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Updated: August 3, 2011 18:48 IST

RBI committee proposes security and customer friendly measures

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The Reserve Bank of India building in Mumbai. File photo
The Hindu
The Reserve Bank of India building in Mumbai. File photo

With a view to make banking sector more secure and customer friendly, the RBI has proposed several measures including introduction of a system under which a person would be able to block his stolen ATM card through a SMS.

The RBI has also proposed to raise the insurance on bank deposits to Rs. 5 lakh and having a single common toll free call number for all banks, besides zero liability against loss in ATM and online transactions.

These form part of the recommendations of the Committee on Customer Service in Banks, constituted under chairmanship of former SEBI chairman M. Damodaran, by RBI last year.

The committee — which was tasked to look into banking services rendered to retail and small customers, including pensioners — had submitted its report last month and the proposals were released into the public domain on Wednesday.

In its report, the Damodaran committee proposed “instant blocking of ATM card through SMS-block for lost/misused cards.” It is expected to help people who currently are required to call up the bank in case of card loss.

“If an ATM card has been misused by another person, on receipt of SMS about use of the card, the customer should be able to immediately send return SMS to block the card with a single word like ‘BLOCK’ to prevent further withdrawals.

“...It is observed that considerable time is lost in locating the numbers of accounts, phone numbers etc., which gives the fraudsters more time to commit fraud,” the report said.

The report further recommends that in case of default by banks, the Rs. 1 lakh cover guaranteed to each account under current rules should be raised to Rs. 5 lakh.

“With rise in general income levels resulting in increase in the size of individual bank deposits, this ceiling of Rs. 1 lakh is considered insufficient. The Committee is of the view that this cover should be raised to at least Rs. 5 lakh so as to encourage individuals to keep all their deposits in a bank,” it said.

The committee also suggested creation of a single common toll free call number for customer services for all banks.

“The Indian Banking Association (IBA) should consider a toll free Common Call Center number (like Dial 100) for all banks. A customer would ring that number and thereafter get diverted to the bank concerned,” it added.

Banks are compulsorily required to get their deposits insured from Deposit Insurance and Credit Guarantee Corporation (DICGC).

The committee also suggests setting up of a third party Know Your Customer (KYC) data bank.

The proposals also include proper prescription of service charges for basic services, providing small remittances at reasonable price and providing floating rate housing loans on a non-discriminatory basis.

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