- The RBI has shifted from its principle of ‘caveat emptor’ (buyer beware) to ‘caveat venditor’ (seller beware), and will design stringent mandatory rules, to be followed by all banks, to refrain lenders from mis-selling and to hold them accountable for their products.
- This was to counter the fundamental flaws in customer protection architecture and the large welfare losses for the customers caused due to Caveat emptor principle.
- This will:
- Discourage the seller from selling substandard products.
- Confer on the seller the burden of proving that there was no shortcoming of deficiency of the service.
- Framework for consumer protection should be fair, transparent, suitability to consumer needs, ability to repay, a grievance redress process, clear rules of liability and duty to inform about the changes in the product.
- Public sector banks are expected to improve customer services in areas related to deposits accounts, loans, credit and debit cards, pensions and failure of commitments made under the BCSBI codes.
- Majority of complaints in bank services in the period of 2012-13 were regarding ATM cases, followed by non-observance of the fair practices code, loans and advances and deposit accounts.
- Read at:http://www.thehindu.com/todays-paper/tp-business/reserve-bank-hints-at-stricter-customer-protection-norms/article6031269.ece
Exams Perspective:
- caveat emptor
- KYC
- caveat venditor
- PSU