Ion and Functions

Organisation and Functions
Establishment
Preamble
Central Board
Board for Financial Supervision
Board for Payment and Settlement

Systems
Local Boards
Legal Framework
Main Functions
Departments
Offices
Training Establishments
Subsidiaries
Establishment
The Reserve Bank of India was established on April 1, 1935 in accordance with the
provisions of theReserve Bank of India Act, 1934.
The Central Office of the Reserve Bank was initially established in Calcutta but was
permanently moved to Mumbai in 1937. The Central Office is where the Governor sits and
where policies are formulated.
Though originally privately owned, since nationalisation in 1949, the Reserve Bank is fully
owned by the Government of India.
Preamble
The Preamble of the Reserve Bank of India describes the basic functions of the Reserve
Bank as:
"...to regulate the issue of Bank Notes and keeping of reserves with a view to
securing monetary stability in India and generally to operate the currency and credit
system of the country to its advantage."
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Central Board
The Reserve Bank's affairs are governed by a central board of directors. The board is
appointed by the Government of India in keeping with the Reserve Bank of India Act.
• Appointed/nominated for a period of four years
• Constitution:
○ Official Directors
 Full-time : Governor and not more than four Deputy Governors
○ Non-Official Directors
 Nominated by Government: ten Directors from various fields and one
government Official
 Others: four Directors - one each from four local boards
Functions : General superintendence and direction of the Bank's affairs
SECRETARY'S DEPARTMENT
Names and addresses of the Directors of the Central Board of the Reserve Bank of India
@11.
1. Dr. D. Subbarao Dr. Ashok S. Ganguly
Governor Firstsource Solutions Limited.
Reserve Bank of India Peninsula Chambers, 6th floor,
Central Office Ganpatrao Kadam Marg,
Mumbai 400 001. Lower Parel
Mumbai - 400 013
2. @12.
Dr. Rakesh Mohan Shri Azim Premji
Deputy Governor Chairman,
Reserve Bank of India WIPRO Limited
Central Office Doddakannelli,
Mumbai 400 001. Sarjapur Road,
Bangalore – 560033
@13.
3. Smt. Shyamala Gopinath Shri Kumar Mangalam Birla
Deputy Governor Chairman,
Reserve Bank of India Aditya Birla Group of Companies
Central Office Aditya Birla Centre,
Mumbai 400 001. S. K. Ahire Marg, Worli
Mumbai – 400 03
4. @14.
Smt. Usha Thorat Smt. Shashi Rajagopalan
Deputy Governor Plot No. 10, Saket Phase 2
Reserve Bank of India Kapra, ECIL Post
Central Office Hyderabad – 500 06
Mumbai 400 001.
5. @15.
Shri Y.H. Malegam Shri Suresh Neotia
Chartered Accountant B-32, Greater Kailash Part - I
C/o S. B. Billimoria & Company New Delhi – 110 048
Meher Chambers (2nd floor)
R. Kamani Road, Ballard Estate
Mumbai 400 001
@16.
* 6 . Prof. Suresh D. Tendulkar Dr. A. Vaidyanathan
Economist, B-1, Sonali Apartment, Old No. 11
AD-86-C, Beach Road, Kalakshetra Colony
Shalimar Bagh, Chennai – 600 090
New Delhi – 110 088
*7. @17.
Prof. U. R. Rao Prof. Man Mohan Sharma
Chairman, Physical Research Laboratory 2/3 Jaswant Baug (Runwal Park),
Department of Space, Behind Akbarallys, Chembur Naka
Government of India Mumbai – 400 071
Antariksh Bhavan, New BEL Road
Bangalore – 560 094
@18.
* 8 . Shri Lakshmi Chand Dr. D. Jayavarthanavelu
IAS (Retd.), Chairman & Managing Director
C-12, Sector 14 Lakshmi Machine Works Limited
NOIDA, Gautham Budh Nagar 34 A, Kamraj Road
Uttar Pradesh Coimbatore -641018
*9. @19.
Shri H. P. Ranina Shri Sanjay Labroo
Advocate, Supreme Court of India, Managing Director & CEO
506, Raheja Centre, Asahi India Glass Ltd.
214 Backbay Reclamation, Global Business Park
Free Press Journal Road, Tower - B, 5th Floor'
Mumbai - 400 023 Mehrauli - Gurgaon Road
Gurgaon - 122002 (Haryana
#20 Shri Ashok Chawla

Secretary
Government of India
Ministry of Finance
Department of Economic Affairs
New Delhi 110001
* Directors nominated under Sect 8 (1) (b) of the RBI Act, 1934.
@ Directors nominated under Sect 8 (1) (c) of the RBI Act, 1934.
# Director nominated under Sect 8 (1) (d) of the RBI Act, 1934. Dated October 1,
2008
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Local Boards
• One each for the four regions of the country in Mumbai, Calcutta, Chennai and New
Delhi
• Membership:
• consist of five members each
• appointed by the Central Government
• for a term of four years
Functions : To advise the Central Board on local matters and to represent territorial and
economic interests of local cooperative and indigenous banks; to perform such other
functions as delegated by Central Board from time to time.
Names and Addresses of the Members of The Local Boards of The Reserve Bank of India
WESTERN AREA NORTHERN AREA
*1.
Shri Y.H. Malegam, 1 . Prof. U. R. Rao
Chartered Accountant, Chairman,
c/o S. B. Billimoria & Company, Physical Research Laboratory,
Meher Chambers (2nd floor), Department of Space,
R. Kamani Road, Ballard Estate, Antariksh Bhawan, New BEL Road
Mumbai - 400 001. Bangalore – 560094
2. Shri K.Venkatesan, 2 . Shri Mitha Lal Mehta

113, F-Block, Former Chief Secretary
Anna Nagar East , Government of Rajasthan
Chennai - 600040. 5, Keshav Nagar, Gopalpura Road
Jaipur - 302 018
3. Shri Dattaraj V. Salgaocar, 3 . Dr. Ram Nath

Managing Director, Ex-Professor & Vice Chancellor
V.M.Salgaocar & Bro Ltd., CSA University of Agri. & Tech.
Hira Vihar, Airport Road, Chicalim, Plot No. 710, 'A' Block, Avas Vikas Colony,
Vasco Da Gama, Hanspur, Naubasta, Kanpur - 208 001
Goa - 403 711.
4. Shri J.B. Patel 4 . Dr. Pritam Singh

At & Post, Adada Director, Management Development Institute
Via Taluka & District Navsari Mehrauli Road, Sukhrali
Gujarat Gurgaon - 122 001
PIN-396445
EASTERN AREA SOUTHERN AREA
* 1 . Shri Suresh D. Tendulkar * 1 . Shri Lakshmi Chand,

Economist, Retd. IAS, C-12,
AD-86-C, Sector - 14, Noida,
Shalimar Bagh, U. P. 201301.
New Delhi - 110 088
2. Shri A.K. Saikia, Retd. IAS, 2. Shri C. P. Nair,

H-8, Sector-27, Retd. Chief Secretary to Government of Kerala,
Noida - 201 301. Narayaneeyam,
Jawahar Nagar,
Thiruvananthapuram - 695 041.
3. Shri Sovan Kanungo, Retd. IAS, 3. Dr S.Ramachander,

17/404, East End Apartments, Director,
Mayur Vihar I (Extension), Institute for Financial Management and Research,
New Delhi - 110 096. 30, Kothari Road,
Chennai - 400 034.
4. Dr.M. Govinda Rao.

Director,
National Institute of Public Finance and Policy,
18/2, Satsang Vihar Marg,
Special Institutional Area (Near JNU)
New Delhi - 110 067.
5. Smt. Devaki Jain,

Tharangavana, D-5, 12th Cross,
RMV Extension,
Bangalore - 560080.
* Representative on the Central Board, appointed w.e.f. November 27, 2000.

Mumbai, dated May 10, 2002.
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Financial Supervision
The Reserve Bank of India performs this function under the guidance of the Board for
Financial Supervision (BFS). The Board was constituted in November 1994 as a committee
of the Central Board of Directors of the Reserve Bank of India.
Objective
Primary objective of BFS is to undertake consolidated supervision of the financial sector
comprising commercial banks, financial institutions and non-banking finance companies.
Constitution
The Board is constituted by co-opting four Directors from the Central Board as members
for a term of two years and is chaired by the Governor. The Deputy Governors of the
Reserve Bank are ex-officio members. One Deputy Governor, usually, the Deputy Governor
in charge of banking regulation and supervision, is nominated as the Vice-Chairman of the
Board.
BFS meetings
The Board is required to meet normally once every month. It considers inspection reports
and other supervisory issues placed before it by the supervisory departments.
BFS through the Audit Sub-Committee also aims at upgrading the quality of the statutory
audit and internal audit functions in banks and financial institutions. The audit sub-
committee includes Deputy Governor as the chairman and two Directors of the Central
Board as members.
The BFS oversees the functioning of Department of Banking Supervision (DBS),
Department of Non-Banking Supervision (DNBS) and Financial Institutions Division (FID)
and gives directions on the regulatory and supervisory issues.
Functions
Some of the initiatives taken by BFS include:
i. restructuring of the system of bank inspections
ii. introduction of off-site surveillance,
iii. strengthening of the role of statutory auditors and
iv. s t r e n g t h e n i n g of the internal defences of supervised institutions.

The Audit Sub-committee of BFS has reviewed the current system of concurrent audit,
norms of empanelment and appointment of statutory auditors, the quality and coverage of
statutory audit reports, and the important issue of greater transparency and disclosure in
the published accounts of supervised institutions.
Current Focus
• supervision of financial institutions
• consolidated accounting
• legal issues in bank frauds
• divergence in assessments of non-performing assets and
• supervisory rating model for banks.
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Legal Framework
Umbrella Acts
• Reserve Bank of India Act, 1934: g o v e r n s the Reserve Bank functions

• Banking Regulation Act, 1949: governs the financial sector
Acts governing specific functions
• Public Debt Act, 1944/Government Securities Act (Proposed): Governs government
debt market
• Securities Contract (Regulation) Act, 1956: Regulates government securities
market
• Indian Coinage Act, 1906:Governs currency and coins
• Foreign Exchange Regulation Act, 1973/Foreign Exchange Management Act,

1999: Governs trade and foreign exchange market
Acts governing Banking Operations
• Companies Act, 1956:Governs banks as companies
• Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980:
Relates to nationalisation of banks
• Bankers' Books Evidence Act
• Banking Secrecy Act
• Negotiable Instruments Act, 1881
Acts governing Individual Institutions
• State Bank of India Act, 1954
• The Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003
• The Industrial Finance Corporation (Transfer of Undertaking and Repeal) Act, 1993
• National Bank for Agriculture and Rural Development Act
• National Housing Bank Act
• Deposit Insurance and Credit Guarantee Corporation Act
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Main Functions
Monetary Authority:
• Formulates, implements and monitors the monetary policy.

• Objective: maintaining price stability and ensuring adequate flow of credit to
productive sectors.
Regulator and supervisor of the financial system:
• Prescribes broad parameters of banking operations within which the country's
banking and financial system functions.
• Objective: maintain public confidence in the system, protect depositors' interest
and provide cost-effective banking services to the public.
Manager of Foreign Exchange
• Manages the Foreign Exchange Management Act, 1999.
• Objective: to facilitate external trade and payment and promote orderly
development and maintenance of foreign exchange market in India.
Issuer of currency:
• Issues and exchanges or destroys currency and coins not fit for circulation.
• Objective: to give the public adequate quantity of supplies of currency notes and
coins and in good quality.
Developmental role
• Performs a wide range of promotional functions to support national objectives.
Related Functions
• Banker to the Government: performs merchant banking function for the central and
the state governments; also acts as their banker.
• Banker to banks: maintains banking accounts of all scheduled banks.
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Offices
• Has 4 regional offices ,15 branches and 5 sub-offices.

Training Establishments
Has six training establishments
• Three, namely, College of Agricultural Banking, Bankers Training College and
Reserve Bank of India Staff College are part of the Reserve Bank
• Others are autonomous, such as, National Institute for Bank Management, Indira
Gandhi Institute for Development Research (IGIDR), Institute for Development and
Research in Banking Technology (IDRBT)
For details on training establishments, please check their websites links which are
available in Other Links.
Subsidiaries
Fully owned: National Housing Bank(NHB), Deposit Insurance and Credit Guarantee
Corporation of India(DICGC), Bharatiya Reserve Bank Note Mudran Private
Limited(BRBNMPL)
Majority stake: National Bank for Agriculture and Rural Development(NABARD).
REGULATIONS:
Reserve Bank of India

Annual Policy Statement 2009-10
Part B. Developmental and Regulatory Policies 2009-10
II. Interest Rate Policy
(b) Payment of Interest on Savings Bank Account on a Daily Product Basis

88. At present, interest on savings bank accounts is calculated on the minimum balances held in the accounts during the period
from the 10th day to the last day of each calendar month. Several banks have suggested that interest on savings bank accounts
may be calculated either on the minimum balances in the deposit accounts during the period from the first to the last day of
each calendar month or on a daily product basis. The matter was referred to the IBA, which was of the view that payment of
interest on a daily product basis would be feasible only when computerisation in banks is completed. In view of the present
satisfactory level of computerisation in commercial bank branches, it is proposed that:
• payment of interest on savings bank accounts by scheduled commercial banks (SCBs) would be calculated on a daily product
basis with effect from April 1, 2010.
Modalities in this regard will be worked out in consultation with banks.
(2)
We have been receiving several suggestions including from Government of India to make bank
branches and ATMs easily accessible to persons with disability by providing ramps so that wheel
chair users can access them and the height of the machine is also appropriate for them. Further
we have also been receiving suggestions for installing speaking software and key pads with
letters in Braille to facilitate use by persons with visual impairment.
2. We have examined the above suggestions and banks are advised to take necessary steps to
provide all existing ATMs / future ATMs with ramps so that wheel chair users / persons with
disabilities can easily access them and also make arrangements in such a way that the height of
the ATM does not create an impediment in its use by a wheelchair user. Banks may also take
appropriate steps including providing ramps at the entrance of the bank branches so that the
persons with disabilities / wheel chair users can enter the bank branches and conduct business
without much difficulty.
3. Further, banks should make at least one third of new ATMs installed as talking ATMs with
Braille keypads and place them strategically in consultation with other banks to ensure that at
least one talking ATM with Braille keypad is generally available in each locality for catering to
needs of visually impaired persons. Banks may also bring the locations of such talking ATMs to
the notice of their visually impaired customers.
Yours faithfully
(Prashant Saran)
Chief General Manager-in-Charge
(3)
Dear Sir,
Co-operative Banks (Nomination) Rules, 1985 - Acknowledgement of Nomination and indicating the Name of the
Nominee in Pass Books / Fixed Deposit Receipts
As you may be aware, in terms of Rule 2(9), 3(8) and 4(9) of the Co-operative Banks (Nomination) Rules, 1985, banks are
required to acknowledge in writing to the depositor(s) / locker hirer (s) the filing of the relevant duly completed Form of
nomination, cancellation and / or variation of the nomination. It has, however, been brought to our notice that some banks do
not comply with the requirement. Further, in some banks, although there is a system of acknowledgement of nomination as
provided in the Savings Bank account opening form, such acknowledgements are actually not being given to the customers.
2. Banks are, therefore, advised to strictly comply with the provisions of Banking Regulation Act, 1949 (AACS) and Co-
operative Banks (Nomination) Rules, 1985 and devise a proper system of acknowledging the receipt of the duly completed
form of nomination, cancellation and / or variation of the nomination. Such acknowledgement should be given to all customers
irrespective of whether the same is demanded by the customers or not.
3. When a bank account holder has availed himself / herself of nomination facility, the same may be indicated on the passbook
so that, in case of death of the account holder, the relatives can know from the pass book that the nomination facility has been
availed of by the deceased depositor and take suitable action. Banks may, accordingly, introduce the practice of recording on
the face of the passbook the position regarding availment of nomination facility with the legend "Nomination Registered". This
may be done in the case of term deposit receipts also.
4. In addition, banks are also advised to indicate the name of the Nominee in the Pass Books / Statement of Accounts /
FDRs,in case the customer is agreeable to the same, as this would be helpful to the customers/ nominees.
Yours faithfully,
(B.P.Vijayendra)
Chief General Manager
(4) RTGS TRANSACTION
The volume of RTGS transactions is increasing rapidly. RTGS settled 1.94 million transactions in the month of March 2009 as
against 0.72 million transactions in March 2008. Customer transactions settling in RTGS presently constitute 89 percent of
total RTGS transactions and are growing. At a recent meeting with major banks, we reviewed the entire gamut of RTGS
customer transactions with a view to making them more user friendly. Based on these discussions, the following decisions
have been taken for implementation by RTGS members.
2. It may be recalled that we had vide our circular DPSS (CO) No. 1607 / 04.04.002 / 2007 - 2008 dated April 7, 2008 advised
all RTGS members to comply with the wire transfer guidelines issued by the Reserve Bank of India while originating wire
transfers. We had also enclosed prototype of a R41 message format and explained how the message format should capture
the details of sender and receiver information. Banks were also required to furnish complete information in field tag No. 5500
and 5561 of customers message format (R-41) as under:-
Field tag 5500
Line 1 Sender's bank account number /

Country specific unique reference number / 35X
Identification number
Line 2 Name of the Sender/ remitter 35X
Line 3 and 4 Address and Place of Residence 2*35X
Field tag 5561
Line 1 Account number [/34X]
Line 2 Name of the Beneficiary 35X
Line 3, 4 and 5 Address and Place of Residence 3*35X
3. We understand that while some of the banks are furnishing the required details in the messages, others have not yet
implemented the guidelines. It is therefore once again reiterated that in a Straight Through Processing (STP) environment,
standardization is very much necessary and uniformity in message format is a pre requisite for the success of STP.
4. RTGS Customers have been complaining that there is no uniformity on information provided to the customer in the pass
books / account statements by different banks. Some banks merely indicate `RTGS credit’ without details while other banks
are giving sender's bank account number or UTR number of the transactions etc. This is on account of the Core Banking
Solution (CBS) of different banks capturing information from different field tags of the message format. As a result, a customer
is receiving multiple RTGS credits on a given date, is at a loss to understand the source of funds leading to reconciliation
issues.
5. It is therefore, advised that
a) A bank customer receiving RTGS credit shall be provided with the name of the remitter in his account statements / pass
book.
b) A bank customer sending a RTGS remittance shall be provided with the name of the beneficiary in his account statements /
pass book.
For the purpose, it is advised that information in field tag no. 5500 and 5561 should be provided uniformly by all banks as
advised above. The CBS of the banks should be fine tuned to capture line 2 of field tag no. 5500 for the receiver’s account
statement/ pass book and line 2 of field tag no. 5561 for the sender’s account statement/ pass book. The banks are free to
provide any additional information as they deem necessary / useful.
6. All RTGS member banks may initiate steps to comply with these instructions latest by June 01, 2009.
Please acknowledge receipt and forward an action taken report in due course.
Yours faithfully,
(G. Padmanabhan)
(5)
USD Denominated Cheques–Improvements in collection process - UCBs
Given the number of instances of customer complaints on delay in collection of USD
denominated cheques, Reserve Bank conducted a sample study of collection practices
followed by banks to explore feasibility of reducing the time lag for collection of such
cheques.
2. Based on the feedback, it has been decided that Authorised Dealer UCBs may initiate
steps as detailed below to provide customer friendly collection arrangements: -
i) UCBs shall make the US Dollar currency cheque collection scheme transparent and a
part of their regular cheque collection policy. Various modes of collection along with the
time period and charges for each mode should be appropriately covered therin.
ii) The policy shall be widely disseminated and displayed on the notice board of branches /
web site.
iii) Customer shall be suitably educated / informed of the collection mode based on need,
convenience and cost, including the advantages of using electronic modes of payment.
iv) UCBs may review their collection policies on an on-going basis and explore using
faster methods of realization such as leveraging on Check-21 facility in the US for saving
in transit time, direct deposit mechanism with correspondent bank (CB), etc., for early
collection of USD cheques.
v) There is scope for reducing the transit time for moving the cheques from branches to
CBs. The transit period may be reduced by 2 to 3 days by sending cheques on the same
day from branches to centralized pooling branch and from centralized pooling branch to
CB. Use of efficient and reliable courier / postal service may help in reducing the transit
time.
vi) UCBs may explore the possibility of forming / pooling the cheques to a service bureau
to avail benefit of imaging, reduced infrastructure costs, etc., with the intent of saving in
transit / collection time.
vii) Service charges for collection of USD cheques shall be decided by UCBs and be made
a part of their USD cheque collection policy.
viii) UCBs shall pay interest on the amount of cheques from the date of sighting credit in
their nostro account till such time the customer account is credited. Interest shall be paid
at saving bank rate calculated on the amount of proceeds credited to the customer's
account.
ix) Compensation by way of additional interest shall be paid to the customer for delay in
collection beyond the declared collection period as per the bank's policy, without the
customer requesting for the same and such interest shall be on "step-up basis" for the
period of delay.
x) UCBs may formulate a policy on 'instant' credit for small value cheques as a part of
their USD cheque collection policy.
xi) Complaints from customers alleging delay in collection / receipt of proceeds or
otherwise shall be properly examined and redressed.
xii) UCBs shall continuously evaluate the industry best practices and adopt such practices
wherever feasible.
3. Please acknowledge receipt to the concerned Regional Office of the Reserve Bank of
India.
Yours faithfully
(A. K. Khound)
(6)
Guidelines on Fair Practices Code for Lenders-
Disclosing all information relating to processing fees / charges
Please refer to our circular RPCD.BOS./81/13.33.01/2005-06 dated May 16, 2006 on the
captioned subject in respect of which all commercial banks including RRBs were advised
to display charges related to certain services in their offices/branches.
2. It has come to our notice that some banks levy in addition to a processing fee, certain
charges which are not initially disclosed to the borrower. It may be mentioned that levying
such charges subsequently without disclosing the same to the borrower is an unfair
practice.
3. Regional Rural Banks are therefore advised to ensure that all information relating
to charges / fees for processing are invariably disclosed in the loan application
forms. Further, the banks must inform ‘all-in-cost’ to the customer to enable him to
compare the rates charged with other sources of finance.
Yours faithfully
(G.Srinivasan)
(7)
Guidelines on Fair Practices Code for Lenders-
Disclosing all information relating to processing fees / charges
Please refer to our circular RPCD.BOS./81/13.33.01/2005-06 dated May 16, 2006 on the
captioned subject in respect of which all commercial banks including RRBs were advised
to display charges related to certain services in their offices/branches.
2. It has come to our notice that some banks levy in addition to a processing fee, certain
charges which are not initially disclosed to the borrower. It may be mentioned that levying
such charges subsequently without disclosing the same to the borrower is an unfair
practice.
3. Regional Rural Banks are therefore advised to ensure that all information relating
to charges / fees for processing are invariably disclosed in the loan application
forms. Further, the banks must inform ‘all-in-cost’ to the customer to enable him to
compare the rates charged with other sources of finance.
Yours faithfully
(G.Srinivasan)
(8)
Foreign Exchange Management Act, 1999 –
Foreign Travel – Mode of payment in Rupees
Attention of Authorised Dealers Category I & II and Full Fledged Money Changers (FFMCs)
is invited to paragraph A.10 of the Annexure to A. P. (DIR Series) Circular No.19 dated
October 30, 2000, in terms of which Authorised Dealers may accept payment in cash up to
Rs. 50,000 (Rupees Fifty Thousand only) against sale of foreign exchange for travel
abroad (for private visit or for any other purpose). Wherever the sale of foreign exchange
exceeds the amount equivalent to Rs.50,000, the payment must be received only by a -
(i) crossed cheque drawn on the applicant’s bank account
or
(ii) crossed cheque drawn on the bank account of the firm/company sponsoring the visit of
the applicant
or
(iii) Banker’s cheque / Pay Order / Demand Draft.
2. With a view to provide flexibility in the mode of payment against sale of foreign
exchange, in addition to the payment by Rupees / through crossed cheque / Banker's
cheque / Pay order / Demand draft, Authorised Dealers Category I & II and FFMCs may
also accept the payments made by the traveller through debit cards / credit cards / prepaid
cards for travel abroad (for private visit or for any other purpose) provided -
(i) KYC / AML guidelines are complied with,
(ii) sale of foreign currency / issue of foreign currency travellers' cheques is within the
limits (credit / prepaid cards) prescribed by the bank,
(iii) the purchaser of foreign currency / foreign currency travellers' cheque and the credit /
debit / prepaid card holder is one and the same person.
3. Authorised Dealers Category I & II and Full Fledged Money Changers may bring the
contents of the circular to the notice of their constituents and customers concerned.
4. The directions contained in this circular have been issued under Section 10(4) and
Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without
prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(Salim Gangadharan)
(9)
Relief/Savings Bonds – Rights of Customers
Please refer to our Circular No RBI / 2004 / 181 (Ref No DGBA.CO.DT. No. 13.01.299 / H-
6252./ 2003-04) dated April 22, 2004 wherein Agency Banks were advised to use a
standardized application form for investment in Relief / Savings Bonds which contained,
inter alia, duties and rights of the investors.
2. In this connection, we advise that the Bank had set up a Committee (Chairman: Shri H.
Prabhakar Rao) to evaluate the efforts for improving public services to individuals
undertaken by the Reserve Bank directly or through banks / institutions and to review
existing policies and procedures with a view to their rationalisation. The Committee has,
inter alia, recommended that the existing rights of the investors included in the
standardised application form for Savings Bonds should be amplified to inform the investor
of the maturity date, the right of the investor to transfer his account from one Agency Bank
to another and the right to get savings bank account interest for delayed payments, etc.
3. The recommendations of the Committee have been accepted by the Reserve Bank and
accordingly Agency Banks which are issuing and servicing the 8 % Savings (Taxable)
Bonds, 2003 should include the revised list of rights, as perAnnex, in the application form.
4. Further, the Committee had observed that in case of most banks, especially the public
sector banks, the entire work related to the issue and servicing of the bonds is conducted
manually even while other areas of operation of the branches are computerised. With a
view to reducing the possibilities of errors/delays resulting in inconvenience and loss to
the investors, Agency Banks are advised to automate, if not done already, the processing
work connected with servicing of savings bonds so as to ensure timely servicing of the
bonds.
5. Furthermore, the Committee had also recommended that banks should actively make
efforts to obtain the bank account details of the investors with a view to migrate to
electronic servicing of interest and maturity proceeds of the Savings Bonds through ECS
and NEFT. In this connection, attention is invited to our Circular No. DGBA.CDD. No. H-
3249/13.01.299/2007-08 dated September 24, 2007 wherein Agency Banks were advised to
use, as far as possible, ECS/EFT facility for making payment of principal and interest, and
that those Agency Banks who have not yet implemented ECS/EFT option, may implement
the same at the earliest. We reiterate the said instruction and urge Agency Banks to make
all out efforts to use electronic payment products (ECS/NEFT/RTGS) for making payments
to the investors, wherever such facility is available.
6. You may please advise all your designated branches and ensure compliance with the
above instructions
7. Please acknowledge receipt.
Yours faithfully,
(Dr. Balu K.)
Deputy General Manager
Annex
RIGHTS OF THE INVESTOR
a. The Bond will be issued on the same day if subscription is received in cash and on
realization of the cheque if subscription is received through cheque.
b. Certificate of Holding will be issued within 5 days from the date of tender of
application.
c. The interest on the bond accrues from the date of subscription in cash or date of
realization of cheque. The half-yearly interest warrants will be dispatched one
month in advance from the due date.
d. The interest on the date of 1st Feb / 1st Aug will be credited to the bank account or
remitted by an interest warrant at the last registered address.
e. An advice of payment of interest will be issued to the investor one month in
advance from the due date.
f. Maturity intimation advice will be issued one month before the due date of the
bond.
g. Facility of payment of interest and principal by ‘demand draft free of cost or at par
cheques’ for up country customers is available.
h. The facility of intra-bank branch and inter bank branch transfer of the bonds is
available.
i. Application forms for investments, redemption, ECS mandate, etc, in respect of
Savings Bonds are available on the website at www………..com (Banks & SHCIL
website)
j. A sole holder or all the joint holders of the Bond together may nominate one or
more persons who would be entitled to the bonds. Non-resident Indians can also be
nominated.
k. The nomination will be registered at the Office of Issue and a Certificate of
Registration will be issued to the holder.
l. The nomination can be varied by registering a fresh nomination.
m. The existing nomination can be cancelled by a request to the Office of Issue.
n. The redemption is due on the expiry of six years from the date of investment.
o. The investor is entitled to receive the repayment amount automatically on due date
if ECS mandate is given or within five clear working days from the date of tender of
acquittance.
p. Facility for payment of half yearly interest / redemption proceeds can be availed
through electronic payment products (ECS/NEFT/RTGS), where such facility is
available. Applicants may indicate their choice, to avoid delay in receipt of
interest / redemption proceeds.
q. Investors are entitled for compensation at current savings bank rate for delayed
payments.
r. If the issuing office does not comply with the above, investors may lodge a
complaint in writing in the form provided at the counter and address the same to
the nearest office of Reserve Bank of India as under:
The Regional Director,
Reserve Bank of India,
Grievances Redressal Cell,
(Location)
You may also address your complaint to:
The Chief General Manager
Reserve Bank of India
Central Office
Department of Government and Bank Accounts
Byculla (Opp. Bombay Central Railway Station)
Mumbai 400 008
Maharashtra
(10)
Guidelines on Fair Practices Code for Lenders- Disclosing
all information relating to processing fees / charges
Please refer to our Circular DBOD.No.Leg.BC.65 /09.07.005/2006-07 dated March 6, 2007 wherein banks
/ FIs were advised that loan application forms in respect of all categories of loans irrespective of the
amount of loan sought by the borrower should be comprehensive. It should include information about
the fees/charges, if any, payable for processing, the amount of such fees refundable in the case of non
acceptance of application, pre-payment options and any other matter which affects the interest of the
borrower, so that a meaningful comparison with that of other banks can be made and informed decision
can be taken by the borrower.
2. It has come to our notice that some banks levy in addition to a processing fee, certain charges which
are not initially disclosed to the borrower. It may be mentioned that levying such charges subsequently
without disclosing the same to the borrower is an unfair practice.
3. Banks / FIs are therefore advised to ensure that all information relating to charges / fees for
processing are invariably disclosed in the loan application forms. Further, the banks must inform
‘all-in-cost’ to the customer to enable him to compare the rates charged with other sources of
finance.
Yours faithfully
(Prashant Saran)
(11)
7% Savings Bonds 2002, 6.5% Savings Bonds 2003 (Non-taxable) &
8% Savings (Taxable) Bonds 2003 - Collateral facility
As you are aware, in terms of relevant Government of India Notifications, Savings Bonds
issued under the captioned schemes, are presently not eligible as collateral for loans from
banks, financial institutions and non banking financial companies, etc.
2. It has now been decided by the Government of India to allow for pledge or
hypothecation or lien of the bonds issued under the captioned schemes as collateral for
obtaining loans from scheduled banks. Accordingly, the holders of the said bonds will be
entitled to create pledge or hypothecation or lien in favour of scheduled banks in
accordance with section 28 of the Government Securities Act, 2006 (the G S Act) and
regulations 21 and 22 of the Government Securities Regulations, 2007 (the G S
Regulations). A copy each of the following amending notifications issued by the
Government of India is enclosed.
a. No. F.4(13)-W & M/2002 dated August 19, 2008 for 7% Savings Bonds, 2002
b. No. F.4(9) -W & M/2003 dated August 19, 2008 for 6.5% Savings Bonds, 2003 (Non-
taxable) and
c. No. F.4(10)-W & M/2003 dated August 19, 2008 for 8% Savings (Taxable) Bonds, 2003
3. In view of the above amendments, you may please advise your branches to facilitate
extension of collateral facility through pledge or hypothecation or lien as per the
procedure laid down in Section 28 of the GS Act and Regulations 21 and 22 of the GS
Regulations. Relevant extracts of the Act / Regulations along with the forms and the
relative press release issued by the Government of India are enclosed for ready reference.
4. It may be noted that collateral facility is available only for the loans extended to the
holders of the bonds and, as such, the facility is not available in respect of the loans
extended to third parties.
Yours faithfully
(P. Vijaya Bhaskar)
Government of India
Ministry of Finance
New Delhi, dated August 19, 2008
NOTIFICATION
7% Savings Bonds, 2002
No. F 4(13)-W&M/2002: The Government of India hereby notifies that with effect from the
date of this Notification, the following modifications shall be effected in Notification No. F.
4 (13)-W& M/2002 dated 5th September 2002 (Notification).
1. For the existing paragraph number 12 of the Notification the following paragraph shall
be substituted, namely,
“The Bonds in the form of Bond Ledger Account and Stock Certificate shall not be
transferable except as provided herein or by way of gift to a relative as defined in Section
6 of the Indian Companies Act, 1956, by execution of appropriate Transfer Form as given
in Annexure 6A or 6B (as may be applicable) and execution of an affidavit by the holder. A
list of relatives is given in Annexure 7.”
2. For the existing, paragraph number 14 of the Notification the following paragraph shall
“The Bonds shall not be tradable in the secondary market. However, the Bonds shall be
eligible as collateral for loans from scheduled banks, and the holders of the said Bonds
shall be entitled to create pledge or hypothecation or lien in favour of scheduled banks in
accordance with Section 28 of the Government Securities Act, 2006 and Regulations 21
and 22 of Government Securities Regulations, 2007.”
By Order of the President of India
(L. M. Vas)
Additional Secretary to the Government of India
Government of India
Ministry of Finance
Notification
6.5% Savings Bonds, 2003 (Non-taxable)

No. F.4(9)-W&M/2003 : The Government of India hereby notifies that with effect from the
date of this Notification, the following modifications shall be effected in Notification No.
F.4 (9)-W & M/2003 dated 13th March 2003 (Notification).
"The Bonds in the form of Bond Ledger Account and Stock Certificate shall not be
transferable except as provided herein or by way of gift to a relative as defined in Section
6 of the Indian Companies Act, 1956, by execution of appropriate Transfer Form as given
in Annexure 6A or 6B (as may be applicable) and execution of an affidavit by the holder. A
list of relatives is given in Annexure 7."
2. For the existing, paragraph number 14 of the Notification the following paragraph shall
"The Bonds shall not be tradable in the secondary market. However, the Bonds shall be
and 22 of Government Securities Regulations, 2007."
(L. M. Vas)
Additional Secretary to the
Government of India
Government of India
Ministry of Finance
NOTIFICATION
8% Savings (Taxable) Bonds, 2003
No. F 4(10)-W&M/2003: The Government of India hereby notifies that with effect from the
date of this Notification, the following modifications shall be effected in Notification No.
F.4 (10)-W & M/2003 dated 21st March 2003 (Notification).
“The Bonds in the form of Bond Ledger Account shall not be transferable except as
provided herein.”
2. For the existing paragraph number 15 of Notification the following paragraph shall be
substituted, namely,
“The Bonds shall not be tradable in the secondary market. However, the Bonds shall be
and 22 of Government Securities Regulations, 2007.”
(L. M. Vas)
Additional Secretary to the Government of India
Extract from the Government Securities Act, 2006

Section 28 –
28. Pledge, hypothecation or lien. - (1) Subject to such terms and conditions as may be
prescribed, the holder of a Government security may create a pledge or hypothecation or
lien in respect of such security.
(2) On receipt of notice of pledge or hypothecation or lien from the holder of the
Government security, the Bank or any agent maintaining the account in respect of such
security shall make necessary entry in its record and such entry shall be evidence of the
pledge, hypothecation or lien thereof, as the case may be.
Extract from the Government Securities Regulations, 2007

CHAPTER VII
PLEDGE, HYPOTHECATION OR LIEN OF GOVERNMENT SECURITY
21. Pledge, Hypothecation or Lien of Government security. - (1) The holder of a
Government security may create a pledge, hypothecation or lien in respect of a
Government security by-
(a) issuing a notice of pledge, hypothecation or lien to the Bank, or, as the case may be,
its agent, in triplicate in Form - XIV; and
(b) submitting the stock certificate and the duly executed Form - III in relation thereto; or
the duly executed Forms - III,IV or V, as may be applicable to the Government security,
where a pledge, hypothecation, or lien is to be created for the Government security held in
subsidiary general ledger account or constituents' subsidiary general ledger account o r
bond ledger account, as the case may be.
(2) The Bank, or, as the case may be, its agent may on receipt of the notice as referred to
in clause (a) of sub-regulation (1), -
(a) record the pledge, hypothecation or lien in its records and confirm the same on the
duplicate and triplicate of the Form - XIV and such confirmation shall be conclusive proof
of the creation of pledge, hypothecation or lien; and
(b) where any discrepancy is found in the Form - XIV, issue a return memo on the
duplicate and triplicate of the notice in Form - XIV, stating the reasons for not recording
the pledge, hypothecation or lien.
(3) The pledgee or creditor, at any time, when wants to invoke the pledge, hypothecation
or lien may file an application in Form - XV in duplicate, to the Bank, or, as the case may
be, its agent for transferring the Government securities in his favour alongwith the
following documents, namely, -
(a) the stock certificate, if any;
(b) Form - XIV wherein the Bank, or, as the case may be, its agent has confirmed the
recording of pledge; and
(c) Forms - III, IV or V which may be applicable to the Government security and was
executed at the time of creation of pledge, hypothecation or lien by the holder of the
Government security.
(4) The Bank, or, as the case may be, its agent may on receipt of the application under
sub- regulation (3) -
(a) record in its books, the invocation of pledge, hypothecation or lien and transfer of the
securities in favour of the pledgee or the creditor and confirm the same on the duplicate of
the application in Form - XV; or
(b) issue a return memo to the pledgee or creditor on the duplicate of the application
in Form - XV, if any discrepancy is found, stating the reasons for not transferring the
securities in the name of the pledgee or the creditor.
(5) The pledgee or the creditor may, at any time, before the registration of transfer of the
Government securities in the books of the Bank or its agent in his favour, apply to the
Bank, or, as the case may be, its agent in Form - XVI in triplicate for cancellation of such
pledge, hypothecation or lien application registration.
(6) The Bank, or, as the case may be, its agent may on receipt of the application under
sub-regulation (5) -
(a) record the cancellation of pledge, hypothecation or lien registered in its books and
confirm the cancellation on the duplicate and triplicate of the application in Form - XVI;
and
(b) issue a return memo on the duplicate and triplicate of the application in Form - XVI to
the pledgee or the creditor, stating therein the reasons for not cancelling the pledge,
hypothecation or lien.
(7) The Forms - III, IV or V executed at the time of creation of pledge, hypothecation or
lien, shall be valid during the currency of the pledge, hypothecation or lien created in
respect of the Government security.
(8) Subject to the forms prescribed in this regulation, the transfer form, notice of pledge,
hypothecation or lien, confirmation of pledge, hypothecation or lien, application for
cancellation or invocation of pledge, hypothecation or lien, or return memo, may be
executed in electronic form under digital signature, as defined in clause (p) of section 2 of
the Information Technology Act, 2000 (21 of 2000).
22. General provisions relating to pledge, hypothecation and lien.- (1) The Bank or, as
the case may be, the Government shall not be responsible to any person creating pledge,
hypothecation or lien or party to thereof for any loss caused to him on account of the
invocation of the pledge, hypothecation or lien by the pledgee or the creditor in violation
of the terms of pledge, hypothecation or lien or the provisions of any other law for the time
being in force.
(2) The Bank or, as the case may be, its agent shall
(a) not take cognizance of any notice or claim of any person that may be received by it
before it has taken the steps required to be taken under regulation 21 on receipt of Forms
- XIV, XV or XVI;
(b) take the steps required under regulation 21 as if it had not received such notice or
claim.
(3) No transfer by the holder of any Government security in respect of which pledge,
hypothecation or lien is in force shall be effected by the Bank or its agent without the prior
concurrence of the pledgee or the creditor, as the case may be.
(4) The Government security in respect of which pledge, hypothecation or lien has been
recorded in the books of the Bank or its agent, as the case may be, matures for
repayment, the maturity proceeds shall not be payable to the holder of the security,
without the written concurrence of the pledgee or creditor along with duly executed Form -
XVI.
Explanation; For the purpose of regulation 21 and this regulation, –
(a) “pledgee” means a person in whose favour the Government security has been pledged;
(b) “creditor” means a person in whose favour the Government security has been
hypothecated or a lien in respect thereof has been created.
FORM - III
[See regulations 4 (1)(c) and 21]
TRANSFER OF STOCK CERTIFICATES
I/We* …………………………. (transferor/s) do hereby assign and transfer my/our* interest or
share in the inscribed stock certificate number ……………..of ………… percent Government
Loan of ……………. amounting to Rs. ………. being the amount /a portion of the stock for
Rs. ………. as specified on the face of this instrument together with the accrued interest
thereon to ……………………….(transferee/s), his / her / their* executors, administrators or
assigns, and I/We* …….………… do freely accept the stock certificate number
……………….to the extent it has been transferred to me/us*.
I/We* ………………………. (transferee/s) hereby request that on my/our* being registered as
the holder/s of the stock transferred to me/us*, the above stock certificate to the extent it
has been transferred to me/us* may be renewed in my/our* name (s)/converted in my/our*
name(s).
@I/We*………………………. (transferor/s) hereby request that on the above transferee(s)
being registered as the holder/s of the stock hereby transferred to him/them*, the
aforesaid stock certificate to the extent it has not been transferred to him/them* may be
renewed in my/our* name (s).
As witness, our hand the …………… day of …………… two thousand and ………………
Signed by the above-named transferor Signature of transferor………………..

in the presence of** ……………………. Address: ……………………………...
……………………………………….. ………………………………………..
Signed by the above-named transferee Signature of transferee………………..

in the presence** ………………………. ………………………………………..
……………………………………….. ………………………………………...
*: Delete whichever is not applicable.
@: This paragraph is to be used only when a portion of the Certificate is transferred.

**: Signature, occupation and address of witness. Witness should be different for
transferor and transferee.
Transferred:
Stock Certificate issued No/s …………………. dated ……………………………..

Manager, Reserve Bank of India, …………………………..
FORM - V
[See regulations 4 (1) (e) and 21]
TRANSFER OF SECURITIES HELD IN THE RESERVE BANK OF INDIA (RBI)

IN THE BOND LEDGER ACCOUNT RELATING TO GOVERNMENT SECURITIES
I/We* …………………………. (transferor/s) do hereby assign and transfer my/our* interest or
share in the Bond Ledger Account of the ……………….. Bonds amounting to Rs… being the
amount / portion of the bonds for Rs… held in the Bond Ledger Account No. ………………
together with the accrued interest thereon due for repayment on …………. to
…………………. (transferee/s), his/her/their* executors, administrators or assigns, and
I/We* …….………… (transferee/s) do freely accept the Bonds in the above Bond Ledger
Account No. ……………. amounting to Rs…
I/We* …………………………………………………. (transferee/s) request that I/We* may be
registered as the holder/s of the Bond hereby transferred to me/us* and a Bond Ledger
Account may be opened in my/our name* credited to my/our Bond Ledger Account No*
………………….
@I/We* ……………………………………. (transferor/s) hereby request that on the above
transferee(s) being registered as the holder(s) of the Bond hereby transferred to
him/them* the aforesaid Bond, to the extent it has not been transferred to him/them*, may
continue in my/our* Bond Ledger Account No ……………………..
As witness, our hand the …………… day of …………… two thousand and ………………
Signed by the above-named Signature of
transferor transferor………………..
in the presence of** Address: ……………………………...
……………………. ………………………………………..
………………………………………..
Signed by the above-named Signature of

transferee transferee………………..
in the presence** ………………………………………..
………………………. ………………………………………...
………………………………………..
*: Delete whichever is not applicable.
@: This paragraph is to be used only when a portion of the Bond is transferred.

**: Signature, occupation and address of witness. Witness should be different for
transferor and transferee.
FORM - XIV
[See regulations 21 (1), (2), (3) and 22(2)]
NOTICE OF PLEDGE/HYPOTHECATION/LIEN OF GOVERNMENT SECURITIES
To, To, To,

The Regional Director The Manager, The Manager
Reserve Bank of India Name of CSGL A/c Holder Name of the agent
Public Debt Office Address: ………………… Address: …………………
………………….. …………………………... …………………………...
Dear Sir,
Please take notice that I/we …………………………………………… [name(s) of the holder(s)]
have pledged/hypothecated/created lien1 on the Government securities specified in
Schedule 'A' hereto annexed {and have deposited the original scrip(s) with…..
………………………………………………………………….name(s) of the Pledgee(s)/Creditor(s)}.
A duly executed transfer form is deposited with the pledgee2. Please
recordpledge/hypothecation/lien1 in your books of account in respect of the securities
listed in Schedule ‘A’ and oblige.
Yours faithfully,
Signature(s) and name(s) of the Holder(s) / Borrower(s)…………………………
Mailing address: …………………………………………………………………..
Signature(s) and name(s) of the Pledgee(s) / Creditor(s)…………………………
Mailing address: ………………………………………………………………….
Dated this ……………day of …………………….
Schedule 'A'
Nomenclature of Distinctive SGL/CSGL/Bond Date of Face value of

the security and number of the Ledger Account maturity security
ISIN physical No
security
Note: (i) This form has to be submitted in triplicate. Counter receipt will be issued if
submitted at the counter. The Public Debt Office will retain the original. Confirmation of
having recorded the pledge/hypothecation/lien in the books of Public Debt Office will be
issued on the duplicate and triplicate. Holder(s)/borrower(s) or pledge(s)/creditor(s) shall
arrange to collect the same by surrendering the counter receipt duly discharged."
(ii) If this Form is submitted otherwise than at the counter, the duplicate and triplicate of
the Form shall be dispatched by Post/Courier at the mailing addresses.
For Office use only:
Return Memo
Notice of pledge/hypothecation/lien could not be recoded in the books of account of Public
Debt Office for the following reason(s).
 Discrepancies in the particulars of securities/Account No(s).
 Discrepancies in the names of holders.
 Form is incomplete.
 Enclosures not compiled properly.
 Signature not matching.
 Security not eligible for pledge/hypothecation/lien
 Security already under pledge/hypothecation/lien in favour of another creditor.
 Claims in respect of the security are pending.
 Under Stoppage.
 Any other reason………………………………………………………………

Authorised Officer
Confirmation
Confirmed that the notice of pledge/hypothecation/lien is recoded in the books of account
of Public Debt Office / CSGL Account Holder / Agent.
Authorised Officer
FORM - XV
[See regulations 21 (3),(4) and 22 (2)]
APPLICATION FOR TRANSFER OF GOVERNMENT SECURITIES UNDER
PLEDGE/HYPOTHECATION/LIEN
To, To, To,

………………….. …………………………... …………………………...
Dear Sir,
Pledge/hypothecation/lien* was created on the securities listed in Schedule ‘A’ below. I/we
now submit herewith the following documents, namely:
(1) Original scrips1
(2) Form - XV containing the confirmation of pledge/hypothecation/ lien, and
(3) Transfer deed executed in our favour [at the time of creating pledge]2
I/We request that the Government securities specified in Schedule 'A' be transferred in
your books of account in my/our favour.
Yours faithfully,
Signature(s) and name(s) of the Creditor(s) ……………………………
Mailing address: ……………………………………………………………………
Schedule 'A'

ISIN physical No
security
Note: (i) This form has to be submitted in duplicate. Counter receipt will be issued if
having transferred the securities in favour of the Creditor(s) in the books of Public Debt
Office will be issued on the duplicate. Creditor(s) shall arrange to collect the same by
surrendering the counter receipt duly discharged.
(ii) If this Form is submitted otherwise than at the counter, the duplicate of the Form shall
be dispatched by Post / Courier at the mailing address.
Return Memo
Securities could not be transferred in the books of account of PDO in favour of the
creditor(s) for the following reason(s).
 Discrepancies in the particulars of securities/account no(s).
 Discrepancy in the name(s) of holders.
 Claims in respect of the security are pending.
 Under Stoppage.
 Any other reason………………………………………………………

Authorised Officer
Confirmation
Confirmed that the pledge/hypothecation/lien recorded in respect of the securities has
been cancelled and the securities have been transferred in the books of account of Public
Debt Office in favour of the creditor(s)
Authorised Officer
FORM - XVI
[See regulations 21 (5) (6) and 22 (2) (4)]
CANCELLATION OF PLEDGE/HYPOTHECATION/LIEN
To, To, To,

………………….. …………………………... …………………………...
Dear Sir,
The holder(s) of the Government securities listed in Schedule ‘A’ had created
pledge/hypothecation/lien*, on the said Government securities in my/our favour. I/we
enclose in original, the duplicate of Form - XV containing the confirmation regarding the
recording of the said pledge/hypothecation/lien* in your books of account and request that
the said pledge/hypothecation/lien be cancelled and that my/our name(s) be deleted from
your books of account as the pledgee(s)/ creditor(s) in respect of the said Government
securities.
Yours faithfully,
Signature(s) and name(s) of the Pledgee(s)/Creditor(s)……………………………….
Mailing address: ……………………………………………………………………….
*: Strike out whichever is not applicable
Schedule 'A'

ISIN physical No
security
Note: (i) This form has to be submitted in triplicate. Counter receipt will be issued if
having cancelled the pledge/hypothecation/lien in the books of Public Debt Office will be
issued on the duplicate and triplicate. Holder(s)/borrower(s) or pledgee(s)/creditor(s) shall
arrange to collect the same within by surrendering the counter receipt duly discharged.
(ii) If this Form is submitted otherwise than at the counter, the duplicate and triplicate of
the Form shall be dispatched by Post/Courier at the mailing addresses.
Return Memo
Cancellation of pledge/hypothecation/lien could not be recorded in the books of account of
PDO for the following reason(s).
 Discrepancies in the particulars of securities/account no(s).
 Discrepancies in the names of holders.
 Any other reason……………………………………………………………

Authorised Officer
Confirmation
Confirmed that the pledge/hypothecation/lien has been cancelled in the books of account
of Public Debt Office.
Authorised Officer
PRESS COMMUNIQUE
Government of India have amended the notifications relating to 7% Savings Bonds, 2002,
6.5% Savings (Non-Taxable) Bonds, 2003, and 8% Savings (Taxable) Bonds, 2003
Schemes, to allow for pledge/lien/hypothecation of the said Bonds as collateral for
obtaining loans from Scheduled Banks. Accordingly, the holders of the said Bonds will be
entitled to create pledge or hypothecation or lien in favour of scheduled banks in
accordance with section 28 of the Government Securities Act, 2006 and regulations 21 and
22 of the Government Securities Regulations, 2007.
2. All other terms and conditions in respect of the said Bonds continue without change.
GOVRNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF ECONOMIC AFFAIRS
Dated, the 19th August 2008
1
Strike out in the case of hypothecation, lien on securities held in SGL, CSGL A/c or BLA.
2
Strike out in the case of hypothecation or lien.
1
To be struck off in case the securities are held in SGL, CSGL or BLA Account.
2
To be struck off in the case of hypothecation and lien
* Strike off whichever is not applicable
(12)
Levy of Service Charges for Electronic Payment Products and
Outstation Cheque Collection
With immediate effect, the framework of charges to be levied by banks for offering various
electronic products and for outstation cheque collection service shall be as under : –
1. Electronic products
a) Inward RTGS / NEFT / ECS transactions – free, no charge to be levied.
b) Outward transactions –
(i) RTGS – Rs. 1 to 5 lakh not exceeding Rs. 25 per transaction
Rs. 5 lakh and above not exceeding Rs. 50 per transaction
(ii) NEFT – Up to Rs. 1 lakh not exceeding Rs. 5 per transaction
Rs.1 lakh and above not exceeding Rs. 25 per transaction
c) Banks may prescribe charges not higher than cheque return charges for ECS debit
returns.
d) These charges shall be applicable for all types of transactions, including inter-bank
funds transfers.
2. Outstation cheque collection
a) Up to Rs. 10,000 not exceeding Rs. 50 per instrument
Rs. 10,000 to Rs. 1,00,000 not exceeding Rs. 100 per instrument
Rs.1,00,001 and above not exceeding Rs. 150 per instrument
b) The above charges will be all inclusive. No additional charges such as courier
charges, out of pocket expenses, etc., should be levied from the customers.
c) To reduce the clearing cycle and to promote electronic modes of payment, the drawee
banks should use electronic modes like RTGS / NEFT, wherever available, to remit
proceeds to the collecting bank branch.
d) Banks may make increased use of Speed Clearing and National Clearing facilities for
providing efficient service.
3. The above charges are applicable only to transactions originated and payable within
India.
4. The provisions of this circular shall not be applicable to cash handling charges levied
by banks for handling large value cash transactions.
5. No bank should refuse to offer the products to its customers or decline to accept
outstation cheques deposited by its customers for collection.
6. These Directions are issued by the Reserve Bank of India, in exercise of the powers
conferred by Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of
2007), without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully
(G. Padmanabhan)
(13)
Payment of interest on accounts frozen by banks
As banks are aware, at times they are required to freeze the accounts of customers based
on the orders of the enforcement authorities. An issue has been raised regarding payment
of interest on such frozen accounts.
2. The issue was examined in consultation with Indian Banks’ Association and banks are
advised to follow the procedure detailed below in the case of Term Deposit Accounts
frozen by the enforcement authorities:
(i) A request letter may be obtained from the customer for renewal for a term equal to the
original term, on maturity.
(ii) No new receipt is required to be issued. However, suitable note may be made
regarding renewal in the deposit ledger.
(iii) Renewal of deposit may be advised by registered letter / speed post / courier service
to the concerned Government department under advice to the depositor. In the advice to
the depositor, the rate of interest at which the deposit is renewed should also be
mentioned.
(iv) If overdue period does not exceed 14 days on the date of receipt of the request letter,
renewal may be done from the date of maturity. If it exceeds 14 days, banks may pay
interest for the overdue period as per the policy adopted by them, and keep it in a
separate interest free sub-account which should be released when the original fixed
deposit is released.
3. Further, with regard to the savings bank accounts frozen by the enforcement
authorities, banks may continue to credit the interest to the account on a regular basis.
Yours faithfully,
(Prashant Saran)
(14)
Unclaimed Deposits / Inoperative Accounts in banks
Please refer to our Circular DBOD.No.Com.BC.109/C.408/A-77 dated October 1, 1977
wherein banks were advised that deposit accounts which have not been operated upon
over a period, say two years should be segregated and maintained in separate ledger/s.
Further, banks were also advised vide our circular no. DBOD.No.Leg.BC.45/C.466 (IV) / 89
dated November 15, 1989 that they should ensure that their branches follow-up accounts
which remained inoperative for a year or so by sending suitable advices to the customers
and if the said letters are returned undelivered, they may immediately be put on enquiry to
find out the whereabouts of customers or their legal heirs in case they are deceased.
2. In view of the increase in the amount of the unclaimed deposits with banks year after
year and the inherent risk associated with such deposits, it is felt that banks should play a
more pro-active role in finding the whereabouts of the account holders whose accounts
have remained inoperative. Further several complaints have been received in respect of
difficulties faced by the customers on account of their accounts having been classified as
inoperative. Moreover, there is a feeling that banks are undeservedly enjoying the
unclaimed deposits, while paying no interest on it. Keeping these factors in view, we have
reviewed the above instructions issued by us and advise banks to follow the instructions
detailed below while dealing with inoperative accounts:
(i) Banks should make an annual review of accounts in which there are no operations (i.e.
no credit or debit other than crediting of periodic interest or debiting of service charges)
for more than one year. The banks may approach the customers and inform them in writing
that there has been no operation in their accounts and ascertain the reasons for the same.
In case the non operation in the account is due to shifting of the customers from the
locality, they may be asked to provide the details of the new bank accounts to which the
balance in the existing account could be transferred.
(ii) If the letters are returned undelivered, they may immediately be put on enquiry to find
out the whereabouts of customers or their legal heirs in case they are deceased.
(iii) In case the whereabouts of the customers are not traceable, banks should consider
contacting the persons who had introduced the account holder. They could also consider
contacting the employer / or any other person whose details are available with them. They
could also consider contacting the account holder telephonically in case his telephone
number / Cell number has been furnished to the bank. In case of Non Resident accounts,
the bank may also contact the account holders through e-mail and obtain their
confirmation of the details of the account.
(iv) A savings as well as current account should be treated as inoperative / dormant if
there are no transactions in the account for over a period of two years.
(v) In case any reply is given by the account holder giving the reasons for not operating
the account, banks should continue classifying the same as an operative account for one
more year within which period the account holder may be requested to operate the
account. However, in case the account holder still does not operate the same during the
extended period, banks should classify the same as inoperative account after the expiry of
the extended period.
(vi) For the purpose of classifying an account as ‘inoperative’ both the type of
transactions i.e. debit as well as credit transactions induced at the instance of customers
as well as third party should be considered. However, the service charges levied by the
bank or interest credited by the bank should not be considered.
(vii) Further, the segregation of the inoperative accounts is from the point of view of
reducing risk of frauds etc. However, the customer should not be inconvenienced in any
way, just because his account has been rendered inoperative. The classification is there
only to bring to the attention of dealing staff, the increased risk in the account. The
transaction may be monitored at a higher level both from the point of view of preventing
fraud and making a Suspicious Transactions Report. However, the entire process should
remain un-noticeable by the customer.
(viii) Operation in such accounts may be allowed after due diligence as per risk category
of the customer. Due diligence would mean ensuring genuineness of the transaction,
verification of the signature and identity etc.However, it has to be ensured that the
customer is not inconvenienced as a result of extra care taken by the bank.
(ix) There should not be any charge for activation of inoperative account.
(x) Banks are also advised to ensure that the amounts lying in inoperative accounts ledger
are properly audited by the internal auditors / statutory auditors of the bank.
(xi) Interest on savings bank accounts should be credited on regular basis whether the
account is operative or not. If a Fixed Deposit Receipt matures and proceeds are unpaid,
the amount left unclaimed with the bank will attract savings bank rate of interest.
3. Banks may also consider launching a special drive for finding the whereabouts of the
customers / legal heirs in respect of existing accounts which have already been
transferred to the separate ledger of ‘inoperative accounts’.
Yours faithfully
(Prashant Saran)
(15)
Display of information by banks – Comprehensive Notice Board
The display of information by banks in their branches is one of the modes of imparting
financial education. This display enables customers to make informed decision regarding
products and services of the bank and be aware of their rights as also the obligations of
the banks to provide certain essential services. It also disseminates information on public
grievance redressal mechanism and enhances the quality of customer service in banks and
improves the level of customer satisfaction.
2. Further, in order to promote transparency in the operations of banks, various
instructions have been given by RBI to banks towards display of various key aspects such
as service charges, interest rates, services offered, product information, time norms for
various banking transactions and grievance redressal mechanism. However, during the
course of inspection/visits to bank branches by RBI, it was observed that many banks were
not displaying the required information due to space constraints, lack of
standardization of the instructions etc.
3. Keeping in view the need for maintaining a good ambience at the branches as also
space constraints, an Internal Working Group in RBI revisited all the existing instructions
relating to display boards by commercial banks so as to rationalize them. Based on the
recommendations of the Working Group, the following instructions are issued to banks:
(I) Notice Boards
4. The Group felt that rationalization of the existing instructions could be best achieved if
the instructions were clubbed on certain categories such as ‘customer service
information', 'service charges', 'grievance redressal' and 'others'. At the same time, the
Group felt that there may not be any need to place detailed information in the Notice
Board and only the important aspects or 'indicators' to the information be placed.
5. Accordingly, the existing mandatory instructions have been broadly grouped into four
categories mentioned above and given in a Comprehensive Notice Board which has been
formulated by the above Group. The format of theComprehensive Notice Board is given
in the Annexure. The minimum size of the Board may be 2 feet by 2 feet as Board of such
a size would facilitate comfortable viewing from a distance of 3 to 5 meters. Banks are
advised to display the information in the Notice Boards of their Branches as per the
format given for the Comprehensive Notice Board.
6. While displaying the information in the notice board, banks may also adhere to the
following principles:
a. The notice board may be updated on a periodical basis and the board should
indicate the date upto which the board was updated (incorporated in the display
board)
b. Though the pattern, colour and design of the board is left to the discretion of the
banks, yet the display must be simple and readable.
c. The language requirements (i.e., bilingual in Hindi speaking states and trilingual in
other states) may be taken into account.
d. The notice board shall specifically indicate wherever recent changes have been
done. For instance, if there is a recent change in the SSI loan products offered by
the bank, the information on the SSI loan products may be displayed as 'We offer
SSI loans/products ( changed on ……….)’.
e. The notice board may also indicate a list of items on which detailed information is
available in booklet form.
7. Further, in addition to the above Board, the banks should also display details such as
‘Name of the bank / branch, Working Days, Working Hours and Weekly Off-days' outside
the branch premises.
(II) Booklets/Brochures:
8. The detailed information as indicated in Para (E) of the Notice Board may be made
available in various booklets / brochures as decided by the bank. These booklets /
brochures may be kept in a separate file / folder in the form of ‘replaceable pages’ so as
to facilitate copying and updation. In this connection, banks may also adhere to the
following broad guidelines:
• The file / folder may be kept at the customer lobby in the branch or at the ‘May I
Help You‘ counter or at a place that is frequented by most of the customers.
• The language requirements (i.e. bilingual in Hindi speaking states and trilingual in
other states) may be taken into account.
• While printing the booklets it may be ensured that the font size is minimum Arial 10
so that the customers are able to easily read the same.
• Copies of booklets may be made available to the customers on request
(III) Website
9. The detailed information as indicated in Para (E) of the Notice Board may also be made
available on the bank’s web-site. Banks should adhere to the broad guidelines relating to
dating of material, legibility etc. while placing the same on their websites.
In this context, banks are also advised to ensure that the customers are able to easily
access the relevant information from the Home Page of the bank’s web-sites. Further,
there are certain information relating to service charges and fees and grievance redressal
that are to be posted compulsorily on the websites of the bank. Reserve Bank is providing
a link to the websites of banks so that customers can also have access to the information
through RBI’s website.
(IV) Other modes of display.
10. Banks may also consider displaying all the information that have to be given in the
booklet form in the touch screen by placing them in the information kiosks. Scroll Bars,
Tag Boards are other options available. The above broad guidelines may be adhered to
while displaying information using these modes.
(V) Other issues:
11. Banks are free to decide on their promotional and product information displays.
However, the mandatory displays may not be obstructed in anyway. As customer interest
and financial education are sought to be achieved by the mandatory display requirements,
they should also be given priority over the other display boards. Information relating to
Government sponsored schemes as applicable location-wise may be displayed according
to their applicability.
Yours faithfully
(Prashant Saran)
Chief General Manager-in -Charge
(16)
RBI cautions Public against Fictitious offers of
Remitting cheap funds from abroad
As you may be aware, fictitious lottery and money circulation schemes
aimed at defrauding members of the public have come to light from time to
time. It is clarified that remittances in any form towards participation in
lottery schemes is prohibited under Foreign Exchange Management Act,
1999. Further, these restrictions are also applicable to remittances for
participation in lottery-like schemes functioning under different names, such
as money circulation scheme or remittances for the purpose of securing
prize money/awards etc. We invite a reference in this connection to a Press
Release on the subject dated December 7, 2007 issued by the Reserve Bank
of India (copy enclosed). You are advised to bring the contents of the press
release to the notice of your customers.
Yours faithfully
(A.K. Khound)
(17)
8% Savings (Taxable) Bonds, 2003 - Income Tax Act, 1961 - TDS
Please refer to our circular No. RBI / 2007-08 / 141 with reference No. DGBA.CDD No. H-
3024/13.01.299/2007-08 dated September 19, 2007 conveying certain clarifications with
regard to application of Tax Deduction at Source (TDS) on 8 % Savings (Taxable) Bonds,
2003. In continuation thereof, the following clarifications, as furnished by CBDT, on a few
more aspects of application of TDS on the captioned bonds are given below.
Sl.
Issue Comments
No.
1. Whether TDS is required to be Tax Deduction at Source on 8 % Savings (Taxable) Bonds, 2003 is effective from
deducted only on new bonds 1.6.2007. Any interest credited or paid on 8 % Savings (Taxable) Bonds, 2003 on
purchased on and from 1.6.2007 or after 1.6.2007 will attract TDS if the amount of interest exceeds 10,000/- rupees
or bonds purchased prior to that for the financial year. Therefore, the date of investment is not a relevant factor.
date when TDS was made TDS would, thus, apply to existing bond holders also.
applicable.
2. At what rate TDS is required to The rates of TDS for various category of persons are as under:
be deducted in respect of
individuals, HUFs and Resident in India Non
Institutions? Recipient (TDS* Rate) Resident
in India
(TDS*Rate)
For period 1.4.2008 Before or
1.6.2007 to 31.3.2008 onwards after
1.6.2007
Company 20 % 20 % 40 %
Other than a 20 % 10 % 30 %
Company
*Surcharge and Cess is to be added as per applicable rates.
3. Whether Form 15G, 15H can be 1. Declaration in form 15G can be accepted from a person not being a company
accepted from eligible individual or a firm if
investors and HUFs and a ) the tax on his estimated total Income of the previous year in which such
exemption from TDS allowed to income is to be included in computing the total income will be nil; and
them even though interest
income exceeds the exemption b) the aggregate of income from (i) dividend other than dividends from domestic
limit and if the investor declares companies, (ii) interest on securities, (iii) interest other than interest on securities,
that his total income for that year (iv) repayment of deposits under the National Saving Scheme, and (v) income in
will not be taxable on account of respect of units does not exceed the maximum amount which is not chargeable to
investment made by him in tax.
various tax savings schemes.
2. Declaration in form 15H can be accepted from an individual resident in India,
who is of the age of sixty-five years or more at any time during the previous year if
a. tax on his estimated total income of the previous year in which such
income is to be included in computing his total income will be nil
4 In case of ‘cumulative’ type of On ‘cumulative’ type of investments, if the interest is credited every year, tax
investments, interest is payable deduction has to be made if the interest credited during the financial year exceeds
on the date of maturity. In such the threshold limit of Rs. 10,000/-. Thus, in the case of ‘cumulative’ type of
cases, whether the TDS is investments, though the interest is payable on the date of maturity, tax deduction
required to be deducted on entire is still to be made whenever the interest credited or paid exceeds the threshold
interest payable on the date of limit during the financial year.
maturity or on deemed date of
payment i.e. on accrual basis
every year.
5. In case of charitable institutions and trusts which A certificate issued by the Assessing Officer under section 197
are exempted from payment of Income Tax, of the Income Tax Act for deduction of tax at a lower rate or Nil
whether exemption certificates issued by an rate is required in the case of charitable institutions and trusts.
Income Tax Officer should be insisted upon No special dispensation is allowed to charitable institutions and
before allowing tax exemption or by their very trusts as far as TDS discipline is concerned.
nature of charitable, they are eligible for
exemption from TDS
6. Tax is required to be deducted at source on the TDS is required to be deducted for interest credited or paid on or
interest exceeding Rupees ten thousand payable after 01.06.2007 whichever is earlier, if the amount of interest
during the ‘financial year’ on 8 % Savings exceeds 10,000/- rupees for the financial year. Hence, in this
(Taxable) Bonds, 2003 with effect from June 1, particular case if the half-yearly interest payable on 01.08.2007
2007. The half-yearly interest payable on August is credited or paid on or after 01.06.2007, then tax is required to
1, 2007 has accrued from 1.2.2007 onwards. In be deducted at source on the entire amount so credited or paid
such situations, whether interest accrued after whichever is earlier.
1.6.2007 is to be considered for TDS.
2. We advise you to ensure that application of TDS on the captioned bonds is made in the
light of the above clarifications and the relevant provisions of the Income Tax Act, 1961.
You may issue suitable instructions to designated branches operating the scheme. You
may also access this circular on our website www.rbi.org.in
3. Please acknowledge the receipt.
Yours faithfully
(Dr. Balu K.)
Deputy General Manage
(18)
Credit Card Operations of Banks
Please refer to the Master Circular on Credit Card Operations of banks (Circular
No.DBOD.FSD.BC.6/24.01.011/2008-2009) dated July 1, 2008.
2. In this connection, we advise that the Reserve Bank of India had undertaken a study on
the credit card operations of banks, based on the complaints received by the Bank as also
by the Offices of the Banking Ombudsmen. The gist of the recommendations of the study
together with existing RBI instructions, if any, and the action required to be taken by
banks in this regard are given in the Annex. Banks may ensure that action is taken by
them as shown in column 4 of the Annex. The study report has also made certain
recommendations relating to recovery of credit card dues through recovery agents in
respect of which a separate circular has already been issued by the Bank
(DBOD.No.Leg.BC.75 /09.07.005/2007-08 dated April 24, 2008).
3. Issue of Unsolicited Cards
Attention of banks is invited to paragraph 6.1 (a) of the Master Circular on Credit Card
Operations of banks dated July 1, 2008 wherein banks have been advised that unsolicited
credit cards should not be issued and that in case an unsolicited card is issued and
activated without the consent of the recipient and the latter is billed for the same, the card
issuing bank shall not only reverse the charges forthwith, but also pay a penalty without
demur to the recipient amounting to twice the value of the charges reversed.
In addition, the person in whose name the card is issued can also approach the Banking
Ombudsman who would determine the amount of compensation payable by the bank to the
recipient of the unsolicited credit card as per the provisions of the Banking Ombudsman
Scheme, 2006 i.e for loss of complainant’s time, expenses incurred, harassment and
mental anguish suffered by him. Further, there have been instances where unsolicited
credit cards issued have been misused before reaching the person in whose name the card
is issued. It is clarified that any loss arising out of misuse of such unsolicited cards will
be the responsibility of the card issuing bank only and the person in whose name the card
has been issued cannot be held responsible for the same as indicated at item (4) –
Column (4) of the Annex.
4. Insurance cover to credit card holders
It has been decided that in cases where the banks are offering any insurance cover to
their credit card holders, in tie-up with insurance companies, the banks may consider
obtaining in writing from the credit card holder the details of nominee/s for the insurance
cover in respect of accidental death and disablement benefits. Banks may ensure that the
relevant nomination details are recorded by the Insurance Company. Banks may also
consider issuing a letter to the credit card holder indicating the details regarding the
name, address and telephone number of the Insurance Company which will handle the
claims relating to the insurance cover.
5. Banks are advised to scrupulously adhere to these instructions and any violation/s
would be viewed seriously.
Yours faithfully
(P.Vijaya Bhaskar)
Annex
Sl. No. Issue in brief Gist of Existing RBI instructions, if any

recommendations on the issue and action to be
1 2 of the Credit Card taken by banks
Study 4
3
I. Card 1. Prudence in The banks need to Banks have already been advised
Issuance issuing credit ensure prudence vide paragraph 2(a) of the Master
cards while issuing credit Circular on Credit Card
cards. Operations(Circular
No.DBOD.FSD.BC.6/24.01.011/2008-
2009 dated July 1, 2008) that they
should independently assess the
credit risk while issuing cards to
persons, especially to students and
others with no independent financial
means. It is reiterated that banks
need to ensure prudence while
issuing credit cards.
2.Reasons for The banks are In terms of the instructions

rejection of credit required to inform contained in the circular
card applications the reason for DBOD.No.Leg.BC.65/09.07.005/2006
to be intimated rejection of credit -2007 dated March 6, 2007, banks
card applications have been advised that in case of
as per the extant all categories of loans irrespective
RBI guidelines. of any threshold limits, including
credit card applications, banks
should convey in writing the main
reason/reasons which in the opinion
of the bank have led to the rejection
of the loan applications. It is
reiterated that banks should convey
in writing the main reason/reasons
which have led to the rejection of
the credit card applications.
3. Consent for The consent for the Banks have already been advised
issue of credit cards issued or the vide paragraph 6.1(a) of the Master
cards other products Circular on Credit Card Operations
offered along with (Circular
the card has to be No.DBOD.FSD.BC.6/24.01.011/2008-
explicit and should 09 dated July 1, 2008) that
not be implied. unsolicited credit cards should not
be issued. It is further clarified that
consent for the cards issued or the
other products offered alongwith the
card has to be explicit and should
not be implied.
4. Losses arising out of A n y m i s u s e o f a n There have been instances where

misuse of unsolicited unsolicited card or unsolicited cards issued have been
credit cards any other product misused before reaching the person
associated with the in whose name these have been
issue of such an issued. It is clarified that any loss
unsolicited card is arising out of misuse of such
the responsibility of unsolicited cards will be the
the card issuing responsibility of the card issuing
bank only and bank only and the person in whose
cannot be laid at name the card has been issued
the door of the cannot be held responsible for the
customer. same.
5. Safeguards In order to reduce With a view to reducing the

against misuse of misuse of lost instances of misuse of lost/stolen
lost/stolen cards cards, banks may cards, it is recommended to banks
consider issuance that they may consider issuing (i)
of – Cards with photographs of the
(i) Photo cards cardholder, (ii) Cards with PIN and
(ii) Cards with a (iii) Signature laminated cards or
PIN any other advanced methods that
(iii)Signature may evolve from time to time.
laminated cards
6.Explicit option to The banks should Instances have come to light where
share customer explicitly state and banks, as part of the MITCs, obtain
information with explain to the the consent of the customer for
other agencies customer the full sharing the information furnished by
meaning of their him while applying for the credit
disclosure clause. card, with other agencies. It is
While reporting to clarified that banks should give the
Credit Information customer the option to decide as to
Companies/CIBIL is whether he is agreeable for the bank
mandatory, all the sharing with other agencies the
other clauses information furnished by him at the
added making the time of applying credit card. The
customer provide application forms for credit cards
his consent to may be suitably modified to
parting with his explicitly and clearly provide for the
personal same. Further, in cases where the
information and customer gives his consent for the
credit history to a bank sharing the information with
host of agencies is other agencies, banks should
purely voluntary explicitly state and explain clearly to
and should not the customer the full
have any bearing meaning/implications of the
on the issue of the disclosure clause.
card.
II Card 7.Acknowledgemen The banks should Banks have been advised, vide
Statements t for monthly have a mechanism paragraph paragraph 3(a) of the
statements to ensure that Master Circular on Credit Card
customer’s operations dated July 1,
acknowledgement 2008(Circular
for receipt of the No.DBOD.FSD.BC.6/24.01.011/2008-
monthly statement 2009 dated July 1, 2008) that they
is taken. should ensure that there is no delay
in dispatching bills and the customer
has sufficient number of days (at
least one fortnight) for making
payment before the interest starts
getting charged. Banks could
consider putting in place a
mechanism to ensure that the
customer’s acknowledgement is
obtained for receipt of the monthly
statement.
8. Undue delay in Banks should be There have been instances where
issue of credit advised against banks have issued credit card
card statements sending statements statements after undue delays and
after a gap of a few demanded payments. Banks may
years and ensure that credit card
demanding bills/statements are sent to the
payments and the customers promptly without any
same has to be delay. Attention of banks is invited
seen as a grossly to paragraph 4(b) of the Master
unfair act on the Circular on Credit Operations of
part of the bank. banks (DBOD.FSD.BC.6 /
Specifying a time 24.01.011/2008-2009 dated July 1,
limit for rectifying 2008) wherein it is stated that in
any errors or order to obviate frequent complaints
making a claim on of delayed billing, the credit card
the cardholder issuing bank may consider providing
need to be bills and statements of
considered. accounts online, with suitable
security built therefor.
9. Educating Banks should step Banks should step up their efforts

customers on the up their education on educating the cardholders of the
implications of efforts on the implications of paying only the
paying only the implications of card ‘minimum amount due’. The MITC
‘minimum amount holders paying only should specifically explain that the
due’ on credit the ‘minimum ‘free credit period’ is lost if any
cards amount due’. An balance of the previous month’s bill
average credit card is outstanding. For this purpose,
customer is not they could work out illustrative
clear as to how the examples and include the same in
interest/finance the Welcome Kit sent to the
charges are cardholders as also place it on their
calculated. The website.
MITC should
specifically explain
that ‘the free credit
period’ is lost if
any balance of the
previous month’s
bill is outstanding.
III Interest 10. Excessive The complaints Banks have already been advised
and other Interest rates/ received by vide RBI circular dated May 7, 2007
charges Other Charges RBI/Banking on excessive interest rates on
Ombudsmen’s advances that they should prescribe
offices on charges a ceiling rate of interest, including
indicate that processing and other charges, in
customers consider respect of small value personal
the charges to be loans and loans similar in nature. It
on the higher side. is clarified that the above
While there could instructions would apply to credit
be an issue of card dues also.
customer education
here, the banks are
required to note
that the interest
rate/other charges
on credit card dues
fall within the
purview of RBI
circular on
excessive interest
rates issued on
May 7, 2007.
11. Variable Some of the banks Where banks charge interest rates
Interest charges levy interest which vary based on the
charges which vary payment/default history of the
based on the cardholder, there should be
payment/default transparency in levying of such
history of the differential interest rates. In other
cardholder. The words, the fact that higher interest
issue needs to be rates are being charged to the
handled cardholder on account of his
transparently. payment/default history should be
made known to the cardholder. For
this purpose, the banks should
publicise through their website and
other means, the interest rates
charged to various categories of
customers.
12. Calculation of As regards the Banks should upfront indicate to the

finance charges amount of finance credit card holder, the methodology
charges, the entire of calculation of finance charges
amount outstanding with illustrative examples,
is taken into particularly in situations where a
account for finance part of the amount outstanding is
charge only paid by the customer.
calculations, if only
partial amount is
paid thereby losing
the advantage of
grace period given
for payment. This
should be made
known to the
customer.
13. Issue of cards In issuing cards There should be transparency

free of charge that are free of (without any hidden charges) in
credit card issue issuing credit cards free of charge
charges for the first during the first year.
year only, the issue
needs to be
handled
transparently and
without any hidden
charges.
IV 14. Authentication It is desirable that In terms of para 5 (c) of the Master

DSAs/DMAs of documents by the DSAs provide Circular on Credit Card operations
the banks to the customer of banks(Circular
only the No.DBOD.FSD.BC.6/24.01.011/2008-
documents/papers 09 dated July 1,2008), banks have
authorized by the been advised that they should have
banks. It is a random check and mystery
desirable that the shopping to ensure that their agents
banks design the have been properly briefed and
modes in such a trained in order to handle with care
way that no and caution their responsibilities,
disputes arise later particularly on the aspects included
between the in the Master Circular like soliciting
customer and the customers, hours for calling, privacy
bank. Most of the of customer information, conveying
complaints of mis- the correct terms and conditions on
selling are offer etc., Banks are once again
attributed to advised to adhere to the above
DSAs/DMAs. instructions.
V 15.Training of call Banks should take Banks should ensure that their call
Grievance center staff efforts to properly center staff are trained adequately
Redressal train their call to competently handle all customer
centre staff who complaints.
are presently
equipped to handle
only routine
complaints.
16. Escalation of Banks should have Banks should also have a

unresolved a mechanism to mechanism to escalate automatically
complaints escalate unresolved complaints from a call
automatically center to higher authorities and the
unresolved details of such mechanism should be
complaints from a put in public domain through their
call centre to website.
higher authorities,
if a higher level of
intervention is
required.
VI CIBIL 17. Reporting to It is desirable that In terms of paragraph 6.2 (c) of the
Issues CIBIL/Credit the banks are made Master Circular on Credit Card
Information to follow a uniform Operations of banks(Circular
Companies method of reporting No.DBOD.FSD.BC.6/24.01.011/2008-
to CIBIL/Master 2009 dated July 1, 2008), before
Card International reporting default status of a Credit
Negative List. card holder to CIBIL or any other
Credit Information Company
authorized by RBI, banks should
ensure that they adhere to a
procedure duly approved by their
Board including issuing of sufficient
notice to such cardholder about the
intention to report him/her as
defaulter to the Credit Information
Company. The procedure should
also cover the notice period for such
reporting as also the period within
which such report will be withdrawn
in the event the customer settles his
dues after having been reported as
defaulter. These procedures should
be transparently made known as
part of the MITCs. The above
instructions are reiterated.
VII Others 18. Registration of Banks to register Instructions in this regard have
Telemarketers all their already been issued to banks vide
telemarketers with RBI Circular
Department of No.DBOD.FSD,BC.19/24.01.011/200
Telecommunication 7-2008 dated July 3, 2007. Banks
s within the may scrupulously adhere to the
deadlines set by above instructions.
TRAI and
scrupulously follow
RBI instructions on
the National Do Not
Call Registry of
TRAI.
19. Coverage of all The banks may be The banks may consider covering all
ATMs by CCTVs advised to cover all ATM sites by CCTVs so that the
the ATM sites by identity of the person withdrawing
CCTVs so that the cash from the ATM can be
identity of the established. Further, the security
withdrawing person staff posted at ATMs may be trained
can be established adequately in this regard.
20. Prompt A request for Any request for a closure of a credit

honouring of closure of the card has to be honoured
requests for credit card has to immediately by a bank, subject to
closure of credit be honoured full settlement of dues by the
cards immediately by the cardholder
bank.
21. Blocking of A lost card should Banks are advised to block a lost
lost card be immediately card immediately on being informed
blocked on being by the customer and formalities if
informed by the any, including lodging of FIR can
customer and follow within a reasonable period.
formalities if any,
including lodging of
FIR can follow
within a
reasonable period.
22. Insurance Banks may Banks may consider introducing, at

cover in respect of consider the option of the customers, an
dues relating to introducing a cover insurance cover to take care of the
lost cards for the lost card liabilities arising out of lost cards.
liability or limiting In other words, only those
such liability at the cardholders who are ready to bear
option of the the cost of the premium should be
customers. provided an appropriate insurance
cover in respect of lost cards.
(19)
Banking facilities to the visually challenged
It has been brought to our notice that visually challenged persons are facing problems in
availing banking facilities. It may be noted that banking facilities including cheque book
facility / operation of ATM / locker, etc. cannot be denied to the visually challenged as
they are legally competent to contract.
2. In the Case No. 2791/2003, the Honourable Court of Chief Commissioner for Persons
with Disabilities had passed Orders dated 05.09.2005 (copy enclosed) wherein the
Honorable Court instructed that banks should offer all the banking facilities including
cheque book facility, ATM facility and locker facility to the visually challenged and also
assist them in withdrawal of cash. Further, in paragraph 14 of the above Order, the
Honorable Court observed that "visually impaired persons cannot be denied the facility of
cheque book, locker and ATM on the possibility of risk in operating / using the said
facility, as the element of risk is involved in case of other customers as well."
3. Banks are therefore advised to ensure that all the banking facilities such as
cheque book facility including third party cheques, ATM facility, Net banking facility,
locker facility, retail loans, credit cards, etc. are invariably offered to the visually
challenged without any discrimination. Banks may also advise their branches to render
all possible assistance to the visually challenged for availing the various banking
facilities.
Yours faithfully
(G.Srinivasan)
(20)

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Organisation and Functions

Board for Financial Supervision

Board for Payment and Settlement

#20 Shri Ashok Chawla

WESTERN AREA NORTHERN AREA

2. Shri K.Venkatesan, 2 . Shri Mitha Lal Mehta

3. Shri Dattaraj V. Salgaocar, 3 . Dr. Ram Nath

4. Shri J.B. Patel 4 . Dr. Pritam Singh

EASTERN AREA SOUTHERN AREA

* 1 . Shri Suresh D. Tendulkar * 1 . Shri Lakshmi Chand,

2. Shri A.K. Saikia, Retd. IAS, 2. Shri C. P. Nair,

3. Shri Sovan Kanungo, Retd. IAS, 3. Dr S.Ramachander,

4. Dr.M. Govinda Rao.

5. Smt. Devaki Jain,

* Representative on the Central Board, appointed w.e.f. November 27, 2000.

iv. s t r e n g t h e n i n g of the internal defences of supervised institutions.

• supervisory rating model for banks.

• Reserve Bank of India Act, 1934: g o v e r n s the Reserve Bank functions

• Foreign Exchange Regulation Act, 1973/Foreign Exchange Management Act,

• Formulates, implements and monitors the monetary policy.

• Has 4 regional offices ,15 branches and 5 sub-offices.

Reserve Bank of India

Part B. Developmental and Regulatory Policies 2009-10

II. Interest Rate Policy

(b) Payment of Interest on Savings Bank Account on a Daily Product Basis

Modalities in this regard will be worked out in consultation with banks.

(4) RTGS TRANSACTION

Line 1 Sender's bank account number /

Line 2 Name of the Sender/ remitter 35X

Line 3 and 4 Address and Place of Residence 2*35X

Field tag 5561

Line 1 Account number [/34X]

Line 2 Name of the Beneficiary 35X

Line 3, 4 and 5 Address and Place of Residence 3*35X

5. It is therefore, advised that

6.5% Savings Bonds, 2003 (Non-taxable)

Extract from the Government Securities Act, 2006

Extract from the Government Securities Regulations, 2007

Signed by the above-named transferor Signature of transferor………………..

Signed by the above-named transferee Signature of transferee………………..

*: Delete whichever is not applicable.

@: This paragraph is to be used only when a portion of the Certificate is transferred.

Stock Certificate issued No/s …………………. dated ……………………………..

TRANSFER OF SECURITIES HELD IN THE RESERVE BANK OF INDIA (RBI)

Signed by the above-named Signature of

*: Delete whichever is not applicable.

@: This paragraph is to be used only when a portion of the Bond is transferred.

To, To, To,

Nomenclature of Distinctive SGL/CSGL/Bond Date of Face value of

 Discrepancies in the particulars of securities/Account No(s).

 Discrepancies in the names of holders.

 Enclosures not compiled properly.

 Signature not matching.

 Security not eligible for pledge/hypothecation/lien

 Security already under pledge/hypothecation/lien in favour of another creditor.

 Claims in respect of the security are pending.

 Any other reason………………………………………………………………

To, To, To,

Nomenclature of Distinctive SGL/CSGL/Bond Date of Face value of

 Discrepancies in the particulars of securities/account no(s).

 Discrepancy in the name(s) of holders.

 Enclosures not compiled properly.