CB clamps down on banks’ offer of gifts in promos
View(s):As the Sinhala Tamil New Year nears local commercial banks normally woo customers with unique offerings of valuable gifts coupled with a host of benefits.
This practice is not only confined to New Year periods but also to any other days especially when bank products are launched under various names and at different interest rates.
As banks deliver various banking solutions, they used to bring unique experience to its customers of all age groups through its line of valuable offerings to attract customers.
The Central Bank has now decided to restrict such practices of licensed banks which have got into aggressive and competitive trade practices to entice the customers.
Such practices raise the question about the truthfulness and fairness of representation of products, services, advertisements, schemes and modalities for promotion of products and services of banks, a senior official of the Central Bank said.
The Central Bank was of the view that offering non-interest based incentive schemes for mobilising of interest bearing savings and time deposits create undue competition among licensed banks.
It also undermines the interest rate policies being implemented by the Central Bank.
Therefore the licensed banks have been directed to desist from conducting lottery schemes/raffle draws and gift schemes resulting in a disadvantageous situation for customers where features of a financial product/service are distorted.
Issuing a circular outlining the new directives, the Central Bank noted that licensed banks should not depict relatively reduced interest rates on savings deposits, incorporating features of time deposits to savings accounts.
However according to the circular of the Central Bank, licensed banks may conduct gift schemes provided that all customers of the relevant product, service or that category receive the offered gift.
Banks should offer applicable interest rate based on the nature of the product and the cost of the gift is not charged to customers, CB said.
No additional terms and conditions are imposed on customers with respect to the gifts offered, Central Bank said. (Bandula)