve Bank of India are either mandatory or advisory, depending upon their tenor content, intent and the provisions under which they are issued. The circulars /directions issued by the Reserve Bank of India may not always contain/mention the provisions under which those are issued. Therefore, in a given case, whether the circular /direction is issued in a mandatory form or otherwise has to be decided on the basis of its content .In some cases , they may be partly mandatory and partly advisory .

April 11, 2008.

20
RIA2517/
2007-08 DBOD

"What is the policy of Government of India, are there any specific legislative enactments (law / legal provisions) prohibiting discrimination on grounds of sex, caste, religion. By banks in lending-(in India) which banks are required to comply with. If yes, brief detail of the law and date of enactment and your policies and procedures pursuant to the compliance of the same."

We have vide our Circular no. DBOD. Leg No. BC 104/09.07.007/ 2002-03 dated May 5, 2003 – (copy enclosed) issued Guidelines on Fair Practices Code for Lenders, which are required to be framed by banks duly adopted by their Boards. The Guidelines inter alia also contain the following paragraphs

(i) Lenders must not discriminate on grounds of sex, caste and religion in the matter of lending. However, this does not preclude lenders from participating in credit-linked schemes framed for weaker sections of the society.

Further, in terms of paragraph 2.17 of the 'Code of Bank's Commitments to Customers' issued by the Banking Codes and Standards Board of India (BCSBI), which refers to adoption and practice of a non-discriminatory policy, banks should not discriminate on the basis of age, race, gender, marital status, religion or disability. BCSBI is an independent and autonomous watch dog to monitor and ensure that the Banking Codes and Standards adopted by the banks are adhered to in true spirit while delivering their services. The above code is a voluntary Code, which sets minimum standards of banking practices for banks to follow when they are dealing with individual customers. The Code may be accessed on the web site of BCSBI using the URL http://www.bcsbi.org.in/Code_of_Banks.html .

June 16, 2008

21
RIA 582/05-06
DBS

Nature and method of processing done by the RBI to applications for empanelment of Auditors– details of such applications. Details of aspects with reference whereof the processing was done.

 

 

 

 

 

 

 

 

Please give details of eligibility norms/ categorization norms and other norms, if any, which were applied to the applications for the purpose of selecting bank branch auditors and for the purpose of categorizing them.

The Institute of Chartered Accountants of India (ICAI) has been entrusted with the work relating to the preparation of the list of eligible auditors/ audit firms, based on the eligibility norms for empanelment of auditors/ audit firms for appointment as statutory branch auditors in PSBs. The eligibility / categorisation norms are:

Cate-gory

No. of CAs exclusively associated with the firm
(Full time)

No. of partners exclusively associated with the firm (full time) (Out of 2)

Profe-ssional
staff

Bank audit experience

Standing of the audit firm

(1)

(2)

(3)

(4)

(5)

(6)

I.

5

3

8

The firm or at least one of the partners should have a minimum of 8 years experience of branch audit of a nationalised bank and / or of a private sector bank with deposits of not less than Rs.500 crore.

8 years

II.

3

2

6

The firm or atleast one of the partners should have preferably conducted branch audit of a nationalised bank or of a private sector bank with deposits not less than Rs.500 crore for atleast 5 years

6 years
(for the firm or atleast one partner)

III.

2

1

4

The firm or atleast one of the CAs should have preferably conducted branch audit of a nationalised bank or of a private sector bank with deposits not less than Rs.500 crore for atleast 3 years 

5 years
(for the firm or atleast one partner)

IV.

2                         2
(The proprietary concerns of Chartered Accountants with 1 paid CA, 2 professional staff and not having any statutory branch audit experience of a nationalised bank or of a private sector bank with deposits not less than Rs.500 crore will be treated at par with the partnership firm after deducting their 3 years seniority from the date of their establishment).  

2

  

Not necessary

3 years

 

 

PSBs are required to draw the branch audit programme for the statutory audit of the branches every year as per the prescribed procedure.

After the exclusion of the firms which are to be denied audit during the relevant year, two lists, viz. “continuing – Part A” and “fresh allotment - Part B” of the firms are prepared as per the following procedure:

1. Branch auditors are generally appointed / continued for tenure of 5 years in a bank subject to their firm complying with the eligibility norms during the relevant years. Effective from the year 2006-07, the tenure for branch auditors has been made 4 years.

2. Branch auditors, after completion of their tenure in a bank as detailed above, are either placed under “compulsory rest” or “rotated” depending upon the place of their registration/ operation. 33 centres (listed in the Attachment 2) are currently identified as surplus centres where the number of eligible audit firms is more than the number of available vacancies for appointment of branch auditors in PSBs. Audit firms after completion of the tenure as branch auditors in these centres will be placed under “compulsory rest” for a period of two years. Audit firms from centres other than the above mentioned 33 centres will be rotated to other banks.

3. RBI only allots the eligible audit firms to banks depending upon the requirement of branch auditors based on the branch audit programme drawn up by the banks. The allotment of branches for statutory audit to the audit firms is done by the banks themselves.

List of 33 centres being treated as “rested districts” for the
pupose of appointment of branch auditors in public sector banks

Sr.No. Name of the District
1. Kolkata
2. Ghaziabad
3. Delhi
4. Ludhiana
5. Panipat
6. Panchkula
7. Gurgaon
8. Sonipat
9. Faridabad
10. Chandigarh
11. Jaipur
12. Bhilwara
13. Ajmer
14. Bikaner
15. Jodhpur
16. Udaipur
17. Kota
18. Vadodara
19. Surat
20. Ahmedabad
21. Brihan Mumbai
22. Thane
23. Kolhapur
24. Solapur
25. Pune
26. Nagpur
27. Indore
28. Raipur
29. Hyderabad
30. Bangalore
31. Chennai
32. Coimbatore
33. Ernakulam
 

614/2008-09

What are the new guidelines on maintain minimum balance in savings bank accounts?

Is it essential to make transactions at an interval of 6 months in a in a savings bank account? Why the account is blocked if there is no transaction after 6 months and what is the legal basis of doing this by the bank?

If there is no transaction in an account for more than 6 months a certain amount is deducted from it, what is the legal basis of this and where does the amount is deposited, provide copy of the Government Order

Reserve Bank of India has not stipulated any minimum balance to be maintained in savings accounts. Reserve Bank of India has also not stipulated levy of any service charge, if the minimum balance is not maintained in such accounts. Such stipulations are made by individual banks themselves, as per their Board approved policies. Reserve Bank of India has issued necessary instructions advising banks that they should inform their customers regarding the requirement of minimum balance at the time of opening savings accounts and levying of charges etc., if the minimum balance is not maintained. Any change in regard to minimum balance should also be intimated to the account holders by banks at least one month in advance

We have advised banks vide our circular no. BC.34 dated August 22, 2008 that a savings as well as current account should be treated as inoperative/ dormant account, if there are no transactions in the account for over a period of two years.

In the context of granting greater functional autonomy to banks, operational freedom has been given to banks on all matters pertaining to banking transactions. Accordingly, with effect from September 7, 1999 banks have been given freedom to fix service charges for various types of services rendered by them. While fixing service charges, banks should ensure that the charges are reasonable and not out of line with the average cost of providing these services. In order to ensure transparency, banks have been advised to display and update on their websites the details of various service charges in a prescribed format.

October 7, 2008

589/2008-09

Whether a bank can charge money in the name of foreclosure charges in case of prepayment of personal loan if it is being repaid in 14th month when the entire loan is repayable in 36 months? If yes, whether such charges can be 5.62% at O/S Principal?”

We have not issued any guidelines regarding foreclosure charges. In the context of granting greater functional autonomy to banks, operational freedom has been given to banks on all matters pertaining to service charges on banking transactions. Accordingly, with effect from September 1999, banks have been given the freedom to fix service charges for various types of services with the approval of their respective Boards. However, banks have been advised that while fixing service charges, they should ensure that the charges are reasonable and not out of line with the average cost of providing these services. Further, the management of loan recovery activity in a bank is essentially an internal management function and each bank's Board is authorized to frame suitable policies in this regard.

October 7, 2008

269/2008-09

On which date the Credit Information Companies (Regulation) Act, 2005 came into force?

Whether Credit Information Bureau (India) Limited, as credit information company, has been granted a certificate of Registration under sub-section (2) of Section 5 of the Credit Information companies (Regulation) Act, 2005? If so, on which date was it registered?

Are the banks not duty bound to disclose to its customers when particulars are sought by them about the credit information furnished by it to Credit Information Company?

The Credit Information Companies (Regulation) Act, 2005 (CIC Act) came into force with effect from December 14, 2006.

The Reserve Bank of India has not yet granted Certificate of Registration (CoR) to Credit Information Bureau (India) Ltd. (CIBIL) for continuing business of credit information under CIC Act. Their application is pending with Reserve Bank of India.

In terms of Section 21 of the Act, a borrower can request for credit information report from credit institution if he/she has applied for a credit facility and it is mandatory for the credit institution to supply him/her with a copy of credit information report.

September 2, 2008

1828/08-09 DBOD

Whether the banks may or may not provide any New /Additional Loan Facility to any existing NPA a/c which is in doubtful and /or loss category except rehabilitation scheme.

There are no RBI guidelines prohibiting a bank from extending any new or additional loan facility to an existing customer having an existing NPA account. Most credit related matters have been deregulated by RBI. Banks formulate their credit policies keeping in view the overall prudential norms prescribed by RBI and on the basis of their risk appetite. Lending decisions are taken by banks based on their commercial judgment and merits of each case, keeping in view the credit policies approved by their Board of Directors.'.

February 12, 2009.

RIA 1602 DBOD

Details of PLR rate applicable to a commercial bank during December 2005 to 2008.
Guidelines issued by RBI for fixing EMI and/or charging the rate of interest by private bank to/from customers/borrowers of housing loan since December 2005.

Guidelines issued by the RBI, for adjustment ratio of EMI towards the principal amount and interest amount in respect of Housing Building loan.

Benchmark Prime Lending Rate (BPLR), which is the reference rate for banks for credit limits over Rs.2 lakhs, is decided by the banks themselves with the approval of the respective Boards. Data on banks' BPLR from the quarter ended June 2002 onwards is available on our website www.rbi.org.in under the link "For Bankers-Lending Rates of Banks-Bank wise Data".

With effect from October 19, 1994 RBI has deregulated the interest rates on advances above Rs.2 lakh and these interest rates are determined by the banks themselves with the approval of their Boards, subject to Benchmark Prime Lending Rate (BPLR) and Spread guidelines. Individual banks therefore determine interest rates to be charged to a particular borrower subject to BPLR and Spread guidelines. Loans upto Rs.2 lakh carry the prescription of not exceeding the BPLR. However, banks have the freedom to determine the rate of interest, without reference to BPLR and regardless of size in respect of loans for purchase of consumer durables and other non-priority sector personal loans including credit cards dues.

Further, the management of loan sanctioning/loan recovery activity in a bank, including fixing of EMI and/or charging of interest rate, is essentially an internal management function and each bank's Board is authorized to frame suitable policies in this regard.
Feb 4, 2009

2099/08-09 DBOD

(1)Service charges/ percentage of commission payable to Nationlised Banks for disbursement of monthly pension to Karnataka State Pensioners. Specify whether the above charges / commission is paid by RBI or Government of Karnataka.

(2)Are there standing orders/ circulars etc. for delayed payment of arrears (any kind) payable to pensioners? If so, a copy of the same may kindly be sent.

(3) Is there any alternative method / procedure to make entries in the customer’s Bank Pass Book in case the computer system goes out of order for a long period?

The banks are paid commission of Rs. 60/- for each pension transaction. Further, agency commission is payable to an agency bank at the full rate provided the transactions are handled by the bank at all stages. Where, however, the work is shared between two banks (i.e. agency bank and Reserve Bank of India/ State Bank of India), the commission is shared between the agency banks and Reserve Bank of India/ State Bank of India in the proportion of 75:25.
(ii) The agency commission is paid by Reserve Bank of India and not by Government of Karnataka.

Yes, the ‘Revised Orders - Payment of Pension through Public Sector Banks in Karnataka’ Published by Finance Department, Government of Karnataka, Bangalore deals with delayed payment of arrears (any kind) payable to pensioners. In this context, an extract of para 16.4 (c) of the said orders issued by Government of Karnataka is enclosed.

We have not issued any specific guidelines regarding alternative method/procedure to make entries in the customer's bank pass book in case the computer system goes out of order for a long period. However, as per instructions contained in paragraph 5.6.2 (Updating Passbooks) of the Master Circular DBOD. No.Leg.BC.75/09.07.005/2008-09 dated November 3, 2008 on Customer Service, banks have been advised the procedures to be followed wherever passbooks are held back for updating. Further, banks have also been advised to put in place Business Continuity Plans and Disaster Recovery Plans for ensuring uninterrupted services to the customers.

March 19, 2009
4103/11-12 DBOD

1. What is the validity time (180 days or 6 months) of a cheque.?

2. Under which provision of law is it provided?

· As per extant banking practice the validity period of a cheque is six months from the date of issue.

· Now, banks have been advised vide circular DBOD. AML. BC. No. 47 / 14.01.001 / 2011-12 dated November 4, 2011 that with effect from April 1, 2012, banks should not make payment of cheques / drafts / pay orders / banker’s cheques bearing that date or any subsequent date, if they are presented beyond the period of three months from the date of such instrument.

· The extant validity period of a cheque for six months from the date of issue is in accordance with the banking practice.

· The instructions dated November 4, 2011 applicable with effect from April 1, 2012 are issued to banks under Section 35A of the Banking Regulation Act, 1949.
March 5, 2012
4327/11-12 DBS

1. What are the RBI criteria for judging profitability of Indian banks?

2. What are the RBI criteria for judging productivity of Indian banks?

For calculating financial performance of banks, various criteria are being used by Reserve Bank of India including Annual Financial Inspection of the banks, conducted under Section 35 of the Banking Regulation Act, 1949. RBI assesses the bank’s financial soundness, net worth, compliance with licensing requirements, Net profit etc. under AFIs. Certain financial ratios such as earnings, Return on Assets, Return on Equity, Net Interest Margin (NIM), Capital Adequacy Ratio (CRAR), Gross and Net Non-performing Advances Ratio, etc. are also used for assessing the profitability and productivity of the Indian banks.

March 29, 2012

RIA No 4272/2013-14

1. Is M&AoA mandatory for opening a current a/c of a Pvt. Ltd. Company?

Yes, Memorandum and Articles of Association is mandatory for opening an account of a company.

RBI’s instructions regarding the documents required for opening bank accounts of companies are mentioned in Annex I of the Reserve Bank’s Master Circular (containing 77 pages) DBOD. AML. BC. No. 24 /14.01.001/2013-14 dated July 1, 2013 on Know Your Customer (KYC) Norms / Anti-Money Laundering (AML) Standards/ Combating of Financing of Terrorism (CFT)/ Obligation of banks under PMLA, 2002.

 They are :

(i) Certificate of incorporation and Memorandum & Articles of Association (ii) Resolution of the Board of Directors to open an account and identification of those who have authority to operate the account (iii) Power of Attorney granted to its managers, officers or employees to transact business on its behalf (iv) Copy of PAN allotment letter (v) Copy of the telephone bill.

February 28, 2014

2. Is the Certificate of Incorporation of the company essential for opening a current a/c of a Pvt. Ltd. Company?

22. Are RBI norms same for Public Sector and Private Banks?

The regulatory prudential norms are applicable to all commercial banks including public sector banks and private sector banks.  RBI also issues Guidelines/ directions etc. to Scheduled Commercial Banks (SCBs) under various provisions of Banking Regulation Act, 1949 and RBI Act, 1934 etc.

These instructions are available on our website www.rbi.org.in under the head “Notifications.”

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