A critical analysis of Banking Codes and Standards (BCSBI)

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Amit Rethrekar
Amit Rethrekar
Amit Rethrekar is a noted author on the subject of Cyber Security, Anti Money Laundering and Compliance related issues.

The first thought a common Indian gets seeing BCSBI words are? Is this some new subsidiary or part of the SBI group? Sadly, this tells the story. There is little or perhaps no awareness on BCBSI in India, especially amongst customers for whose benefit it is formed.


BCSBI stands for Banking Codes & Standards Board of India. It is an autonomous body under the patronage of RBI formed to bring uniformity in systemic issues of banking relating to products and services. Its basic objective is “fair” treatment of customers.


In November 2003, the RBI constituted a committee on procedures and performance audit of Public services. Although the scheme of BO: Banking Ombudsman ( बँक लोकपाल) was already functional systemic issues relating to quality of service were not being taken care of. Hence in the Monetary Policy statement of 2005, announcement of BCSBI formation was made.

Simple understanding:

For banking in India, RBI was-is-always WILL be the regulator. Hence in the banking scenario, RBI is like the Principal. It decides who to admit sets the rules and safeguards the general public against the act of its pupils. Banking Ombudsman is like the Strict Teacher appointed by RBI, whose activity is to receive complaints and punish. BCSBI is the mild Teacher. It’s a philosophical teacher who will give directions, set standards and expect everyone to follow.

Form of organization

Interestingly, BCSBI although is the “brain child” of RBI, it is not the direct subsidiary of RBI (Like Banking Ombudsman scheme or the currency printer BRBNMPL: Bhartiya Reserve Bank Note Mudran Private Limited). It is formed as a “Society” under the Societies Registration Act, 1860; the form of organization preferred by NGO’s (Check the article on NGO laws).

International Scenario

BCSBI is a unique body in itself, since there is no organization like BCSBI in the world. Yes, in countries like USA and other European nations, have a Financial Consumer Protection type law, i.e statute and no codes.


The membership is exclusive to Scheduled Banks. It is on voluntary basis. The categories of membership being:

  • Scheduled Commercial Banks
  • Scheduled Co-op banks
  • Regional Rural Banks


  1. To develop and promote the Codes and Standards for banks formulated by it
  2. To monitor and ensure Codes and Standards adopted by BCSBI are adhered to it letter and spirit

Codes & Standards

The codes are service area specific and not product specific. As of now, the Codes formulated by BCSBI in co-ordination with IBA (Indian Bankers Association) are as under:

  1. Code of Commitment to Customers
  2. Code of Commitment to Micro and Small Enterprises.

What BCSBI mandates?

  1. Just like Principal Officer is appointed for FIU IND under PMLA, for BCSBI banks are required to appoint PCCO- Principal Code Compliance Officer
  2. Publishing these codes (English and regional optional) on the banks website
  3. Information handout on the Charter to customers provided at the time of account opening on demand ( The codes will be usually put up on the Notice Board)
  4. Annual Statement of Compliance (ASC) as on calendar year basis, i.e as on 31st December to be submitted and reviewed by the bank. Chairman, BCSBI reviews the same and asks for further compliance and so on.



This is a code which has the basic crux of “Fair” treatment to customers and has spelt out some guidelines on:

·         Information transparency No sharing of info on customer details, DND, tariff for services applicable, rate of interest and terms and conditions
·         Advertisement related No selling of third party products, Credit Rating agencies info sharing
·         Dues Policy for collection, security re-possession
·         Complaints and Grievances Banking Ombudsman related
·         Products and services Covers all types of deposits, lending, safe deposit lockers, guarantees, foreign exchange services, ATM/Credit cards, mobile banking
·         Protecting your account Some instructions, liability for losses
·         Monitoring and review of the code Annually by BCSBI

Please note this is indicative, the entire code can be accessed on www.bcsbi.org.in

Some interesting facts of the code you were never aware of…!!!!

  1. The bank has to give in writing the reasons for not issuing loan to you, in case the loan application is rejected.
  2. The documents submitted for the loan, original deeds and documents have to be given back to the customers within 15 days of the closure of the loan.


I shall not be focusing much on the same, since MUDRA Bank has almost negated the code now. When you have a bank for the micro and small enterprises, the code will lose relevance. One of the most important aspects of the code was providing MSME with collateral free loans upto INR 1 lakhs. It was already in place by the CGTSME or some subsidy availment under MSME schemes.


I have heard one Ex-Governor of RBI stating on record, they incur a cost of around INR 4,000 per every complaint handled by Banking Ombudsman, besides the amount spent by the bank and customer, it sums up about INR 15,000-18,000, which is simply waste of time and money. Having the guiding codes, the intention is cut down on complaints and facilitates banks-customers to respect each other’s rights and in event of conflict seek mitigation.

What the codes should have done?

As you aware of the spamming, phishing, spearphishing and vishing frauds wherein customers have been duped of their money stealing/ cloning their ATM/Credit cards, the banks cunningly prove it that the customer was either negligent or did not exercise due care and exercise and shirk off the liability. The BCSBI codes have been silent so far, they have spoken on the charges part only. If there was a tinge of clarity on who is actually at fault when such a fraud occurs, things would have been better.

Indiaforensic is at the forefront of investigating such cyber fraud related issues. One stunning fact in most of the cases is compromise of information from the banks staff or its subsidiaries or outsourcing agents. For such cases, customers cannot be made to bear the burden of loss.

Indiaforensic (Brand owned by Riskpro) will try to create more awareness in this regard and bring clarity in case of compensation for loss due to cyber crimes. Indiaforensic is committed to educating the bankers as well as general public and we believe the revision in codes in terms of “Liability” clause in case of cyber crime/fraud will serve as a precedent for all such cases in future.



Don’t write off these codes; in the last Annual General Meeting they have put a vision of submitting a memorandum to Govt of India for conversion of these codes into law. So the next time, the banks charge you/debit your account without prior intimation, refer the codes and if non adhered fight for your rights.

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