A review of the laws governing money lending has been taken up by the Reserve Bank of India to ensure the interests of rural households are protected.
The RBI has constituted a technical group headed by S C Gupta to review the efficacy of the existing legislative framework governing money lending and its enforcement machinery in different States in the interest of rural households.
RBI said various state governments have shown interest in the deliberations of the group and therefore, it proposes to co-opt as special invitees representatives from the state governments for wider representation.
Dwelling on credit delivery mechanisms and other banking services in its mid-term review of the 2006-07 monetary policy, RBI asked banks to review their practices concerning lending for housing, as it has been reported to it that some banks are not fully transparent in indicating the circumstances and factors governing the benchmark in respect of floating rates as well as in regard to reset clauses.
The central bank asked banks to also afford an opportunity to borrowers to obtain fair and transparent terms consistent with legal requirements and fair practices.
The RBI said it has been taking measures on an ongoing basis for protection of customers' rights, enhancing the quality of customer services and strengthening grievance redressal mechanisms in the central bank as well as in banks.
It said out of 84 scheduled commercial banks, 55 covering about 93 per cent of domestic assets of SCBs have committed to follow the code prescribed by the Banking Codes and Standards Board of India.
In regard to monitoring of compliance with the Code by banks, a RBI working group has recommended that the BCSBI may collect from member banks details of complaints relating to service charges and track the changes in the levels of service charges to identify any abnormal increases.
The recommendations of the working group have since been examined and operational guidelines to banks would be issued shortly.
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