The Hindu : Business : RBI asks banks to focus on deposit mobilisation

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Friday, Apr 29, 2005

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RBI asks banks to focus on deposit mobilisation

Special Correspondent

Banking Codes and Standards Board to be set up

BANKING ON STABILITY: The Reserve Bank of India Governor, Y. V. Reddy, along with the Deputy Governor, K. Udeshi, addressing a press conference in Mumbai on Thursday. — Photo: Vivek Bendre

MUMBAI: The Reserve Bank of India Governor, Y. V. Reddy, on Thursday called upon banks to refocus on deposit mobilisation and empower the depositors, by providing wider access and better quality of banking services.

While announcing the Annual Monetary and Credit Policy for 2005-06, Dr. Reddy said that the central bank would persist with its efforts to ensure quality of banking services, in particular, to small individual depositors. The policy statement also noted that the Committee on Procedures and Performances Audit on Public Services headed by S. S. Tarapore had expressed its dissatisfaction over treatment of ordinary depositors by banks.

The RBI will implement policies to encourage banks which provide extensive services while disincentivising those which are not responsive to the banking needs of the country, including the underprivileged. The nature, scope and cost of services will be monitored to assess whether there is any denial — implicit or explicit — of basic banking services to the common person. "Banks are urged to review their existing practices to align them with the objective of financial inclusion," the policy statement said.

The RBI also decided to set up an independent Banking Codes and Standards Board of India on the model of the mechanism in the U.K. in order to ensure that comprehensive codes of conduct for fair treatment of customers are evolved and adhered to. It also decided to issue appropriate guidelines to banks to ensure transparency and disclosure of information by the card issuing banks and customer rights protection including facilitating enforcement of such rights. It proposed to widen the scope of the Banking Ombudsman inter alia to cover all individual cases/grievances relating to non-adherence to the fair practices code evolved by the Indian Banks Association and adopted by individual banks.

The apex bank also took note of the `genuine concerns' over banking practices that excluded rather than attract vast sections of the population.

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