New Delhi (Agencies): In a bid to guard the customers’ interests, the Reserve Bank of India (RBI) may soon tighten its noose on banks lacking on customer service front by a new set of rules, which could include hefty penalties and other remedial measures against such lapse.

A high-powered committee, constituted by RBI last year under the Chairmanship of former Sebi chief M Damodaran, is likely to soon submit its recommendations to the central bank
on required changes in existing policy framework and prevalent practices of customer service in banks.

Sources close to the development said that the panel might suggest stern action, including monetary and procedural penalties, against banks found lacking on customer service front.

Banks would be penalised for lapses on both implementation and maintenance of model customer service standards, they said, adding that the panel would submit its report later this month.

In this regard, the panel is said to be in favour of giving more teeth to the Banking Ombudsman through necessary legal measures. The Banking Ombudsman Scheme was established by RBI in 1995 to provide speedy solutions to the grievances faced by bank customers.

RBI will frame its final guidelines after studying the panel recommendations, which also include putting in place a pre-determined time frame for resolving customer complaints.

Besides, the banks will also have to tell the customers beforehand about the expected time taken for providing various banking services.

Besides, the RBI might also consider putting more responsibility on the banks' boards of directors in terms of adopting better customer service standards and putting in place necessary checks against any lapses.

There has been a sharp increase in the number of customer complaints at various banks. The Banking Ombudsman received as many as 79,266 complaints in the year 2009-10, the latest period for which data is available. This marked an increase of about 15 per cent from 69,117 complaints received in 2008-09.