Know banking codes and get yourself heard

Banking surely has come a long way. You don’t have to visit the musty branches and brave serpentine queues anymore. The ATM can take care of most of your needs. If at all you need to visit a branch, smiling faces with pleasant manners would welcome you warmly.

However, the facade drops the moment you have a serious issue — like an erroneous transaction or wrong entry — with the bank. No technology, no courtesy can save you from the Kafkaesque nightmare. Suddenly, the bureaucratic maze would make sure that you run from one counter to the other or follow up the matter with countless phone calls to find a solution.

That need not be the case. A little bit of awareness about the service level of banks mandated by RBI can help you take the bank to task. If there is a violation of the code of commitment (available on the websites of the banks and the Banking Codes and Standards Board of India) by the bank, you can take up the matter with the bank’s nodal officer. Here are a few common problems faced by bank customers and how you can find a solution to it.

Failure to regularise loan accounts:

In most cases, banks settle a loan through a compromise if there is a default in repayment for a considerable period. However, if a loan is repaid under a compromise settlement, with a part of the amount being waived off, many banks report it as ‘written-off’ instead of loan account ‘closed’ while submitting data to credit information companies like CIBIL. They do it despite their code of commitment to customers clearly stating that if the account of a borrower is regularised after having been in default, the information would be passed on to the credit information company in the subsequent monthly report.

This is a serious issue as it has the potential to adversely affect the person’s credit rating for future loan applications. “We have been flooded with such complaints. We advise the aggrieved borrowers to write to the bank’s nodal officer for correcting the situation. If the issue remains unresolved at this level for a period of 30 days, they can consider approaching the Banking Ombudsman,” says VN Kulkarni, chief counsellor with the Bank of India-backed Abhay Credit Counselling Centre.

Erroneous ATM transaction:

ATMs aren’t god, even they can commit mistakes. One of the common grouse against these magnificent machines which almost always give you the right amount is about failed transactions. Often customers find that failed withdrawals are often debited from their account.

In accordance with the directive from the Reserve Bank of India, banks are required to reverse any erroneous debit made to an individual’s account due to failed ATM transaction within 12 days of receiving a complaint from the account holder.

If the bank fails to reverse the entry, it will have to offer compensation of Rs 100 per day to the customer. The amount is to be credited to the individual’s account on the date of re-credit, even if he/she has not made a claim for the compensation.

Delay in crediting:

The code of commitment also lays out the penal interest payable by the bank if there is a delay in executing transactions on payment platforms such as RTGS, NEFT, ECS and so on. The central bank has also recently prescribed penalties to be shelled out by banks for any delay in credits pertaining to payments made through the electronic platforms.

In the case of NECS or ECS-Credit, the bank is expected to pay a penal interest at the prevailing RBI LAF Repo Rate plus two per cent, starting from the due date of credit till the date of actual credit. The same rate also applies to NEFT transactions. On delays in return of the funds transfer instruction, the destination bank has to refund the amount along with the interest till the date of refund.

“Besides this, every bank has a cheque collection policy in place. One significant provision is the penalty payable by the bank in the event of a delay in collecting outstation cheques. Account holders would do well to go through their bank’s policy in this regard,” suggests Madan Mohan, chief counsellor, Disha Financial Counselling, which is supported by the ICICI Bank.

Uncouth recovery agents:

Banks have found an easy way to tackle serial defaulters. Antisocial elements who would act as recovery agents for banks make life hell for people with untimely visits and abusive phone calls. The sad part is that even genuine customer can be target of these characters. Following widespread complaints from borrowers, the RBI had taken measures to regulate the conduct of recovery agents. The code of commitment states the bank will not initiate the recovery proceedings without informing the borrower in writing.

In addition, the agents are supposed to contact the customer at a place of his or her choice and are duty bound to interact in a ‘civil manner’. Also, the recovery agent can make calls or visits only between 7 am and 7 pm. If the recovery agent does not adhere to these norms or fails to maintain the decorum, you can bring it to the bank’s notice. Finally, arm yourself with a careful reading of the BCSBI code of commitment to customers as it will help you understand your rights as a customer and ensure that you get a fair deal from your bank.