The Indian Banks' Association's Code for Banking Practice is set to undergo a makeover. To be christened as the 'Model Code for Fair Business Practices', the new code of ethics aims at fostering healthy competition between banks and build a sound banker-customer relationship.
The new Code, being revamped by the Indian Banks' Association, seeks to bring under one umbrella the principles governing inter-bank relationship, the industry-wide convention on application of interest on deposit accounts and the Model Citizen's Charter, which deals with the minimum service commitments by banks to their customers.
In the light of emphasis being placed on corporate governance and social responsibility in business, it is expected that banks' will conduct their operations based on the ethical principles of integrity, impartiality and transparency and frame/ execute business policies consistent with social responsibility.
"The new Code aims to promote good banking practices by setting out the minimum standards to be followed by banks' employees, agents and other personnel in their dealings with customers. Besides it deals with the policies that need to be put in place to address the interest of all stakeholders in particular and the banking system in general," a senior official with a state-owned bank said.
The Code envisages that banks should win business based on merits of their products and services even as their business policy is anchored in fairness and impartiality.
Business courtesy that bank employees, agents and business associates extend to customers, both internal and external, should stand the scrutiny of propriety and not amount to unfair business practices/ contravention of any law or regulation.
Further there should be appropriate policies and procedures for business courtesy accounting.
Banks are prohibited from giving prizes, gifts, donations, etc., or any direct or indirect benefits in the purchase price or in respect of any other transactions relating to securities, bonds, etc., as consideration or with a view to getting or retaining a deposit and/ or an advance account.
As far as the general convention for domestic deposits goes, interest on fixed deposits may be paid, credited, transferred or reinvested at a frequency not less than quarterly rests.
However, payment of monthly interest may be allowed, if required, by discounting the quarterly interest accrued. No overdraft limit on a regular basis is to be permitted in savings bank account.
On the customer relationship front, banks have to ensure that customers have access to all the information about their products and the terms and conditions governing purchase and use.
A minimum 30 days notice is to be given to customers in order to make any changes effective in the terms and conditions of the contracts entered with banks.
Subject to compulsions of law and acquiescence by the customer, banks will treat all customer-related information as private and confidential. Employees, agents and associates will adhere to customer privacy policy in letter and spirit.
Banks have to ensure that all their business policies towards their customers are gender, status and physical ability neutral.
The IBA Code for Banking Practice, which replaced the Ground Rules and Code of Ethics, has been operational for almost four years.
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