The Reserve Bank of India may make public the names of banks indulging in unfair customer treatment.
"Mere penalty will not do the trick. The central bank may publish the names of those banks known for poor customer service," said the CEO of a private sector bank.
The annual policy, released last week, focused on customer service in a big way. It has proposed to set up the Banking Codes and Standard Board of India to look into this area.
The RBI has set up this body amid mounting complaints from customers on unjustified hidden charges and exclusion of small depositors by banks.
"The threat of a dent on a bank's image has been the best method to deal with poor customer service standards in the United Kingdom and could be used in India as well," said sources at Indian Banks' Association, the apex banking association in the country.
Private and foreign banks will be the ones hauled up most, say industry observers.
The British Bankers' Association's banking code uses something called the 'name and chime' approach to punish errant banks.
The UK association has a banking code, a voluntary one that sets standards of good banking practices for financial institutions to follow.
There are also instances where British banks have been fined and been asked to return money to a large number of customers as compensation for lack of transparency in their product offerings.
The RBI plans to set up the initial banking standards body hand it over to the IBA at a later stage. This body will have legal status. It may start off by adopting the IBA's fair practices code with some changes.
The fair practices code, prepared some ten months back, has not been enforced so far. It emphasises the need for banks to be fair, just, clear in their communication to customers.
According to the code, a bank needs to give its customers advance intimation of all charges. The code even gives customers the right to return a banking product in case it does not live up to what the bank had promised.
The proposed board is likely to appoint respectable public citizens and some bankers to ensure that a bank's point of view is kept in mind when dealing with customer grievances, said sources.
The UK body is a panel of nine members -- five of whom are non-bankers such as retired bureaucrats, legal experts and other public citizens.
