the current system of regulations that govern sale of financial products and services is based on caveat emptor as a doctrine. the caveat emptor principle has led to fundamental flaws in the customer protection architecture and has created large welfare losses for customers. let me explain further, caveat venditor principle is a counter to caveat emptor and suggests that seller ( banks ) can also be deceived in a market transaction. this forces the seller to take responsibility for the product and discourages the seller from selling the products of inferior quality, “ caveat venditor ” vests the burden of effort of proving that the shortcoming deficiency of service was absent on the seller of the product. we have to reach everyone with financial services as per the prime minister ’ s vision of the jan dhanyojana and extend the highest degree of consumer protection to all users of financial services but very specially, for the vulnerable poor. profit is certainly essential and not an ugly word at all. banks can and do charge for their services but we must again stress the need for reasonableness of service charges while accepting the need for profit margins and profitability of banks. market based returns over inflation must be offered to customers. there is a pressing need to move to a customer protection regime where the provider is held accountable for the service sold to the buyer, by ascertaining that the products sold or the advice given was suitable for the buyer considering her needs and current financial situation, that is, the customer must have a “ right to suitability ”. once the rights are enshrined in the charter of customer rights, it will be mandatory for all banks to adhere to them. the framework governing customer protection should consist of fairness, transparency of rules and conditions, suitability of products that matches customer needs, ability to repay, existence of a grievance redress process, clear specifications of liability if things go wrong, simplicity of the product and duty to inform about changes in the product. customer protection is very important both for all those of us who are literate and enlightened customers in this room and even more for those who are not in this room – the poor, the uneducated and the illiterate customers. with the increasing complexity of banking and the growing chasm of the dangerous digital, this acquires even greater salience. the all india bank depositors ’ association, money life consumer activists, complainants, customer vigilantes all play a significant

role in providing valuable inputs to rbi in furthering our initiatives in the area of customer protection. what we need are collaboration, commitment, credible action and concrete deliverables. governor rajan ’ s five pillar financial sector blueprint will chart the direction of development of our financial system in years to come. pillar four places a high priority on the consumer protection agenda. among the areas of policy focus are the development of cost efficient delivery channels as payment banks and small banks that will enhance the outreach of financial services, expand the range of products and services to meet the distinct financial needs of the underserved and strengthen the institutional arrangements to enhance the capacity of providers of such financial services. equally important will be the attention accorded to financial consumer education and protection in which the standards of consumer care are high and consumers have choices and are confident about making their financial decisions. the customer charter of rights will go some way in enhancing financial literacy and financial capability of consumers to make well informed and responsible financial decisions and thus participate meaningfully and effectively in the financial system. 5c ’ s framework to support our mission to safeguard stability and protect consumers : customer – is at the heart of the central bank ’ s focus and must be the core of the bank ’ s focus too ; confidence – working to help consumers have confidence in financial services, products and regulation ; compliance – monitoring and enforcing compliance with consumer protection rules ; challenge – being prepared to challenge firms and ourselves to get a better outcome for customers ; in case of doubt, the customer is always right and bis central bankers ’ speeches culture – promoting a consumer - focussed approach to the provision of financial services. this talk is titled protecting customers safeguarding stability as the two are inalienable. there has to be a synergy between financial inclusion, financial literacy and customer protection for sustainable financial stability. appropriately, the all india bank depositors ’ association has selected money life foundation for this year ’ s award for their zealous efforts and hard work in the area customer protection. inclusion, economic growth and stability – these are the watch words of the central bank. the macro economic framework and financial sector development necessitate financial deepening and a robust framework of customer protection for stability. we are at an inflection point. we have gone some way, yet much needs to be done in this area. the crusader ’ s work in the area of customer protection is never done, the bar of necessity must be raised higher. thank you for a patient hearing! and