the last year ’ s conference, i had raised certain issues such as the need for a change in attitude towards customers right from the top management down, need for effectively communicating with the consumers, need for being proactive while compensating for lapses, lending responsibly, transparency in disclosure of incentives received while selling insurance / mutual fund products, protection of customers in case of electronic banking transactions, etc. i notice that a lot more still needs to be done in these areas as the position is far from satisfactory. i hope banks and the pccos refocus their efforts on meeting regulatory and customer expectations in these areas. 35. the bcsbi and all of you as pccos have a vital role to play in ensuring that banks rise to meet the above challenges. pro - active and dynamic pccos can make a real difference to the quality of customer service rendered by banks. you are the eyes and ears of bcsbi within the bank and, hence, can positively influence your respective organization ’ s approach towards adherence to codes and standards. we count on all of you assembled here today to act as change agents within your respective organizations and ensure that the principle of treating customer fairly becomes part of your organization ’ s dna. 36. let me remind that in the wake of the global financial crisis, the public gaze is firmly fixed on the conduct of financial institutions. in case banks do not demonstrate customer centricity in their operations, it would be fair to expect that the society would not only demand but force a change in the financial sector architecture involving a move towards a twin peaks approach with a dedicated market conduct regulator. for regulated entities, such a move would mean a huge spiral in regulatory obligations and resultantly, compliance costs. it is, therefore, in banks ’ own interest to convincingly demonstrate, through effective customer service and consumer protection initiatives, that the existing framework is adequate to meet the market conduct objectives envisaged under the twin peaks model. 37. with the above aspirations in focus, i hope that today ’ s deliberations would be able to generate practical ideas on how the institution of bcsbi and pccos can be best leveraged to ensure that the customer service and conduct standards of banks soar high and meet the expectations of customers and the society at large. ladies and gentlemen, i sincerely thank you for your patience. bis central bankers ’ speeches

occupy protests ” which united the common man across continents. the protests gave vent to the seething anger that the people had against the unethical practices followed by the financial institutions, including an utter disregard for the silent majority. not only have the financial market players become an object of despise ; the regulators, governments and the central banks have also lost their credibility in the eyes of the public. desirability in indian context 27. having seen the twin peaks structure and a heightened global preference for this form, let us focus on its desirability in the indian context. is there a case for a separate agency for consumer protection? since so many agencies bcsbi, bo, consumer courts, courts of law, sebi, irda, pfrda, rbi, mca already exist, will a separate regulator dilute, duplicate or damage existing mechanism? or will the creation of a separate market conduct regulator facilitate greater customer protection? in the west, the financial crisis has demonstrably proved that shadow banks, with their large customer base, pose a huge systemic risk which only twin peaks regulation can effectively stem. we too have a plethora of financial products which fall between two stools. 28. in india, in order to ensure financial stability and closer monitoring of financial conglomerates, recently, rbi, sebi, irda and pfrda have entered into an mou enabling consolidated supervision and effective monitoring of financial conglomerates which presently exist. but, this mou broadly has a financial stability objective. 29. we need to have an open mind on the subject and look at it as an opportunity to bring customer - centricity to our regulation. the role regulators presently have in product design and pricing is minimal. the advent of market conduct regulation would mean greater role and responsibility of the regulator in design and pricing issues. this sort of an intervention may force the banks to focus more on appropriateness of selling strategies and product development. the pricing freedom conferred on banks will continue to be in place but would be ring - fenced with a lot of responsibility towards the consumers. 30. in the indian context, we additionally have the twin challenges of financial inclusion and financial education. the need of the hour is to ensure that our unbanked population gains access to formal sources of finance, their reliance on informal channels and on the shadow banking system subsides, and, in the process, consumer exploitation is curbed. a glaring example is the recent case of a chit