Banks should not charge pre-payment fee for floating loans
Home loan borrowers in floating rate schemes have a reason to rejoice, if the Reserve Bank of India finally implements its suggestion to waive pre-payment charges in floating rate loans. However, banks can continue to levy charges on pre-payment of loan taken on fixed interest basis, the RBI said.
To improve customer service, the regulator has come out with ten action points derived at its Banking Ombudsman Conference held on September 5.
“Banks may also offer long-term fixed rate housing loans to their customers,” said a release issued by the RBI on Tuesday.
These are not the only measures that will spell cheer for customers. Now, an aggrieved customer, who has suffered metal harassment from his bank, may now be paid monetary compensation. The regulator in association with the Indian Bankers’ Association (IBA) would examine the issues pertaining to monetary compensation.
Now-a-days it’s a common phenomenon that banks are at loggerheads with customers over online and ATM frauds. RBI’s ten-point recommendations have included this fact taking a customer-friendly approach.
“In the event of any monetary dispute involving the customer and the bank in case of ATM/Internet-based banking transactions, the onus should be on the bank to prove the customer’s negligence or mistake. Customers must be compensated for the losses arising out of his/her non-authorised transactions,” RBI said.
RBI also attempts to bring some transparency on the tax front. It suggests banks to issue tax deduction at source (TDS) certificates to account holders and dispatch it to their mailing address.
On inculcating the code of “fair practices to the customers” in banks, the regulator said it is in favour of intense dissemination of information to customers. That includes providing periodical loan statements to small investors and conveying borrowers on the annualised all-in cost (annual effective rate) on their loan accounts. Moreover, insurance of some reasonable amount on customers’ credit and debit card transaction should be put in place, the regulator stated. Check out Latest Dining Offers on Restaurants in Delhi
RBI has also asked banks to provide a consensus view on the recommendations of the Damodaran Committee report on customer services in banks that could be implemented immediately. An RBI panel headed by former SEBI chief M Damodaran was formed to improve customer services in the banking arena. It gave its final recommendations in the first week of August.
In the Ombudsman conference, RBI governor D Subbarao said, “Prevention is better than cure. So, rendering good customer service is like ‘prevention’ and is better than the ‘cure’ which is the various grievances redressal mechanisms.”