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.
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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 -
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
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
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.).
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
All deposit accounts, whether savings, current or term deposits, shall be properly introduced
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.
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
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.
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
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.
Member Banks shall not make publicity of adverse/weak position of other banks, in order to wean away the customers of the affected banks.
No overdraft limit on a regular basis be permitted in saving bank account.
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)
Model Code of Conduct for the Direct Selling Agents (DSAs)
(APPLICABLE TO TELEMARKETERS & FIELD SALES PERSONNEL)
Model Code of Conduct for the Direct Selling Agents (DSAs) is non-statutory code issued by Indian Banks' Association, a voluntary association of Banks in India for adoption and implementation by DSAs while operating as Agents of Banks and Financial Institutions.
Upon adoption and inclusion as part of agreement between Kotak Mahindra Bank and the DSA, this code will apply to all persons involved in marketing and distribution of any loan or other financial product of the Bank. The Direct Selling Agent (DSA) and its Tele-Marketing Executives (TMEs) & field sales personnel, namely, Business Development Executives (BDEs) must agree to abide by this code prior to undertaking any direct marketing operation on behalf of the bank. Any TME/BDE found to be violating this code may be blacklisted and such action taken be reported to the bank from time to time by the DSA. Failure to comply with this requirement may result in permanent termination of business of the Direct Selling Agent (DSA) with Bank and may even lead to permanent blacklisting by the industry.
A declaration to be obtained from TMEs and BDEs by the DSAs before assigning them their duties is annexed to this Code.
3. Tele-calling a Prospect (a prospective customer)
A prospect is to be contacted for sourcing a bank product or a bank related product only under the following circumstances:
4. When you may contact a prospect on telephone
Telephonic contact must normally be limited between 0930 Hrs and 1900 Hrs. However, it may be ensured that a prospect is contacted only when the call is not expected to inconvenience him/her.
Calls earlier or later than the prescribed time period may be placed only under the following conditions:
5. Can the prospect's interest be discussed with anybody else?
DSA should respect a prospect's privacy. The prospect's interest may normally be discussed only with the prospect and any other individual/family member such as prospect's accountant/secretary/spouse, authorized by the prospect.
6. Leaving messages and contacting persons other than the prospect.
Calls must first be placed to the prospect. In the even the prospect is not available; a message may be left for him/her. The aim of the message should be to get the prospect to return the call or to check for a convenient time to call again. Ordinarily, such messages may be restricted to:
"Please leave a message that (Name of officer) representing Kotak Mahindra Bank called and requested to call back at (phone number)".
As a general rule, the message must indicate:
7. No misleading statements/misrepresentations permitted
TME/BDE should not -
8. Telemarketing etiquettes
9. Gifts or bribes
TME/BDE's must not accept gifts from prospects or bribes of any kind. Any TME/BDE offered a bribe or payment of any kind by a customer must report the offer to his/her management.
10. Precautions to be taken on visits/contacts
11. Other important aspects - Appearance & Dress Code
BDE's must be appropriately dressed - For men this means
For women this means
Jeans and/or T Shirt, open sandals are not considered appropriate.
12. Handling of letters & other communication
Any communication sent to the prospect should be only in the mode and format approved by the Bank.
Declaration - Cum - Undertaking
To be obtained by the DSA from TMEs/BDEs employed by them
Re: Code of Conduct
I am working in you company as a __________. My job profile, inter-alia, includes offering, explaining, sourcing, and assisting documentation of products and linked services to prospects of Kotak Mahindra Bank.
In the discharge of my duties, I am obligated to follow the Code of Conduct attached to this document.
I confirm that I have read and understood and agree to abide by the Code of Conduct. I further confirm that the trainer mentioned below has explained the contents in full to me.
In case of any violation, non-adherence to the said Code, you shall be entitled to take such action against me as you may deem appropriate.
Signed on this _______________ day of _________20____
Signature _______________ Name _________Agency____
Signature of Trainer _______________ Name _________Company____