The Reserve Bank of India panel on Wednesday recommended an increased deposit insurance cover of Rs.5 lakh so as to encourage individuals to keep all their deposits in banks.

A possibility may be explored to enable full insurance cover for bank deposits by making necessary amendments in the relevant Acts, said the report on Customer Service in Banks chaired by M. Damodaran, former Chairman of the Securities and Exchange Board of India (SEBI).

In case of sick banks, where the accounts are frozen, a possibility to enable customers to immediately avail themselves of a part of their insured deposits before the final fate of sick banks is decided may be explored, it added.

Home loans

The panel also recommended that banks should not impose exorbitant penal rates towards foreclosure of home loans and a policy should be devised to ensure that customers are not denied of opportunity to enhance their economic welfare by making choices such as switching to other banks/financial entities to enjoy the benefits conferred by market competition.

Further, measures to stop practices of discriminating between new and old customers with identical risk profiles on the basis of interest rate offers, must also be initiated.

Banks should automatically provide annual account statement to home loan customers without request from them. Such statements must contain details of payments made towards principal and interest, including principal outstanding.

All home loan customers should permit a switchover between fixed to floating or vice versa at least once during the loan tenure at an appropriate and reasonable fee.

Home loans backed by insurance products, in any eventuality, should be automatically settled by the insurance amount with minimum inconvenience to the nominees and heirs. The procedure should be explained upfront to the customers.

The title deeds should be returned to the customers within 15 days after the loan closure and the boards of banks should put in place a suitable compensatory policy to compensate the customers for delayed return of title deeds or where there is a loss of title deeds in the custody of banks

Banks should ensure through government subsidy or insurance that educational loans are properly priced so that no bright student would be denied an educational loan.

The criteria for giving such loans should well be publicised through websites or advertisements to ensure transparency and non-discrimination in sanction. The Board Approved Policy for educational loans should indicate the minimum percentage in value or number of such loans which will be disbursed to students from rural areas.

Banks may bring the possibility of switch over to the Base Rate to the notice of all borrowers concerned as envisaged in RBI circulars in this matter and also explain the benefits of switchover.

Senior citizens

There should be prioritised service to senior citizens, physically handicapped persons by effective crowd/people management available at all branches. Provision of the SMS alerts service about balance in the account at periodic intervals and about due dates for submission of important documents should be introduced.

Automatic updation of the customers to the senior citizen category based on the date of birth would be introduced. Pensioner may be allowed to submit the annual life certificate at any of the (linked) branches and not necessarily at the home branch. All the life certificates may be maintained in a centralised database.

Rural areas

Banks should ensure proper currency exchange facilities and also the quality of notes in circulation in rural areas. Branches should be made functioning at a time convenient to the customers (agricultural labourers, workers and artisans), that is, morning hours and late evening hours.

Exchange facilities for soiled/torn notes is a right of every citizen using such facilities and the RBI, through its agents, should ensure that no holder of sovereign currency note is turned away at a bank counter when the exchange facility is desired, irrespective of the person tendering the note is a customer or not. All banks should implement the citizens' charter on exchange facilities of notes and coins adopted by the Department of Currency Management, RBI.

The bank's approach to develop Client First Attitude' by its employees needs to be documented.