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EXECUTIVE SUMMARY
The aim of this project is to introduce the reader to the topic of T H E B A N K I N G OMBUDSMAN. The project also deals with the policy adopted by the RBI and the excess of case laws. The ability of the banking industry to achieve the socio-economic objectives and in the process bringing more and more customers into its fold will ultimately depend on the satisfaction of the customers. Banks have a strong belief that a satisfied customer is the foremost factor in developing our business. This project is focused in understanding the essentiality of the Banking Ombudsman in regards to the public interest and the interest of the banking policies to enable resolution of complaints related to deficiency in banking services. Sensing the need for a easy, expeditious and inexpensive mechanism for redressal of unresolved grievances of customers, the RBI initially formulated the Scheme of Ombudsman, 1995, which became operational in June 1995, providing an institutional and legal framework to bank customers to resolve all their complaint The scheme is applicable to all scheduled commercial banks having business in India and scheduled primary cooperative banks except Regional Rural Banks. Fifteen offices of Banking Ombudsman at important centres were set up to cover the entire country.
The Banking Ombudsman offers customers the opportunity to resolve disputes with their banks without needing to resort to the Courts.
PREFACE OBJECTIVES To present Banking Ombudsman Scheme & how does it works. To present the services of the Banking Ombudsman offered to the customer. To show how the Banking Ombudsman deals with customer complaints. To explain the duties, functions & powers of the
Ombudsman.
Chp:-1 INTRODUCTION TO BANKING OMBUDSMAN INTRODUCTION An ombudsman is a person who has been appointed to look into complaints about an organization. Using an ombudsman is a way of trying to resolve a complaint w i th o u t g o i n g to c o u r t. Banking Ombudsman is a quasi judicial authority functioning under Indias Banking Ombudsman Scheme, and the authority was created pursuant to the a decision by the Government of India to enable resolution of complaints of customers of banks relating to certain services rendered by the banks. The Banking Ombudsman Scheme was first introduced in India in 1995,and was revised in 2002 and 2006. In the wake of the failure in the efficient services of the banks, the RBI brought a scheme for the prompt, efficient and courteous services and also to protect the rights of the customers.
The Banking Ombudsman has power to consider complaints from Non-Resident Indians having accounts in India in relation to their remittances from abroad, deposits and other bank-related matters. The Banking Ombudsman does not charge any fee for resolving customers complaints. Complaint can be made before a Banking Ombudsman on the same subject matter for which any proceedings before any court, tribunal or arbitrator or any other forum is pending or a decree or award or a final order, has already been passed by any such competent court, tribunal, arbitrator or forum.
DUTIES & FUNCTIONS OF BANKING OMBUDSMAN The Ombudsman shall enquire into and investigate in accordance with the provisions of the Act, and take action or steps as may be prescribed by the Act and concerning Practices and actions by persons, enterprises and other private institutions where complaints allege that violations of fundamental rights and freedoms have taken place. All instances or matters of alleged or suspected corruption and them is appropriation of public moneys or other public property by officials.
Without derogating from the provisions, any request or complaint in respect of instances or matters referred to in that provisions, may include any instance or matter in respect of which the Ombudsman has reason to suspect That the provisions of any law or under the authority of the State or by any person in its employment, or that any practice is so followed, in a manner which is not in the public interest.
The Ombudsman shall not be required to investigate any instance or matter referred to in the provisions which has been laid before him or her under the provisions when the grounds on account of which the inquiry is desired is in the opinion of the Ombudsman. The provisions shall not apply in respect of any decision taken in or in connection with any civil or criminal case by a court of law
C O M P L A I N T S C O N S I D E R E D BY BANKING OMBUDSMAN The Banking Ombudsman can receive and consider any complaint relating to the following deficiency in banking services (including internet banking): non-payment or inordinate delay in the payment or collection of cheques, drafts, bills etc.; non-acceptance, without sufficient cause, of small
denomination notes tendered for any purpose, and for charging of commission in respect thereof; non-acceptance, without sufficient cause, of coins tendered and forcharging of commission in respect thereof; non-payment or delay in payment of inward remittances ; failure to issue or delay in issue of drafts, pay orders or bankers cheques; non-adherence to prescribed working hours ;
non-observance of Reserve Bank guidelines on engagement of recovery agents by banks; and non-observance of Reserve Bank Directives on interest rates; delays in sanction, disbursement or non-observance of prescribed time schedule for disposal of loan applications; non-acceptance of application for loans without furnishing valid reasons to the applicant; and COMPLAINTS NOT CONSIDERED BY BANKING OMBUDSMAN Ones complaint will not be considered if: One has not approached his bank for redressal of
his grievance first. One has not made the complaint within one year from the date one has received the reply of the bank or if no reply is received if it is more than one year and one month from the date of representation to the bank.
enumerated
Banking Ombudsman Scheme, 2006. OPERATIONALISATION Reserve Bank of India operationalised the Banking Ombudsman Scheme by establishing Banking Ombudsman Offices at 15 centers all over the country. The names, addresses and area of operation of the Banking Ombudsmen have been given in to Annexure A. Reserve Bank frames the guidelines for operationalizing the Scheme and supervises the running of the Scheme. It also supervises the running of the Scheme and administrative arrangements, budget and expenditure of the Banking Ombudsman Offices.
Chp:-3
PERFORMANCE
OF
THE
OFFICES
OF
BANKINGOMBUDSMAN The performance of the Offices of the Banking Ombudsman was analyzed on the aspects such as the quantum of complaints handled by them, the timeliness in handling the issues, and appropriateness of the decisions given against the complaints. Number of Complaints Received The number of complaints received by the Banking Ombudsman Offices had constantly increased in the last five years. There was more than threefold increase in the number of complaints received in the year 2006-07from the previous year after the Banking Ombudsman Scheme, 2006 was notified. The increasing receipt was also observed in the year 2007-08 with a 24% increase from the year 2006-07.The average number of complaints received per Banking Ombudsman Office has also increased from 550 in 2003-04 to 3192 in 2007-08.
Number
of
complaints
received
by the
Banking
Ombudsman Offices
Period
2003-2004
15
8246
+53%
550
The increase in the number of complaints received during the years 2005-06and2006-07 can be attributed to new areas such as credit card complaints included and to facilitation of complaint submission by allowing complaint submission in any form including by online and by email allowed in the Banking Ombudsman Scheme, 2006. Per month receipt in the number of complaints received under the BO Scheme2006 was more than thrice the number of complaints received under the Banking Ombudsman Scheme, 2002. The increase in the number of complaints received under the Banking Ombudsman Scheme 2006 as compared to the previous scheme clearly indicates the extent to which the scheme has benefited larger sections of of the banking customers. The comparative effects the Banking Ombudsman Schemes
2002and 2006 in complaint receipt are given as below: Number of complaints received in 2005-06 and 2006No. PERIOD SCHEME S RUNNIN FROM TO TOTAL G COMPLAINTS FROM TO TOTAL RECEIVED TOTAL PER OF
9 MONTH S 18 MONTH S
B 2002 B 2006
O 9732
SCHEME
Disposal of Complaints During the year 2007-08, the Banking Ombudsman Offices disposed of 49100complaints (including from the complaints pending at the beginning of the year and those received during the year). Of these, 21747 complaints (49%) were settled to the satisfaction of the complainants, 15914 complaints (36%) could not be considered under the scheme owing to several reasons like being outside the purview of the scheme, time-barred, without sufficient cause, frivolous, pending in other for a, etc. A sample analysis of 756 complaints that could not be considered under the scheme disclosed that 42% of such complaints fell outside the purview of the scheme and 23%were first resort complaints and could not be taken up by the Banking Ombudsmen. In11% of the complaints, deficiency of service could not be established and the remaining24% complaints could not be considered for reasons like they were pending in other for a or the
settled to the (42%) complaints (a) Complaints That be under consider the
couldnt (42%)
10403 (86%)
27235 (82%)
37661 (84%)
49100 (89%)
Analysis of Complaints:
The analysis of complaints received at the Banking Ombudsman offices includes analysis of subject category of complaints and the bank-groups against which the complaints were made. Computerization of the functioning of Banking Ombudsman Offices through the Complaint Tracking Software has enabled detailed analysis in this regard. The maximum number of complaints pertained collection dealt to with during the last five-year deposit the period complaints regarding etc, besides accounts,
deficiency in servicing of loans and advances and delay in of cheques/bills, miscellaneous complaints. The details are given in the following table:
Analysis of complaints dealt with -category-wise Category Deposit 20022003 1789 20032004 2500 (26%) 1226 (13%) 1001 (11%) 20042005 3239 (27%) 2291 (19%) 1245 (10%) 20052006 6733 (20%) 5215 (16%) 3058 (9%) 20062007 5803 (15%) 5151 (13%) 4058 (11%)
Amount (27%) Loans & 1651 Advances Collection of Cheques & Bills Others 2158 (34%) (25%) 908 (14%)
4756 (50%)
5299 (44%)
18357 (55%)
23626 (61%)
However, during the year 2006-07, the maximum number of complaints received pertained to credit cards at 20%. Complaints pertaining to deposit accounts, loans and advances and remittances occupied the next three places in the number of complaints received. The details are shown below.
Analysis of complaints-Bank-group-wise Group-wise, the majority of the complaints pertain to the Nationalized Banks followed by the State Bank Group. However, over the years, the percentage of complaints against public sector banks, including the SBI Group, showed a decline vis--vis the number of complaints received against private sector banks and foreign banks Break-up of complaints dealt with -Bank-group-wise
Banks Scheduled 166 Primary Cooperative Banks RRB Others Total 232 526 9483
SUSPENSION OF THE SCHEME 1) The Reserve Bank, if it is satisfied that it is expedient so to do, may by order suspend for such period as may be specified in the order, the operation of all or any of the
BANKINGOMBUDSMAN POWERS AND JURISDICTION 1) The Reserve Bank shall specify the territorial limits to which the authority of each Banking Ombudsman appointed under Clause 4 of the Scheme shall extend. 2) The Banking Ombudsman shall receive and consider
complaints relating to the deficiencies in banking or other services filed on the grounds mentioned in clause 8 and facilitate their satisfaction or settlement by agreement or through conciliation and mediation between the bank concerned and the aggrieved parties or by passing an Award in accordance with the Scheme.
proceedings. SETTLEMENT OF COMPLAINT BY AGREEMENT 1) As soon as it may be practicable to do, the Banking Ombudsman shall send a copy of the complaint to the branch or office of the bank named in the complaint, under advice to the nodal officer referred to in sub-clause (3) of c l a u s e the 15, and endeavor the bank to promote a s e t t l e m e n t o f t h e co m p l a i n t b y agreement between complainant and through conciliation or mediation. 2) For the purpose of promoting a settlement of the complaint, the Banking Ombudsman may follow such procedure as he may consider just and proper and he shall not be bound by any rules of evidence. 3) The proceedings before the Banking Ombudsman shall be summary in nature.
REJECTION OF THE COMPLAINT The Banking Ombudsman may reject a complaint at any stage if it appears to him that the complaint made is; a) Not on the grounds of complaint referred to in clause 8 or otherwise not in accordance with sub clause (3) of clause 9; or b) Beyond or c) Requiring consideration of elaborate documentary and oral evidence and the proceedings before the Banking Ombudsman are not appropriate for adjudication of such complaint; or d) Without any sufficient cause; or e) That it is not pursued by the complainant with the pecuniary jurisdiction of Banking
reasonable diligence; or
APPEAL BEFORE THE APPELLATE AUTHORITY: 1) Any person aggrieved by an Award under clause 12 or rejection of a complaint for the reasons referred to in sub clauses (d) to (f) of clause 13,may within 30 days of the date of receipt of communication of Award or rejection of complaint, prefer an appeal before the Appellate Authority ; Provided that in case of appeal by a bank, the period of thirty days for filing an appeal shall commence from the date on which the bank receives letter of acceptance of Award by complainant under sub. clause (6) of clause12
BANKS
TO
DISPLAY
SALIENT
FEATURES
OF
THE
SCHEME FOR COMMON KNOWLEDGE OF PUBLIC 2) The banks covered by the Scheme shall ensure that the purpose of the Scheme and the contact details of the Banking Ombudsman to whom the complaints are to be made by the aggrieved party are displayed prominently in all the offices and branches of the bank in such manner that a
Ombudsman in respect of complaints filed against the bank. Wherever more than one zone/region of a bank are falling within the jurisdiction of a Banking Ombudsman, one of the Nodal Officers shall be designated as the 'Principal Nodal Officer' for such zones or regions.
REMOVAL OF DIFFICULTIES
APPLICATION
OF
THE
BANKING
OMBUDSMAN
SCHEMES,1 9 9 5 A N D 2 0 0 2
The adjudication of pending complaints and execution of the Awards already passed, before coming into force of the Banking Ombudsman Scheme, 2006,shallcontinue to be governed by the provisions of the respective Banking Ombudsman Schemes and instructions of the Reserve Bank issued there under.
Chp:-6
AMDMENT
PASSED
BY
RB I
FOR
THE
C H A N G E S I N BANKE N ING OMBUDSMAN SCHEME, 2006: Amendment 1: RBI expands Scope of Banking Ombudsman Scheme; Includes Fair Banking Practices. Date:26 Dec 2005
Amendment 3: RBI amends Banking relating Ombudsman to Internet Scheme: Banking includes and Noncomplaints
adherence to BCSBI Code. Date:05 Feb 2009 The Reserve Bank of India has widened the scope of its Banking Ombudsman Scheme 2006, to include deficiencies arising out of internet banking. Under the amended Scheme, a customer would also be able to lodge a complaint against the bank for its nonadherence to the provisions of the fair practices code for lenders or the Code of Bank's Commitment to Customers issued by the Banking Codes and Standards Board of India (BCSBI). The BCSBI is an independent and autonomous watchdog set up by the Reserve Bank to monitor and ensure that the codes
include/exclude Ombudsman.
areas
taking
The amended Scheme however, does not include certain banking transactions, such as, failure to honour bank guarantee or letter of credit, etc. Complaints on the areas of banking services are insignificant in number.
Chp:-7 Policy for grievances redressal in IDBI bank INTRODUCTION In the present scenario of competitive banking, excellence in customer service is the most important tool for sustained business growth. Customer complaints are part of the business life of any corporate entity. This is more so for banks because banks are service organizations. As a service organization, customer service and customer satisfaction should be the prime
CUSTOMERCOMPLAINTS/ GRIEVANCES Customer Service Committee of the Board This sub-committee of the Board would be responsible for formulation of a Comprehensive Deposit Policy incorporating the issues such as the treatment of death of a depositor for operations of his account, the product approval process and the annual survey of depositor satisfaction and the tri-enniel audit of such services. The Committee would also examine any other issues having a bearing on the quality of customer service rendered. This Committee would also review the functioning of Standing Committee on Customer Service. The Customer Service Committee of the Board is responsible for the rendering of customer service to the individual, both as a depositor and also as
examining loan policies and service issues for the individual as a borrower also. Standing Committee on Customer Service The Standing Committee on Customer Service will be chaired by the Managing Director/ Executive Director of the Bank. Besides two to three senior executives of the bank, the committee would also have two to three eminent non-executives drawn from the public as members. The committee would have the following functions. Evaluate feed-back on quality of customer service received from various quarters. The committee would also review comments/feed-back on customer service and implementation of commitments in the Code of Banks Commitments to Customers received from BCSBI. The Committee would be responsible to ensure that all regulatory instructions regarding customer service are followed by the bank. Towards this, the committee would obtain necessary feed-back from zonal/regional managers/ functional heads. The committee also would consider unresolved complaints/grievances referred to it by functional heads responsible for redressal and offer their advice.
Nodal Officer and other designated officials to handle complaints and grievances Bank would appoint a Nodal Officer who will be responsible for the implementation of customer service and complaint handling for the entire bank. The bank may also appoint such other officials as it deems necessary. To enable the customers to voice their grievances or offer suggestions for improvement in customer service, Customer Day is observed at all the offices of the Bank across the organization covering branches, Regional / Zonal Offices and Head Office, on 15th of every month ( next day, if 15th is a holiday or half day).In case of any complaint, the matter may be first brought to the notice of concerned Branch Manager for immediate redressal. If the complaint is not redressed to the satisfaction of the customer, the matter may be taken up with the Regional Manager / Zonal Manager
Regional Manager as Nodal Officer for handling the complaint grievances in respect of the branches under their jurisdiction. If the complainant still feels unsatisfied with the responses received, he/she can address the complaint to the banks Nodal Officer at Head Office designated to deal with customers complaints / grievance giving full details of the case. RESOLUTION OF GRIEVANCES Branch Manager is responsible for the resolution of
complaints/grievances in respect of customers service by the branch. He would be responsible for ensuring closure of all complaints received at the branches. It is his foremost duty to see that the complaint should be resolved completely to the customers satisfaction and if the customer is not satisfied, then he should be provided with alternate avenues to escalate the issue. If the branch manager feels that it is not possible at his level to solve the problem he can refer the case to Regional or Zonal Office for guidance. Similarly, if Regional or Zonal office finds that they are not able to solve the problem such cases may be referred to the Nodal Officer. Complaints relating to non-compliance with the Code may be referred to the Code Compliance officers, who shall ensure speedy disposal of all such complaints.
TIME FRAME
Complaint has to be seen in the right perspective because they indirectly reveal a weak spot in the working of the bank. Complaint received should be analyzed from all possible angles. The first level of receiving complaints is at the branch. Branch Head should try to resolve the complaint within 8 working days. In case the customer does not receive a revert / response within 8 working days from the branch, he can escalate the complaint to the Nodal Officer, who shall strive to revert / answer the complaint within a period of 15 working days. If the customer does not receive a satisfactory response from the Bank within a period of one month, he may be provided information about how he can take his complaint further i.e. to the Ombudsman. Communication of Banks stand on any issue to the customer is a vital requirement. Complaints received, which would require some time for examination of issues involved, should invariably be acknowledged promptly
HANDLINGCOMPLAINTS Staff should be properly trained for handling complaints. We are dealing with people and hence difference of opinion and areas of friction can arise. With an open mind and a smile on the face we should be able to win the customers confidence. It would be the responsibility of the Nodal Officer to ensure that internal machinery for handling complaints/grievances operates smoothly and efficiently at all levels. He should give feedback on training needs of staff at various levels to the HR Dept.
department had seized a cheque book in respect of current name ofMr.XYZ credit balance of Rs.44,647.10 as on the date of seizure adding that the cheque book and passbook were not readily traceable and the
account by the complainant. DECISION When the complainant had approached the bank on12.09.2003 for refund of the amount lying to his credit, the bank had refused to allow him to withdraw the amount. Article 90 of the Limitation Act clearly mentions that limitation would start running from the date of demand. The complaint filed with the office of the Banking Ombudsman is not barred by limitation and is maintainable in law. It is a general rule that the party who affirms any proposition shall prove it. It is also a general rule that the onus lies upon the party who seeks to support his case by a particular fact to prove it. If this basic principle of law of evidence is applied, it is for the bank to prove conclusively as to when and how the account was closed and to produce the documents supporting such payment and closure, which ought to have been in its custody. It may also be pertinent to note that the Asst. Director of Income Tax [Inv.] had served an order under Sec.132 [3] of the Income Tax on the branch manager directing him not to part with the funds lying to the credit of the complainant incurrent account No.929. When the bank asserts that the account was closed it is for the bank to bring proof of such closure and it cannot excuse itself stating that records were destroyed or its tapes were not readable. The submission that the bank had
This case is about a customer Mr.XYZ, who is a current account holder with the ABC Bank. Mr.XYZ was having a balance of Rs.44,647/-in department investigations his the current a income account raid tax in when his the income tax his conducted premises. While the
department
confiscated
passbook, cheque book, FDRs and other document of all the banks including the ABC Bank. After thirteen years the income tax department was not able to trace his documents. So he decided to withdraw his balance amount and close the account, but the
CONCLUSION Though the Banking Ombudsman Scheme was introduced in the year 1995, with a view to do away with the banking customer complaints, the scheme was amended in subsequent years of 2002 and 2006. But the banks do not seem to have adopted the norms for their efficient functioning, that is the reason behind the
B a n k i n g O m b u d s m a n Scheme 2007-2008. Booklet of The Banking Ombudsman Scheme 2006. RBI Journals.