and advances, credit cards, non - payment / inordinate delay in the payment or collection of cheques, drafts, bills, non - issue of drafts to customers, non - adherence to prescribed working hours by branches etc. banking ombudsman ( bo ) functions as an arbitrator in respect of any dispute with mutual consent of both the parties provided that the value of the claim in such dispute does not exceed rupees ten lakh. under the new scheme, the complainants will be able to file their complaints in any form, including online. the complainant can appeal against the awards given by the banking ombudsmen. a quick review of the complaints received at the various offices of the ombudsman since the revised scheme came into force reveals that the number of complaints received by the bo ’ s offices has more than doubled to 13, 483 during the quarter ended march 31, 2006. this increase could be attributed to the complainants tending to approach the ombudsman ’ s office or rbi directly instead of first approaching the concerned bank ’ s internal machinery for redressal. there is an urgent need for banks to strengthen their own internal grievance redressal machinery and set up nodal officials at various centres. banks should give wide publicity to the names / contact addresses etc. of such nodal officers so that members of public can forward their grievances to these officials. if no response is received within a month's time or if the customer is dissatisfied with the response he can approach the concerned banking ombudsman. currently bo offices are functioning at 15 centres. fair practices code of indian banks ’ association indian banks ’ association ( iba ) has also played a complementary role in efforts for improving customer service in banks. iba had come out with model fair practices code covering lenders liability, depositors ’ interest that cover what a customer can expect from his bank. it also indicates the responsibilities of banks while giving different kinds of banking services. iba has further come out with a model deposit policy. the fair practices code has been recently reviewed and made more comprehensive in consultation with the bcsbi and is expected to set higher benchmarks for customer services in banks. the banks will be entering into covenants with the bcsbi for adhering to the fpc. ensuring reasonableness of bank charges as the reserve bank was receiving several representations from public about unreasonable service charges being levied by banks, it was felt that the

v leeladhar : the evolution of banking regulation in india – a retrospect on some aspects special address by mr v leeladhar, deputy governor of the reserve bank of india, at the bankers ’ conference ( bancon ) 2007, mumbai, 26 november 2007. * * * it is my pleasure to be here with you this afternoon on the occasion of the bankers ’ conference, which has become a landmark annual event in the indian banking industry. i am indeed grateful to the organisers for their kind invitation, which provided me an opportunity to share my thoughts on the evolutionary path of the banking regulation in india over the past several decades. the topic, to my mind, appears particularly relevant today when india has completed 60 years of its independence this year. while during the last six decades, the indian banking system has indeed come a long way traversing an arduous and tortuous path, it would perhaps be appropriate to assess in retrospect and take stock of how far we have come from where we started and what more remains to be achieved. i would, therefore, like to briefly present a bird ’ s eye view of the salient milestones crossed in the long journey of our banking system and to take stock of the current status of the industry. i would also like to take this opportunity to briefly touch upon certain doubts, which somehow seem to have crept in, about certain aspects of the current regulatory dispensation for the indian banking sector. institutional evolution of the indian banking as most of you would, no doubt, be aware, the indigenous system of banking had existed in india for many centuries, and catered to the credit needs of the economy of that time. the famous kautilya arthashastra, which is ascribed to be dating back to the 4th century bc, contains references to creditors and lending. for instance, it says " if anyone became bankrupt, debts owed to the state had priority over other creditors ". similarly, there is also a reference to " interest on commodities loaned " ( prayog pratyadanam ) to be accounted as revenue of the state. thus, it appears that lending activities were not entirely unknown in the medieval india and the concepts such as “ priority of claims of creditors ” and “ commodity lending ” were established business practices. during the period of modern history, however, the roots of commercial banking in india can be traced back to the early eighteenth century when the bank of calcutta was established in june 1806 – which