India: RBI mulls code for third-party products

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The move comes on allegations that several public and private sector banks were guilty of practices that encouraged money laundering and violated know-your-customer (KYC) norms and anti-money laundering (AML) rules in the sale of gold and other third-party products.

“The intent and basic structure for TCF is in place in India for banking products of scheduled banks. However, it is now being considered to extend the TCF structure to third-party products, viz, mutual funds, capital market and insurance products sold by banks and also extending the BOS (banking ombudsman scheme) to non-scheduled banks,” RBI said.

TCF is a consumer protection policy, designed to address the problem of asymmetric information in the financial services sector. It is a regulatory initiative in which companies are required to consider their treatment of customers at all stages of the product life-cycle, including the design, marketing, advice, point-of-sale and after-sale stages.

RBI says it has taken a lead in ensuring banks’ customers in India are treated fairly. “Over the years, it has initiated several customer-centric measures and inculcated a culture of treating customers fairly through regulatory and supervisory interventions,” the report said.

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