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Treating Customers Fairly

The Reserve Bank of India (RBI) introduced guidelines on Treating Customers Fairly (TCF) to address issues like money laundering, violation of KYC norms, and mis-selling of third-party financial products by banks. TCF is a consumer protection policy designed to prevent asymmetric information in the financial sector and ensure customers are treated fairly throughout the product lifecycle. The RBI concluded that banks must not only obtain customer signatures but also provide correct advice and make sure customers understand products.

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0% found this document useful (0 votes)
112 views8 pages

Treating Customers Fairly

The Reserve Bank of India (RBI) introduced guidelines on Treating Customers Fairly (TCF) to address issues like money laundering, violation of KYC norms, and mis-selling of third-party financial products by banks. TCF is a consumer protection policy designed to prevent asymmetric information in the financial sector and ensure customers are treated fairly throughout the product lifecycle. The RBI concluded that banks must not only obtain customer signatures but also provide correct advice and make sure customers understand products.

Uploaded by

yogeshdhuri22
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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TREATING CUSTOMERS FAIRLY (TCF) - RBI Guidelines (Novembe !

"#$)

B%& M ' B'(')ed

Treating Customer Fairly (TCF)

BACKGROUND
Cobrapost Fallout - Country s -!- pri"ate se#tor ban$s %ere en#ouraging money laun&ering an& %ere "iolating K'C norms (or t)ir& party pro&u#ts su#) as sale o( gol& #oins* #apital mar$et* insuran#e pro&u#ts an& mutual (un&s+ RB, also s#rutini-e& internal #ontrol pro#esses o( !. ban$s bet%een /ar#) an& /ay 012! 3 issue& s)o% #ause noti#es to !4 o( t)ese on (in&ing lapses an& t)en impose& a monetary penalty on -!2- ban$s+ Re#ently in mis-selling by 56BC* 67B, (oun& t)e unne#essary #)urn in #lient s mutual (un& port(olio to earn more #ommission+

Treating Customer Fairly (TCF)

BACKGROUND (#ontinues8)
TCF norms %ere (irst intro&u#e& by t)e UK s Finan#ial 6er"i#es Aut)ority 9,t is not enoug) (or ban$s to merely sti#$ to rules* t)ey must pro"e t)at t)ey )a"e a#te& in t)e best interest o( #ustomers: T)e intent o( basi# stru#ture (or TCF is in pla#e in ,n&ia (or ban$ing pro&u#ts (or s#)e&ule& ban$s+

Treating Customer Fairly (TCF)

;)at is TCF<
TCF is #onsumer prote#tion poli#y &esigne& to a&&ress t)e problem o( asymmetri# in(ormation in (inan#ial ser"i#es se#tor to pre"ent money laun&ering an& "iolation o( K'C norms in respe#t o( t)ir& party pro&u#ts+ Gui&elines on ;ealt) management ser"i#es* mar$eting an& &istribution o( t)ir& party (inan#ial pro&u#ts* K'C norms an& A/C stan&ar&s+

Treating Customer Fairly (TCF)

;)at is TCF< (#ontinues8)


TCF is regulatory an& super"ising inter"ention an& #ustomer #entri# initiati"e by RB, 3 To treat #ustomer (airly at all stages o( pro&u#t li(e #y#le* in#lu&ing &esign mar$eting* a&"i#e* point o( sale an& a(ter sale stages o( t)ir& party pro&u#ts+ 7=ten&ing Ban$ing Ombu&sman 6#)eme (BO6) to non- s#)e&ule& ban$s+

Treating Customer Fairly (TCF)

;)at is TCF< (#ontinues8)


RB, )as pro"i&e& a list o( a#tionable issues to ban$s+ ,nspe#tion s#rutinis s)oul& be more targete& an& (o#us s)oul& be results rat)er t)an t)e mere pro#ess+ Customer #an no% submit a #laim or ma$e a #omplaint+

Treating Customer Fairly (TCF)

RB, Con#lu&es
,t is not enoug) (or a ban$ to obtain t)e signature o( a #ustomer on t)e appli#ation (orm* it also bears t)e onus to ma$e sure t)at it pro"i&e& #orre#t a&"i#e+

Treating Customer Fairly (TCF)

Treating Customer Fairly (TCF)

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