The Code of Bank’s Commitment to Micro and Small Enterprises has been jointly developed by the Banking Codes and Standards Board of India (BCSBI) and the Indian Banks’ Association (IBA). This Code outlines a set of minimum standards that banks voluntarily commit to uphold in their dealings with Micro and Small Enterprises (MSEs). It is intended to supplement, rather than replace, the existing regulatory framework, recognizing that regulations alone may not guarantee high-quality service delivery.
The objective of the Code is to enhance access to transparent, efficient, and responsive banking services for MSEs by promoting a culture of positive and voluntary compliance among banks. It emphasizes the need for banks to offer need-based financial products and to deal with the financial challenges of MSEs in a fair and empathetic manner.
Key Provisions of the Code
1. Easy Access to Banking Services
The Code sets forth standards to ensure that MSE customers receive banking services that are accessible, prompt, transparent, and efficient.
2. Customized Products and Services
Banks are encouraged to design and deliver financial products tailored to the specific requirements of MSEs, thereby supporting their growth and sustainability.
3. Financial Assistance
The Code affirms banks’ commitment to providing appropriate financial support to MSEs. This includes addressing their financial constraints with a sympathetic approach, thereby facilitating their operational continuity.
4. Non-Discrimination
Banks are required to adhere to a strict non-discrimination policy in their interactions with MSEs. Discrimination on the basis of age, gender, race, marital status, religion, disability, or financial status is explicitly prohibited, ensuring equitable treatment for all customers.
5. Confidentiality
All personal and business-related information of MSE customers is to be treated as private and confidential, even after the banking relationship has ended. Disclosure is permitted only when mandated by law, public duty, or for the prevention of fraud.
6. Fair Practices
Banks are expected to maintain transparency in their dealings, including the disclosure of fee structures and terms of service, to ensure fair and ethical practices.
7. Support for Financially Distressed MSEs
The Code includes provisions for the rehabilitation of financially distressed or “sick” MSEs. Banks are committed to offering structured assistance such as debt restructuring and revival schemes to help such enterprises recover and resume operations.
8. Communication and Transparency
Effective communication is a cornerstone of the Code. Banks are expected to provide clear, accurate, and easily comprehensible information regarding their services, terms, and conditions. Such information should be available in the language preferred by the customer. Marketing and promotional content must not be misleading, and banks are encouraged to actively engage with MSEs to better understand their needs.
9. Publicizing the Code
Banks are obligated to disseminate the Code widely. Copies must be made available to both existing and prospective MSE customers, displayed prominently in branches, published on official websites, and supported by staff training programs to ensure proper implementation. Additional awareness initiatives are also encouraged to inform MSEs of their rights and responsibilities under the Code.
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