core sector communique

Functioning of Private Banks

With effect from September, 1999, banks are being given freedom to fix reasonable charges for various services rendered by them. Based on the recommendations of a Working Group, RBI had advised all scheduled commercial banks to identify basic banking services on broad parameters and principles to be adopted and followed by banks for ensuring reasonableness in fixing charges for basic banking services. Besides, the Fair Practices Code for lenders evolved by the Banking Code and Standards Board of India (BCSBI) are also required to be framed by banks duly approved by their respective boards. Banks are also required to inform its customers charges and fees for processing as well as “all-in-cost” etc. to enable the customers to compare the charges with other sources of finance. Under the Banking Ombudsman Scheme of RBI, complaints pertaining to deficiencies in banking services provided by private sector banks are resolved and penalties imposed on banks and compensation given to customers subject to limits stipulated. Under various provisions of Banking Regulation Act, 1949 and RBI Act, 1934, RBI monitors and supervises private sector banks through inspections, on site surveillance as well as post inspection follow-up compliance. This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in Rajya Sabha today.