RBI forms committee to ensure bank charges

Mumbai, May 18 | Updated: May 19 2006, 05:39am hrs
In a bid to ensure reasonableness in bank charges and to incorporate them in the fair practice code, the Reserve Bank of India (RBI) has constituted a working group to formulate a scheme.

The working group would comprise of five eminent personalities, including N Sadasivan, chairman, Banking Ombudsman, Mumbai; S Diwakara, All India Depositors Association; HN Sinor, chief executive Officer, Indian Banks Association; P Saran, chief general manager, RBI; Kaza Sudhakar, CGM, as member secretary.

The major objective of this group would be to enumerate the various basic banking/financial services rendered to individual customers for which the scheme should be applicable. Also the group has to study the basis/methodology adopted by banks for fixing the quantum of charges/fees for such services.

The central bank has asked this committee to submit the report at the end of July 2006. This move by RBI was in response to Annual Policy Statement 2006-07, where it was mentioned that RBI continued to receive representations from the public about unreasonable and non-transparent service charges being levied by banks indicating that the existing institutional mechanism in this regard was not adequate.

On the other hand, RBI has also constituted another working group to suggest measures to assist distressed farmers including provision of financial counselling services and introduction of a Specific Credit Guarantee Scheme under the Deposit Insurance and Credit Guarantee Corporation of India (DICGC) Act for such farmers. This group would find out the circumstances under which a farmer can be treated as a distressed farmer.

Also, it would suggest measures for providing financial counselling and risk mitigants for these distressed farmers. The group is expected to submit its report by September 30, 2006 to the apex bank.