Customer Service

Ombudsman in Banking
An official appointed to investigate complaints by individuals against public authorities Banking Ombudsman scheme was set up by RBI in 1995. A Banks customer can approach the Ombudsman if his grievance is not settled to his satisfaction within 1 month and if the complaint is covered by the scheme. RBI appoints one or more persons as Ombudsman and he is authorised to attend the following complaints: Concerning deficiency in service: 1) 2) 3) 4) 5) 6) 7) 8) 9) Non payment or delay in payment or collection of cheques, drafts, bills Working hours Refusal to issue drafts Commission or refusal to issue small denomination notes Dishonour Letter of Credit/guarantee Claims w.r.t. unauthorised/fraudulent withdrawals Exporters bank operation in India (bill/receipt of documents) NRE A/c. Complaints Complaints w.r.t. Savings, current or other A/cs

Non observance of RBI Directives on: 1) Interest rates 2) Delay in loan sanction 3) Time schedule Quick and inexpensive forum. Award given by the banking ombudsman is binding on both parties. This scheme was revised in 2002 to include: 1) 2) 3) 4) Credit card complaints Deficiencies in promised services by banks sales agents Levying service charge with prior notice Non-adherance to Fair Practice Code

This scheme is applicable to all commercial banks, RRBs Scheme. Primary co-op banks in India w.e.f. 1/1/2006.

Universal Banking:
Universal Banking can be defined as the conduct of a range of financial services comprising deposit taking and lending, trading of Financial instruments and forex (and their derivates), underwriting of new debt and equity, brokerage and investment management and insurance, term Finance and project advisory services, etc. Universal Banking is a one-stop shop of financial projects and services. It helps the service provider to build up long-term relationship with the client by catering to his different needs. The client also benefits as he gets a whole range of services at a low cost under one roof. e.g. Citibank, ING Vysya Bank Deutsche bank. ICICI was the 1st Financial Institution in India to convert itself into a Universal bank. In India the trend towards Universal Banking began when Financial Institutions were allowed to finance working capital requirement. This trend got the momentum with the report of Narasimham Committee II, suggesting that Developing Financial Institutions (DFIs) should convert ultimately into Commercial banks or NBFCs. The Khan Committee set up by RBI was also of the view that DFIs should be allowed to become banks at the earliest. In April 2001, RBI set out the operational and regulatory aspects of conversion of DFIs into Universal banks.

KYC (Know Your Customer) Norms and Anti-Money Laundering

On the recommendations of the United Nations, the GOI has enacted Prevention of Money Laundering Act 2002. (PML Act 2002). Money laundering is a process whereby proceeds of crimes, such as drug trafficking, smuggling etc. are converted into legitimate money through a series of financial transactions making it impossible to trace back the origin of the funds. The objectives of the KYC policy are to prevent criminal elements from using the banks for money laundering activities by enabling the bank to know/understand the customers and their financial dealings better, which in turn would help the bank to manage risks prudently and to put in place appropriate controls for detection and reporting of suspicious activities in accordance with the laid down procedures so as to comply with applicable laws and regulatory guidelines. (KYC is mandatory) Section 12 of PML Act 2002 has placed certain obligations on every banking institution and intermediary which include: 1) 2) 3) 4) Maintaining a record of prescribed transactions Furnishing information of prescribed transactions to the specified authorities Verifying and maintaining records of the identity of its clients Preserving records in respect of i), ii) and iii) for a period of 10 years from the date of cessation of transactions with the clients.

Key elements of the Policy include customer acceptance policy, customer identification procedures, documents to verify name/identity and address of the customer, obtaining proper introduction, photograph and risk categorization (High, Medium, Low, Negligible). (Note: High Risk Countries: Without Anti-Money Laundering and Regulations, politically unstable regime with high level of public/private sector curruption, known to be drug producing or drug transit countries, non co-operating country.)