Code of Conduct

Indian Banks' Association (IBA) introduced a formal system of self-discipline in the Indian Banking Industry in the year 1973, by recommending a ceiling rate of interest on inter-bank borrowings in call money market.

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Code for Banking Practice

Indian Banks' Association (IBA) introduced a formal system of self-discipline in the Indian Banking Industry in the year 1973, by recommending a ceiling rate of interest on inter-bank borrowings in call money market. In the year 1977, the Ground Rules and Code of Ethics (GRACE) were evolved. In a highly regulated environment, GRACE served its purpose for the last over 20 years, in bringing about a standard of ethical behaviour among Member Banks in certain focal areas of interest to the banking public. GRACE also served as a tool defining the boundaries for interpretation of the directives of the Regulatory Authority in key areas. However, the framework of GRACE was predominantly suited to a fully regulated environment.

The environment has undergone transformation following liberalisation and in the context of financial sector reforms. It was, therefore, felt that there was a need for comprehensively revising GRACE.

Keeping the above need in view, the IBA Committee to Monitor Code of Ethics (CMCE) set up a working group drawing members from the CMCE itself to revise the GRACE. The Working Group drafted a code for banking practice for uniform adoption by the banks. The draft code for banking practice was circulated among Member Banks for their comments. The final draft after incorporating suggestions from Member Banks and our legal consultant was approved by the IBA Managing Committee. The Code was then forwarded to the Reserve Bank of India (RBI) for its concurrence. RBI advised that the IBA Code for Banking Practice is in order for uniform adoption by the Member Banks.

The IBA Code for Banking Practice thus evolved, is an attempt towards fulfilling the above need under the liberalised and deregulated environment, aiming to promote a healthy relationship between the banks. This IBA Code for Banking Practice shall replace the extant GRACE with effect from 1st September, 1999 for adoption by all Member Banks.

Status of the IBA Code for Banking Practice

Indian Banks' Association (IBA) Code for Banking Practice (hereinafter referred to as the IBA Code/the Code) is issued by the Indian Banks' Association (hereinafter referred to as the Association) which has the concurrence of the Reserve Bank of India.

This is a non-statutory Code issued on a voluntary basis. It is to be observed by the Member Banks in dealing with their personal customers (hereinafter referred to as customers). It covers specifically banking services such as current accounts, savings and other deposit accounts, advances (loans and overdrafts). However, principles of the Code will apply to overall relationship between the Member Banks themselves and their customers.

The recommendations set out in the Code are supplementary to and do not supplant any relevant legislation, codes, guidelines or rules applicable to Member Banks under the Banking Regulation Act, 1949, the Reserve Bank of India Act, 1934, the Negotiable Instruments Act, 1881, the Banking Companies Acquisition and Transfer of Undertakings Act, 1970 and 1980 or any other law in force in India governing the Banking Law and Practice.

The Association expects its respective Member Banks to comply with the Code in letter and spirit and observance/compliance thereof shall be monitored by a Committee to be constituted at the Association.

The Code becomes effective from 1st September, 1999 and would also be subject to review/revision from time to time; at least once in every three years.


The Code is intended -

  • to promote good banking practices by setting out the minimum standards which Member Banks will follow in their dealings with customers;
  • to foster customer confidence in the banking system;
  • to inculcate self-discipline amongst Member Banks with a view to promoting healthy competition and ethical practices in respect of banking services.

  • Useful Definitions
  • "Prizes etc." means any prize' lottery' lucky dip' prize draw, gift, benefit either in cash or in kind, attached to, linked with or flowing from any deposits/advances schemes.
  • "Term Deposits" or "Fixed Deposits" are deposits where the depositor makes a lump sum deposit at one time for a fixed term and receives payment thereof on maturity; the interest on the deposit is payable at simple rate either periodically or at maturity
  • "Recurring Deposits" or "Cumulative Deposits" are deposits where the input is in equal monthly installments and the output, on maturity, is in one lump sum
  • "Special Recurring Deposits" are deposits accepted in quarterly/half-yearly/yearly installments from the institutional/corporate investors for their special needs such as sinking/amortisation funds or from individuals for any of their special needs
  • "Annuity Deposits" are deposits where the input is either in installments or in lump sum and the output is in installments
  • "Permanent Income Plan" or "Perennial Pension Plan" is a scheme under which deposits are accepted in lump sum or in installments for a specific period, on completion on which, interest at applicable rate on the corpus built is paid monthly (discounted) or quarterly (actual), as per terms of contract.
  • "Reinvestment Deposits" and "Cash Certificates" are deposits which are accepted in lump sum for a fixed period, on maturity of which the principal plus interest compounded at quarterly intervals are repaid to the depositor as a lump sum

  • IBA Code for Banking Practice
  1. Observance

    Member Banks of the Indian Banks' Association (the Association) agree to observe and abide by the following Ground Rules:

  2. Member Banks of the Indian Banks' Association (the Association) agree to observe and abide by the following Ground Rules:

    Member Banks shall not give prizes, gifts, donations, etc., or any direct or indirect benefits in the purchase price or in respect of any other transactions relating to securities, bonds, etc., as consideration or with a view to getting or retaining a deposit and or advance account. Promotional schemes duly approved by the Boards of respective banks may, however, be launched within the regulatory framework of the Reserve Bank of India. However, it may be customary to distribute gifts (cost of such gift article should not exceed Rs. 250/- per piece) at the time of Diwali or New Year to the valued customers. Bank's policy in this regard be approved by the Board

  3. Association with Chit Funds/Speculative Ventures

    Member Banks shall not associate themselves with chit fund companies, which conduct lottery, gift schemes, etc., or any other speculative ventures. Member Banks shall also not encourage or lend their names to promote speculative ventures of any nature. However, it would be in order for banks to open current accounts, fixed deposits, etc. of such companies in the banks' normal course of business

  4. Deposit Receipts

    When Member Banks issue deposit receipts against cheques/drafts/pay-orders drawn on local banks, the banks may pay interest on such deposits from the date on which the relative instrument gets credited/adjusted in the bank's account at the clearing house (RBI, SBI, etc.).

  5. Savings Bank Accounts

    Member Banks shall not open savings bank accounts in the name of the institutions which have been listed out in the Annexure to this Code and also as amended from time to time

  6. Introduction of Accounts

    All deposit accounts, whether savings, current or term deposits, shall be properly introduced

  7. Printing of Customer's Logo, etc. on Cheque Leaves

    Member Banks shall not print or allow the customers to print any logo, advertisement, etc., on the cheque leaves. However, this prohibition need not be extended to dividend/ interest warrants or refund orders in view of their limited circulation.

  8. Collection of Term Deposit Receipt on Maturity

    The Term Deposit Receipt (TDR) received for collection from another bank shall not be renewed by the TDR issuing bank and delivered to the customer directly. The TDR issuing bank shall either pay to the collecting bank or else, the instrument shall be returned, if the issuing bank has any valid reasons not to pay

  9. Renewal of Overdue Domestic Term Deposit

    Renewal of overdue domestic term deposit (from maturity date of overdue deposit) shall be for a period extending upto at least 15 days beyond the actual date of renewal. If the renewed overdue domestic deposit is tendered for premature foreclosure/encashment before completion of minimum 15 days from the actual date of the renewal, no interest be paid for the overdue period even if the total overdue period from the date of maturity of the old deposit receipt exceeds 15 days.

  10. Payment of Interest on Term Deposit Maturing on Holidays

    If the noted due date of a term deposit falls on a holiday, Sunday, non-business working day, interest be paid for such intervening day(s), at the originally contracted rate, till the succeeding working day

  11. Maturity Value Certificate (MVC)

    Member Banks shall not issue Maturity Value Certificates (MVCs) under any circumstances to any person who approach bank branches with offer to procure substantial rupee deposits.

  12. Negative Publicity

    Member Banks shall not make publicity of adverse/weak position of other banks, in order to wean away the customers of the affected banks.

  13. Interest Payment
    • The statements with regard to the rate of interest, method of interest calculation, etc. in any publicity literature, advertisement and other forms of publicity on deposit scheme/s of banks shall be precise and intelligible
    • Member Banks may follow the Master Charts relating to payment of interest on deposits prepared by the Association from time to time for fixing maturity values; for payment of monthly income, annuities, etc
  14. General Conventions for Domestic Deposits
    • Member Banks may not accept any deposits for a period longer than 10 years. However, banks may accept deposits for periods exceeding 10 years in terms of orders of competent courts or in the case of minors where interests of minors are involved, provided banks are convinced that it is necessary to do so. Individual banks may decide in this matter based on asset liability management policies being followed.
    • Interest on deposits for fixed term may be paid, credited, transferred or reinvested with frequency not less than the quarterly rests. However, payment of monthly interest may be allowed, if required, by discounting the quarterly interest accrued (refer to the Association's Master Charts).
    • Interest on deposits where the terminal period (month/quarter/half year etc., as the case may be) is incomplete shall be paid on maturity
    • On deposits repayable in less than three months or where the terminal quarter is incomplete, interest would be paid for the actual number of days on the basis of 365 days in a year
    • Where the interest is paid at discounted value on monthly basis during the currency of the deposits:

      If the terminal quarter or half years consists of one month (e.g. deposit is for 37 months), interest therefore (i.e. for 37th month) shall be paid at actuals (i.e. one third of quarterly or one-sixth of half-yearly interest).
    • Where the terminal incomplete quarter or half year consists of (i) one month and over, but less than two months (ii) two months, and (iii) two months and over but less than three months, interest shall be paid as under:
      • for one month and over but less than two months (e.g. deposit for 37 months and 15 days); or
      • two months (e.g. deposit of 38 months) - At discounted value for the first month (i.e. 37th month) and at actuals for the terminal incomplete month (i.e. 15 days) or second month (i.e. 38th month), as the case may be; (iii) for two months and over but less than three months (e.g. deposit for 62 months and 15 days) - At discounted value for first and second months (i.e. 61st and 62nd month) and at actuals for the terminal incomplete month (i.e. 15 days).
  15. Terms of Acceptance of Deposits
    • Member Banks shall not issue an incomplete term deposit receipt which does not clearly mention the amount actually deposited, period for which the deposit is placed/accepted and the rate of interest payable as also periodical rest at which interest is payable
    • In case of Reinvestment Plan Deposit, Recurring Deposit and Cash Certificate in addition to the particulars stated in the above para, banks shall also mention the maturity value and periodical rest at which the interest shall be compounded
  16. Overdraft in Savings Bank Account

    No overdraft limit on a regular basis be permitted in saving bank account.

  17. Monitoring

    The Committee constituted by the Association to ensure the observance/compliance of the Code by the banks shall be empowered to investigate and follow up the cases of violation of the Code by Member Banks that may be brought to its notice.

    Member Banks shall not violate any of the Ground Rules merely because some other Member Bank/s has/have violated. They shall, instead, instruct their branch managers or any other officials that on their coming across any case of violation by other banks, they shall bring the same to the notice of their head office, which will take up the matter with the Association. For this purpose, every Member Bank shall nominate a designated officer who shall liaise between the bank's branches and the Association in the matter. The Association shall consider the complaint on violations received from the designated officer of the complainant bank. Member Banks shall give immediate effect to the suggestions given by the Committee in respect of any matter related to violation of this Code


Prohibition against Opening of Savings Bank Accounts in the Name of Certain Bodies/Organisations(Vide paragraph 9.13 Manual of Instructions (June 1998); Department of Banking Operations and Development, Reserve Bank of India)

  1. Savings deposit account cannot be opened by banks in the name of:\
    • Government departments
    • Bodies depending upon budgetary allocations for performance of their functions.
    • Municipal Corporations or Municipal Committees
    • Panchayat Samitis
    • State Housing Boards.
    • Water and Sewerage/Drainage Boards.
    • State Text Book Publishing Corporations
    • Societies.
    • Metropolitan Development Authority.
    • State/District Level Housing Co-op. Societies, etc.
    • Any trading, business or professional concern (e.g. firms of Chartered Accountants, Lawyers, etc.) whether such concern is a proprietary or a partnership firm or a company or an association.
    • Political Party.
  2. The above prohibition will not apply in the case of the following organisations/agencies:
    • Primary Co-operative Credit Society which is being financed by the bank
    • Khadi and Village Industries Boards.
    • Agriculture Produce Market Committees
    • Societies registered under Societies Registration Act, 1860 or any other corresponding law in force in State or a Union Territory
    • Companies governed by the Companies Act, 1956 which have been licensed by the Central Government under Section 25 of the said Act, or under the corresponding provision in the Indian Companies Act, 1913 and permitted not to add to their names the word "Limited" or the words "Private Limited".
    • Institutions other than those mentioned in clause (i) above and whose entire income is exempt from payment of income tax under Income-Tax Act, 1961.
    • Government departments/bodies/agencies in respect of grants/subsidies released for implementation of various programmes/schemes sponsored by Central Government subject to production of an authorisation from the respective Government departments to open savings bank account.
    • Development of Women and Children in Rural Areas (DWCRA).
    • Self-help Groups (SHGs) registered or unregistered, which are engaged in promoting savings habits among their members.
    • Farmers' Clubs - Vikas Volunteer Vahini VVV.

Code of conduct for DSA

Model Code of Conduct for the Direct Selling Agents (DSAs)


1. Preamble

Model Code of Conduct for the Direct Selling Agents (DSAs) is non-statutory code issued by Indian Banks' Association, a voluntary association of Banks in India for adoption and implementation by DSAs while operating as Agents of Banks and Financial Institutions.

2. Applicability

Upon adoption and inclusion as part of agreement between Kotak Mahindra Bank and the DSA, this code will apply to all persons involved in marketing and distribution of any loan or other financial product of the Bank. The Direct Selling Agent (DSA) and its Tele-Marketing Executives (TMEs) & field sales personnel, namely, Business Development Executives (BDEs) must agree to abide by this code prior to undertaking any direct marketing operation on behalf of the bank. Any TME/BDE found to be violating this code may be blacklisted and such action taken be reported to the bank from time to time by the DSA. Failure to comply with this requirement may result in permanent termination of business of the Direct Selling Agent (DSA) with Bank and may even lead to permanent blacklisting by the industry. 

A declaration to be obtained from TMEs and BDEs by the DSAs before assigning them their duties is annexed to this Code.

3. Tele-calling a Prospect (a prospective customer)

A prospect is to be contacted for sourcing a bank product or a bank related product only under the following circumstances:

  • When prospect has expressed a desire to acquire a product through the bank's internet site/call centre/Branch or through the Relationship Manager at the bank or has been referred to by another prospect/customer or is an existing customer of the bank who has given consent for accepting calls on other products of the bank.
  • When the prospect's name/telephone no/address is available & has been taken from one of the lists/directories/databases approved by the Direct Selling Agent (DSA) Manager/Team leader, after taking his/her consent. The TME should not call a person whose name/number is flagged in any "do no disturb" list made available to him/her.

4. When you may contact a prospect on telephone

Telephonic contact must normally be limited between 0930 Hrs and 1900 Hrs. However, it may be ensured that a prospect is contacted only when the call is not expected to inconvenience him/her.

Calls earlier or later than the prescribed time period may be placed only under the following conditions:

  • When the prospect has expressly authorized TME/BDE to do so either in writing or orally.

5. Can the prospect's interest be discussed with anybody else?

DSA should respect a prospect's privacy. The prospect's interest may normally be discussed only with the prospect and any other individual/family member such as prospect's accountant/secretary/spouse, authorized by the prospect.

6. Leaving messages and contacting persons other than the prospect.

Calls must first be placed to the prospect. In the even the prospect is not available; a message may be left for him/her. The aim of the message should be to get the prospect to return the call or to check for a convenient time to call again. Ordinarily, such messages may be restricted to:

"Please leave a message that (Name of officer) representing Kotak Mahindra Bank called and requested to call back at (phone number)".

As a general rule, the message must indicate:

  • That the purpose of the call is regarding selling or distributing a bank product of Bank

7. No misleading statements/misrepresentations permitted

TME/BDE should not -

  • Mislead the prospect on any service/product offered.
  • Mislead the prospect about their business or organization's name, or falsely represent themselves.
  • Make any false/unauthorized commitment on behalf of Bank for any facility/service.

8. Telemarketing etiquettes

    No calls prior to 0930 Hrs or post 1900 Hrs unless specifically requested.
  • No serial dialing
    No calling on lists unless list is cleared by team leader
    • Identify yourself, your company and your principal
    • Request permission to proceed.
    • If denied permission, apologize and politely disconnect.
    • State reason for your call
    • Always offer to call back on landline, if call is made to a cell number
    • Never interrupt or argue
    • To the extent possible, talk in the language which is most comfortable to the prospect
    • Keep the conversation limited to business matters
    • Check for understanding of "Most Important Terms and Conditions661
    • " by the customer if he plans to buy the product
    • Reconfirm next call or next visit details
    • Provide your telephone no, your supervisor's name or your bank officer contact details if asked for by the customer.
    • Thank the customer for his/her time
    • Customers who have expressed their lack of interest for the offering should not be called for the next 3 months with the same offer
    • Provide feedback to the bank on customers who have expressed their desire to be flagged "Do Not Disturb"
    • Never call or entertain calls from customers regarding products already sold.
      Advise them to contact the Customer Service Staff of the bank.

9. Gifts or bribes

TME/BDE's must not accept gifts from prospects or bribes of any kind. Any TME/BDE offered a bribe or payment of any kind by a customer must report the offer to his/her management.

10. Precautions to be taken on visits/contacts

BDE should

  • Respect personal space - maintain adequate distance from the prospect.
  • Not enter the prospect's residence/office against his/her wishes:
  • Not visit in large numbers - i.e. not more than one BDE and one supervisor, if required.
  • Respect the prospect's privacy.
  • If the prospect is not present and only family members/office persons are present at the time of the visit, he/she should end the visit with a request for the prospect to call back.
  • Provide his/her telephone number, supervisor's name or the concerned bank officer's contact details, if asked for by the customer.
  • Limit discussions with the prospect to the business - Maintain a professional distance.

11. Other important aspects - Appearance & Dress Code

BDE's must be appropriately dressed - For men this means

  • Well ironed trousers;
  • Well ironed shirt, shirt sleeves preferably buttoned down.

For women this means

  • Well ironed formal attire (Saree, Suit etc.);
  • Well groomed appearance.

Jeans and/or T Shirt, open sandals are not considered appropriate.

12. Handling of letters & other communication

Any communication sent to the prospect should be only in the mode and format approved by the Bank.

Declaration - Cum - Undertaking

To be obtained by the DSA from TMEs/BDEs employed by them


Re: Code of Conduct

Dear Sir,

I am working in you company as a __________. My job profile, inter-alia, includes offering, explaining, sourcing, and assisting documentation of products and linked services to prospects of Kotak Mahindra Bank.

In the discharge of my duties, I am obligated to follow the Code of Conduct attached to this document.

I confirm that I have read and understood and agree to abide by the Code of Conduct. I further confirm that the trainer mentioned below has explained the contents in full to me.

In case of any violation, non-adherence to the said Code, you shall be entitled to take such action against me as you may deem appropriate.

Signed on this _______________ day of _________20____

Signature _______________ Name _________Agency____

Signature of Trainer _______________ Name _________Company____