Greater transparency for home loan seekers.
By Joseph Samson
Sep 24, 2009
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The Banking codes and Standards board of India (BCSBI) has asked its member banks to justify their lending policies and other services thus ensuring more transparency in the way banks price their home loans.

BCSBI was formed by RBI in November 2003, under the chairmanship of the then deputy governor, S.S. Tarapore, to address issues concerning availability of adequate banking services to common man.

According to the directions by the BCSBI, the banks will have to inform the customers, who avail home loans at floating rates, of the reference rate to which the floating rate is attached.

KJ Udeshi, chairperson of the BCSBI, said that the banks would have to disclose changes in such reference rates on their websites.

These codes will be applicable to all major commercial banks in India. Banks have been asked by RBI to voluntarily accept the codes, which entails the banks to justify their pricing mechanisms. They will have to abide by the publicly announced policies, failing which the Board could intervene and ensure that the banks comply with the announced policies.

RBI's deputy governor, KC Chakrabarty said that as a regulator, they had the onus of the customers. He added that the new norms will aid the vulnerable sections of the society as they do not have any another platform for redressal.

The new code urges the banks to explain Income Tax Act provisions applicable to interest income. Bank will have to dispose off customer complaints within 30 days. Besides this, banks will have to come out with the most important terms and conditions (MITC) for credit cards and loans that are concise and comprehensive.

Customers can now check with the banks' websites for policies relating to cheque collection, compensation, collection of dues and grievance redressal.

BCSBI, in association with Reserve Bank and Indian Banks' Association (IBA), had first issued the code in 2006.

In order to enhance the credit delivery mechanism in the industry, BCSBI plans to set up a credit counselling centre in Mumbai from next month.

The service will be free of cost for member banks' customers.


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