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Code of Conduct

Indian Banks' Association (IBA) introduced a formal system of self-discipline in the Indian Banking Industry in the year 1973, by recommending a ceiling rate of interest on inter-bank borrowings in call money market.

Indian Banks' Association (IBA) introduced a formal system of self-discipline in the Indian Banking Industry in the year 1973, by recommending a ceiling rate of interest on inter-bank borrowings in call money market. In the year 1977, the Ground Rules and Code of Ethics (GRACE) were evolved. In a highly regulated environment, GRACE served its purpose for the last over 20 years, in bringing about a standard of ethical behaviour among Member Banks in certain focal areas of interest to the banking public. GRACE also served as a tool defining the boundaries for interpretation of the directives of the Regulatory Authority in key areas. However, the framework of GRACE was predominantly suited to a fully regulated environment.

The environment has undergone transformation following liberalisation and in the context of financial sector reforms. It was, therefore, felt that there was a need for comprehensively revising GRACE.

Keeping the above need in view, the IBA Committee to Monitor Code of Ethics (CMCE) set up a working group drawing members from the CMCE itself to revise the GRACE. The Working Group drafted a code for banking practice for uniform adoption by the banks. The draft code for banking practice was circulated among Member Banks for their comments. The final draft after incorporating suggestions from Member Banks and our legal consultant was approved by the IBA Managing Committee. The Code was then forwarded to the Reserve Bank of India (RBI) for its concurrence. RBI advised that the IBA Code for Banking Practice is in order for uniform adoption by the Member Banks.

The IBA Code for Banking Practice thus evolved, is an attempt towards fulfilling the above need under the liberalised and deregulated environment, aiming to promote a healthy relationship between the banks. This IBA Code for Banking Practice shall replace the extant GRACE with effect from 1st September, 1999 for adoption by all Member Banks.

Status of the IBA Code for Banking Practice

Indian Banks' Association (IBA) Code for Banking Practice (hereinafter referred to as the IBA Code/the Code) is issued by the Indian Banks' Association (hereinafter referred to as the Association) which has the concurrence of the Reserve Bank of India.

This is a non-statutory Code issued on a voluntary basis. It is to be observed by the Member Banks in dealing with their personal customers (hereinafter referred to as customers). It covers specifically banking services such as current accounts, savings and other deposit accounts, advances (loans and overdrafts). However, principles of the Code will apply to overall relationship between the Member Banks themselves and their customers.

The recommendations set out in the Code are supplementary to and do not supplant any relevant legislation, codes, guidelines or rules applicable to Member Banks under the Banking Regulation Act, 1949, the Reserve Bank of India Act, 1934, the Negotiable Instruments Act, 1881, the Banking Companies Acquisition and Transfer of Undertakings Act, 1970 and 1980 or any other law in force in India governing the Banking Law and Practice.

The Association expects its respective Member Banks to comply with the Code in letter and spirit and observance/compliance thereof shall be monitored by a Committee to be constituted at the Association.

The Code becomes effective from 1st September, 1999 and would also be subject to review/revision from time to time; at least once in every three years.


The Code is intended -

  • to promote good banking practices by setting out the minimum standards which Member Banks will follow in their dealings with customers;
  • to foster customer confidence in the banking system;
  • to inculcate self-discipline amongst Member Banks with a view to promoting healthy competition and ethical practices in respect of banking services.

Useful Definitions

  • "Prizes etc." means any prize' lottery' lucky dip' prize draw, gift, benefit either in cash or in kind, attached to, linked with or flowing from any deposits/advances schemes.
  • "Term Deposits" or "Fixed Deposits" are deposits where the depositor makes a lump sum deposit at one time for a fixed term and receives payment thereof on maturity; the interest on the deposit is payable at simple rate either periodically or at maturity
  • "Recurring Deposits" or "Cumulative Deposits" are deposits where the input is in equal monthly installments and the output, on maturity, is in one lump sum
  • "Special Recurring Deposits" are deposits accepted in quarterly/half-yearly/yearly installments from the institutional/corporate investors for their special needs such as sinking/amortisation funds or from individuals for any of their special needs
  • "Annuity Deposits" are deposits where the input is either in installments or in lump sum and the output is in installments
  • "Permanent Income Plan" or "Perennial Pension Plan" is a scheme under which deposits are accepted in lump sum or in installments for a specific period, on completion on which, interest at applicable rate on the corpus built is paid monthly (discounted) or quarterly (actual), as per terms of contract.
  • "Reinvestment Deposits" and "Cash Certificates" are deposits which are accepted in lump sum for a fixed period, on maturity of which the principal plus interest compounded at quarterly intervals are repaid to the depositor as a lump sum

IBA Code for Banking Practice

  1. Observance

    Member Banks of the Indian Banks' Association (the Association) agree to observe and abide by the following Ground Rules:

  2. Member Banks of the Indian Banks' Association (the Association) agree to observe and abide by the following Ground Rules:

    Member Banks shall not give prizes, gifts, donations, etc., or any direct or indirect benefits in the purchase price or in respect of any other transactions relating to securities, bonds, etc., as consideration or with a view to getting or retaining a deposit and or advance account. Promotional schemes duly approved by the Boards of respective banks may, however, be launched within the regulatory framework of the Reserve Bank of India. However, it may be customary to distribute gifts (cost of such gift article should not exceed Rs.250/- per piece) at the time of Diwali or New Year to the valued customers. Bank's policy in this regard be approved by the Board

  3. Association with Chit Funds/Speculative Ventures

    Member Banks shall not associate themselves with chit fund companies, which conduct lottery, gift schemes, etc., or any other speculative ventures. Member Banks shall also not encourage or lend their names to promote speculative ventures of any nature. However, it would be in order for banks to open current accounts, fixed deposits, etc. of such companies in the banks' normal course of business

  4. Deposit Receipts

    When Member Banks issue deposit receipts against cheques/drafts/pay-orders drawn on local banks, the banks may pay interest on such deposits from the date on which the relative instrument gets credited/adjusted in the bank's account at the clearing house (RBI, SBI, etc.).

  5. Savings Bank Accounts

    Member Banks shall not open savings bank accounts in the name of the institutions which have been listed out in the Annexure to this Code and also as amended from time to time

  6. Introduction of Accounts

    All deposit accounts, whether savings, current or term deposits, shall be properly introduced

  7. Printing of Customer's Logo, etc. on Cheque Leaves

    Member Banks shall not print or allow the customers to print any logo, advertisement, etc., on the cheque leaves. However, this prohibition need not be extended to dividend/ interest warrants or refund orders in view of their limited circulation.

  8. Collection of Term Deposit Receipt on Maturity

    The Term Deposit Receipt (TDR) received for collection from another bank shall not be renewed by the TDR issuing bank and delivered to the customer directly. The TDR issuing bank shall either pay to the collecting bank or else, the instrument shall be returned, if the issuing bank has any valid reasons not to pay

  9. Renewal of Overdue Domestic Term Deposit

    Renewal of overdue domestic term deposit (from maturity date of overdue deposit) shall be for a period extending upto at least 15 days beyond the actual date of renewal. If the renewed overdue domestic deposit is tendered for premature foreclosure/encashment before completion of minimum 15 days from the actual date of the renewal, no interest be paid for the overdue period even if the total overdue period from the date of maturity of the old deposit receipt exceeds 15 days.

  10. Payment of Interest on Term Deposit Maturing on Holidays

    If the noted due date of a term deposit falls on a holiday, Sunday, non-business working day, interest be paid for such intervening day(s), at the originally contracted rate, till the succeeding working day

  11. Maturity Value Certificate (MVC)

    Member Banks shall not issue Maturity Value Certificates (MVCs) under any circumstances to any person who approach bank branches with offer to procure substantial rupee deposits.

  12. Negative Publicity

    Member Banks shall not make publicity of adverse/weak position of other banks, in order to wean away the customers of the affected banks.

  13. Interest Payment
    • The statements with regard to the rate of interest, method of interest calculation, etc. in any publicity literature, advertisement and other forms of publicity on deposit scheme/s of banks shall be precise and intelligible
    • Member Banks may follow the Master Charts relating to payment of interest on deposits prepared by the Association from time to time for fixing maturity values; for payment of monthly income, annuities, etc
  14. General Conventions for Domestic Deposits
    • Member Banks may not accept any deposits for a period longer than 10 years. However, banks may accept deposits for periods exceeding 10 years in terms of orders of competent courts or in the case of minors where interests of minors are involved, provided banks are convinced that it is necessary to do so. Individual banks may decide in this matter based on asset liability management policies being followed.
    • Interest on deposits for fixed term may be paid, credited, transferred or reinvested with frequency not less than the quarterly rests. However, payment of monthly interest may be allowed, if required, by discounting the quarterly interest accrued (refer to the Association's Master Charts).
    • Interest on deposits where the terminal period (month/quarter/half year etc., as the case may be) is incomplete shall be paid on maturity
    • On deposits repayable in less than three months or where the terminal quarter is incomplete, interest would be paid for the actual number of days on the basis of 365 days in a year
    • Where the interest is paid at discounted value on monthly basis during the currency of the deposits:

      If the terminal quarter or half years consists of one month (e.g. deposit is for 37 months), interest therefore (i.e. for 37th month) shall be paid at actuals (i.e. one third of quarterly or one-sixth of half-yearly interest).
    • Where the terminal incomplete quarter or half year consists of (i) one month and over, but less than two months (ii) two months, and (iii) two months and over but less than three months, interest shall be paid as under:
      • for one month and over but less than two months (e.g. deposit for 37 months and 15 days); or
      • two months (e.g. deposit of 38 months) - At discounted value for the first month (i.e. 37th month) and at actuals for the terminal incomplete month (i.e. 15 days) or second month (i.e. 38th month), as the case may be; (iii) for two months and over but less than three months (e.g. deposit for 62 months and 15 days) - At discounted value for first and second months (i.e. 61st and 62nd month) and at actuals for the terminal incomplete month (i.e. 15 days).
  15. Terms of Acceptance of Deposits
    • Member Banks shall not issue an incomplete term deposit receipt which does not clearly mention the amount actually deposited, period for which the deposit is placed/accepted and the rate of interest payable as also periodical rest at which interest is payable
    • In case of Reinvestment Plan Deposit, Recurring Deposit and Cash Certificate in addition to the particulars stated in the above para, banks shall also mention the maturity value and periodical rest at which the interest shall be compounded
  16. Overdraft in Savings Bank Account

    No overdraft limit on a regular basis be permitted in saving bank account.

  17. Monitoring

    The Committee constituted by the Association to ensure the observance/compliance of the Code by the banks shall be empowered to investigate and follow up the cases of violation of the Code by Member Banks that may be brought to its notice.

    Member Banks shall not violate any of the Ground Rules merely because some other Member Bank/s has/have violated. They shall, instead, instruct their branch managers or any other officials that on their coming across any case of violation by other banks, they shall bring the same to the notice of their head office, which will take up the matter with the Association. For this purpose, every Member Bank shall nominate a designated officer who shall liaise between the bank's branches and the Association in the matter. The Association shall consider the complaint on violations received from the designated officer of the complainant bank. Member Banks shall give immediate effect to the suggestions given by the Committee in respect of any matter related to violation of this Code


Prohibition against Opening of Savings Bank Accounts in the Name of Certain Bodies/Organisations(Vide paragraph 9.13 Manual of Instructions (June 1998); Department of Banking Operations and Development, Reserve Bank of India)

  1. Savings deposit account cannot be opened by banks in the name of:\
    • Government departments
    • Bodies depending upon budgetary allocations for performance of their functions.
    • Municipal Corporations or Municipal Committees
    • Panchayat Samitis
    • State Housing Boards.
    • Water and Sewerage/Drainage Boards.
    • State Text Book Publishing Corporations
    • Societies.
    • Metropolitan Development Authority.
    • State/District Level Housing Co-op. Societies, etc.
    • Any trading, business or professional concern (e.g. firms of Chartered Accountants, Lawyers, etc.) whether such concern is a proprietary or a partnership firm or a company or an association.
    • Political Party.
  2. The above prohibition will not apply in the case of the following organisations/agencies:
    • Primary Co-operative Credit Society which is being financed by the bank
    • Khadi and Village Industries Boards.
    • Agriculture Produce Market Committees
    • Societies registered under Societies Registration Act, 1860 or any other corresponding law in force in State or a Union Territory
    • Companies governed by the Companies Act, 1956 which have been licensed by the Central Government under Section 25 of the said Act, or under the corresponding provision in the Indian Companies Act, 1913 and permitted not to add to their names the word "Limited" or the words "Private Limited".
    • Institutions other than those mentioned in clause (i) above and whose entire income is exempt from payment of income tax under Income-Tax Act, 1961.
    • Government departments/bodies/agencies in respect of grants/subsidies released for implementation of various programmes/schemes sponsored by Central Government subject to production of an authorisation from the respective Government departments to open savings bank account.
    • Development of Women and Children in Rural Areas (DWCRA).
    • Self-help Groups (SHGs) registered or unregistered, which are engaged in promoting savings habits among their members.
    • Farmers' Clubs - Vikas Volunteer Vahini VVV.

Please Note:

  • Nomination facility is available on all deposit accounts, articles in safe custody and safe deposit vaults.
  • Bank exchanges soiled notes and mutilated notes.
  • Bank accepts / exchange coins of all denominations.
  • If a banknote tendered at the branch is found to be counterfeit, bank will issue an acknowledgement to the tenderer after stamping the note.
  • We accept direct tax collection.
  • We open 'No frills' accounts.
  • The Bank will consider the clear balance available in your account at the beginning of the day to process cheques in Inward Clearing.