21 February 2017

Dr Urjit Patel
Governor,
Reserve Bank of India
Mumbai

Subject: Requesting issuance of a Master circular/notification on the Charter of

Customer Rights with clear provisions fixing timelines for redressal and escalation,
penalty for negligent service and interest/compensation to customers for losses
caused due to mis-selling

Dear Dr Patel,

Congratulations on your new role as Governor, Reserve Bank of India.

Sir, we at Moneylife Foundation, look forward to your support in making banking a

safe experience for customers during your tenure. We also hope to engage with the
RBI more frequently, to bring to your attention various issues faced by savers and
depositors. We are sorry to say that problems of bank customers seem to be rising
significantly, despite the framing of a consumer charter nearly two years ago, since it
remains inoperative.

Sir, we are among the NGOs who had whole heartedly welcomed the Charter of
Customer Rights framed by the RBI despite some dilution in the content, as opposed
to what was discussed with the NGOs. The Charter covers almost every problem that
consumers were likely to face. The only thing missing was to fix timeframes for
grievance redressal and a set of penalties for failure to treat consumers fairly.
Unfortunately, that has never happened and the Charter seems to be in limbo for
nearly two years.

RBI issued the Charter of Customer Rights on 3 December 2014 recognising five basic
rights of bank customers and asks banks to adapt and implement it after their Board's

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approval. These five rights of bank customer are: (i) Right to Fair Treatment; (ii) Right
to Transparency; Fair and Honest Dealing; (iii) Right to Suitability; (iv) Right to
Privacy; and (v) Right to Grievance Redress and Compensation.

We are surprised at the delay in giving teeth to the Consumer Charter, when top
central bankers have repeatedly pointed to problems with customer service and
grievance redressal.

We are most hopeful that you will expedite things, because you have been with the
RBI for a longer time and are fully aware of magnitude of the problem and that things
have become worse for consumers despite the charter. In fact, far too many
judgements of the Banking Ombudsmen are also summary with no regard to the
systematic process of fooling customers into buying needless or toxic insurance and
derivative products. We are also distressed at the fact that RBI's customer services
department no longer engages with consumers or consumer groups in order to get
feedback.

We are very hopeful that your tenure as Governor will lead to a sea change in how
customers are treated. We would be happy to proactively bring a few core issues to
your attention with the intention of ensuring that RBI, NGOs and customers are on the
same page with regard to customer services and grievance redress.

Here are a few statements by senior central bankers, which acknowledge the problems
that customers face.

On 16 February 2016, speaking to Banking Ombudsmen at Thiruvananthapuram, your

predecessor Dr Raghuram Rajan had said that Grievance Redressal Mechanism must
be integrated in the business operations of banks. He stated: "Customers must have
the right to access banking services and to the grievance redressal machinery - to
banks' internal mechanism for grievance redressal as well as the Banking Ombudsman
Scheme of the Reserve Bank - so that they are not 'excluded' from the banking fold."
(Ref- https://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=36256).

This is not happening. We heard some talk about banks being asked to set up internal
ombudsman, but even we as NGOs have not come across any. In fact, complaints are
rising. We also believe that an 'Internal Ombudsman' is a needless deviation, unless
he/she is merely implementing the Consumer Charter. However, for that to be done,

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timelines for redressal of complaints and penalties/compensation/interest has to be
specified first. It cannot be arbitrary or discretionary.

Next, here is what Deputy Governor, SS Mundra said to bank compliance officers on
23 May 2016: "Even a decade after having come into existence, the status of
implementation of Banking Codes and Standards Board of India (BCSBI) Codes at the
ground level remains far from satisfactory. I understand that BCSBI's assessment of
the compliance by banks with the Codes and Standards has brought out several
instances of flagrant violations of the code. This is evident not only from the numerous
complaints received by our Banking Ombudsman Offices across the country but also
in our interactions with customers in Outreach programmes and Town Hall meetings.
This aspect merits serious attention by Principal Code Compliance Officers (PCCOs). I
am told that in the rating exercise undertaken by BCSBI on adherence to the Codes by
the banks in 2014-15, only 14% of the member banks were rated with high rating, 49%
got Above Average and 21% banks received Average rating. These clearly evidence
the fact that a number of banks need to enhance the present level of code
implementation and appropriately fulfil their commitments to their customers laid out
in the codes." (Ref- https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=1005)

These comments do not even take into account the steep rise in digital complaints,
mis-use of bank accounts (JanDhan accounts used as money mules) that Mr Mundra
has referred to in other speeches. We have written to you separately on that issue.

Four key issues faced by customers are :

1) Mis-selling of insurance and derivatives products by abusing the trust reposed
in banks and bankers
2) One-sided loan agreements with details buried in the fine print, which are
bleeding customers (we are happy to provide you with concrete examples,
where the Banking Ombudsman has not even gone into the enormous legal
precedent that is available with regard to one-sided contracts)
3) Frequent increase in charges and billing customers by stealth without opt-out
clauses that are not mentioned and
4) Wrong emails being tagged by faulty algorithms of banks and finance
companies, which are leading to emails being sent to people who have no
borrowing or accounts. This is a serious issue that will affect people's credit
history.

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 A Master circular/notification by the Reserve Bank giving teeth to the Charter of
Customer Rights with clear provisions fixing timelines for redressal and escalation,
penalty for negligent service and interest/compensation to customers for losses
caused due to mis-selling is urgently needed.

Dr Patel, we are confident you will look in to our request and initiate action on this at
the earliest. We would be happy to meet you personally with concrete examples and
explain why corrective action from the RBI is so important.

We look forward to a line of acknowledgement of our letter from your office.

Yours truly,

Sucheta Dalal and Debashis Basu

Founding Trustees
Moneylife Foundation

CC:
1. Secretary,
Dept. of Financial Services,
Ministry of Finance,
3rd floor, Jeevan Deep Building
Sansad Marg
New Delhi-110001

Enclosed:
1. Copy of the Charter of Customer Rights issued by RBI on 3 December 2014
2. Copy of the Press Release dated 16 February 2016 on Annual Conference of
Banking Ombudsmen 2016 held in Thiruvananthapuram on 15-16 February 2016.
3. Copy of the keynote address delivered by Mr SS Mundra, Deputy Governor, RBI,
on 23 May 2016 at Mumbai
4. Fact sheet about Moneylife Foundation

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