NTH :: New banking code may keep your online transactions secure

By Preeti Kulkarni, ET Bureau | 19 Feb, 2014, 06.44AM IST | Economic Times

You don’t have to worry anymore about someone trying to access the confidential information every time you use internet to carry out banking transactions. According to the Banking Codes and Standards Board of India’s (BCSBI) revised code of commitment to customers that came into force from January, banks will have to take a lot more responsibility for any “unauthorised” transactions.

If a customer incurs any direct loss due to a security breach of the Internet banking system that is not contributed or caused by the customer, the bank will bear the loss,” says AC Mahajan, chairman, BCSBI, a quasi-regulatory body in charge of framing guidelines — or codes of commitment. Banks will have to either prove the customer has compromised sensitive information, or compensate him or her for the loss.

Similarly, banks have been asked to desist from upgrading accounts without the consent of the customer. “There were many complaints that accounts were upgraded without their consent and banks started levying charges for non-maintenance of minimum balance,” says VN Kulkarni, chief credit counsellor with Bank of India-backed Abhay Credit Counselling Centre. Banks cannot continue the current practice of sending an SMS, informing about the upgrade anymore. It has to get a written consent of the customer before initiating such measures.

No More Arm-twisting?

Many banks ask customers to open fixed deposits for availing of safe locker facilities. Some banks also ask customers to buy an insurance policy. The new code tries to put an end to it – albeit with a catch.

Though banks can’t insist on an FD, they can still ask for an FD to cover the rent for the locker facility. “Banks can obtain a fixed deposit which would cover three years’ rent and charges for breaking open the locker in case of an eventuality,” says Kulkarni. But it is still a better deal for customers. For example, if a bank insisted on Rs 25,000-fixed deposit for a locker facility, now it can ask only for an FD of, say Rs 3,000 — or equal to the rent for the locker for three years. However, selling life insurance policies on a quid pro quo basis seems definitely out.

Banking from Home

The new code wants banks to service you at your home. This will benefit differently-abled customers and senior citizens. “This could include a pick-up of cash/instruments for credit to the account or delivery of cash/demand drafts against issue of cheque/ requisition in writing. Such services will be provided in special circumstances like ill health,inability to come to the branch, etc,” adds Kulkarni.

But don’t celebrate yet. “In fact, the practice of providing doorstep facilities already exists. However, it is not mandatory. Banks’ decisions will depend on the feasibility,” a senior industry official said.

Outdated Credit Reports?

The new code can have an adverse impact on your credit score, as it takes an ambiguous stand on banks sending repayment data to credit information companies (CIC). Earlier, banks used to send the data to CIC on a monthly basis, but the new code allows them to do it “periodically”.

This should not open a window for banks to report data to credit information companies over longer time cycles, resulting in data not being current,” says Satish Mehta, co-founder of credit counselling firm CredExpert. If the credit reports are outdated, it could affect the credit scores of individuals.

Finally, you can file a complaint with your bank’s grievance redressal officer. If the bank fails to resolve it, you can approach the bank’s nodal officer. If the nodal officer also fails to address your concerns, you can approach banking ombudsman.

Source : http://goo.gl/ulhB1C

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