Banking is defined accepting for the purpose of lending and investment, deposit of money from the public repayable on demand or otherwise and withdraw by cheque, draft order or otherwise. Ombudsman - An official appointed to investigate individual’s complaint against maladministration especially that of public authorities.
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By : Group 4 Jayalaxmi Desai Kevin Ladani Manish Jagwani Piyush
Singh Samarth Khare Sameer Tigga 1
Topics Covered Introduction Banking Ombudsman Scheme, 2006
Grounds of Complaints Case Studies Grievances Redressal Rejection
of Complaints Appeals Facts Summary 1
Introduction
Bank Banking is defined accepting for the purpose of lending
and investment, deposit of money from the public repayable on
demand or otherwise and withdraw by cheque, draft order or
otherwise. Ombudsman An official appointed to investigate
individuals complaint against maladministration especially that of
public authorities. 2
The Banking Ombudsman Scheme enables an expeditious and
inexpensive forum to bank customers for resolution of complaints
relating to certain services rendered by banks Banking Ombudsman
Scheme Need Of Banking Ombudsman. 3
To be a visible and credible system of dispute resolution
mechanism for common persons utilizing banking services Vision
4
To ensure redressal of grievances of users of banking services
in an inexpensive, expeditious and fair manner that will provide
impetus to improved customer services in the banking sector on a
continuous basis To provide feedback/suggestions to Reserve Bank of
India towards framing appropriate and timely guidelines to banks to
improve the level of customer service and to strengthen their
internal grievance redressal systems To enhance the awareness of
the Banking Ombudsman Scheme To facilitate quick and fair
(non-discriminatory) redressal of grievances through use of IT
systems, comprehensive and easily accessible database and enhanced
capabilities Goals 5
Banking Ombudsman Scheme, 2006
Appointment and Tenure The Reserve Bank may appoint one or more
of its officers in the rank of Chief General Manager or General
Manager to be known as the banking ombudsmen They carry out the
functions entrusted to them by or under the scheme This appointment
may be made for a period not exceeding three years at a time 9
Qualification The Banking Ombudsman shall be a person of repute
experience in the field of Law Banking Financial services Public
administration or Management sectors
If such person is a civil servant he should be in the rank of
joint secretary or above in the Government of India and Incase of
such person being from banking sector, he should had the experience
of working as a whole time Director in a public sector or
equivalent position Qualification (Cont.)
Territorial Jurisdiction and Location of Office The Reserve
Bank shall specify the territorial limits to which the authority of
each of the banking ombudsman shall extend The office of the
banking ombudsman will be located at such places as may be
specified by the Reserve Bank
Sittings The banking ombudsman may hold sittings at such places
within his area of jurisdiction as may be considered necessary and
proper by him, in respect of a complaint or reference before
him
Secretariat The Reserve Bank shall depute such number of its
officers and other staff to the office of the banking ombudsman as
considered necessary to function as the secretariat of the banking
ombudsman The cost of the secretariat will be borne by the Reserve
Bank
General Powers of Banking Ombudsmen To receive complaints
relating to banking services To consider such complaints relating
to the deficiencies in the banking and other services and
facilitate their satisfaction or settlement by agreement through
conciliation and mediation between the bank and the aggrieved
parties or by passing an award in accordance with the scheme
Powers to Call for Information Banking Ombudsman may require
the bank against whom the complaint is made or any other bank
concerned with the complaint to provide any information or furnish
certified copy of any document relating to the complaint which is
or alleged to be in its possession The Banking Ombudsman shall
maintain confidentiality of such information
Grounds On Which The Banking Ombudsman Can Receive And Consider
Complaints 17
Deficiency in services (including internet banking) Non-payment
or inordinate delay in the payment or collection of cheques,
drafts, bills etc Delay in payment of inward remittances Delay /
failure of issuing drafts / pay orders / bankers cheque / banking
facility Delay and failure in providing necessary banking services
and products like debit cards,
Complaints of accounts operated by NRI Refusal in opening the
deposit account and levying additional charges for the products
without informing the customer Non Adherence to the RBI guidelines
in the matter of credit and debit cards Delay in disbursing of
pension Refusal / delay in accepting payment towards taxes Delay /
refusal in servicing or redemption of government securities Refusal
/ delay in closing of accounts
Non-adherence to the fair practices code as adopted by the bank
or non-adherence to the provisions of the Code of Bank s
Commitments to Customers issued by Banking Codes and Standards
Board of India and as adopted by the bank Non-observance of RBI
guidelines on engagement of recovery agents by bank Any other
matter relating to the violation of the directives issued by the
RBI in relation to banking or other services
Deficiency in Services (loans and advances) Non compliance of
interest rates as per guidelines from RBI Delays in sanction,
disbursement or non- observance of prescribed time schedule for
disposal of loan applications Non-acceptance of loan application
without furnishing valid reasons Non-observance of any other
directions or instructions of the RBI from time to time.
CASES 22
CASE 1 The complainant was having a Saving Bank Account with
the opposite party bank. Being an employee of TCS, his salary and
other allowances were being directly credited to his account with
the bank. He alleged that the bank had issued a cheque-book without
his knowledge to someone else and had passed cheques which were not
drawn by him. The total amount so fraudulently withdrawn from his
account amounted to Rs.977,000/-. A police complaint was also
filed. 23
DECISION The subsequent developments after filing of the police
complaint and the opinion given by the GEQD, leads to an
irrefutable conclusion that the culprits had made fraudulent
withdrawals by forging the signature of the complainant. In the
circumstances, prima facie forgery had been established. Legally if
the drawers cheque is forged or unauthorised, however clever the
forgery is, the banker cannot debit his customers account. The
complainant was out of India during the material time. The bank
could not bring out any evidence/proof that the complainant was in
any way connected with the fraud or his involvement in the forgery
hence the bank had to pay for the losses. 24
CASE 2 The complainants husband and had deposited Rs. 15000/-
jointly in the name of self and her name in the bank as on 9.3.93
for one year and the deposit matured on 9/3/94. As on 15.2.96 he
expired. When the complainant had approached the bank and produced
the death certificate and the marriage certificate and informed
that the deposit receipt is lost and asked for the payment of the
deposit proceeds, the bank did not make payment and informed that
they wanted clearance from their controlling office regarding the
heir of the depositor since the deceased had left behind his first
wife and children. 25
DECISION As per RBI guidelines the bank should not insist upon
succession certificate where the amount to the credit of a deceased
depositor does not exceed Rs.25,000/-. As directed earlier by RBI,
BO advised that the intention of the depositor to add the name of
his wife in the deposit payable jointly was that the deposit should
go to the second beneficiary on his death. The bank was advised to
make payment to the complainant after obtaining an indemnity and
after following usual formalities such as verification of signature
and identity etc. 26
CASE 3 The complainant, when he tried to withdraw cash through
ATM, there was power supply failure and he could not withdraw cash
whereas his account was debited by Rs. 600/-. The complainant
reported the matter to the bank. But in- spite of his request and
telephonic talk the bank did not take any action and replied that
he might have withdrawn the cash as per the list of transactions
available with them. 27
DECISION On perusal of the disputed transactions and cash
summary as per ATM, the bank found that the cash was not dispensed
for the disputed transaction and they reimbursed the amount 28
Redressal of Greiveances
PROCEDURE FOR REDRESSAL OF GRIEVANCE Any person who has a
grievance against a bank on any one or more of the grounds
mentioned in Clause 8 of the Scheme may, himself or through his
authorized representative (other than an advocate), make a
complaint to the Banking Ombudsman within whose jurisdiction the
branch or office of the bank complained against is located The
complainant shall file along with the complaint, copies of the
documents, if any, which he proposes to rely upon 30
A complaint made through electronic means shall also be
accepted by the Banking Ombudsman. The Banking Ombudsman shall also
entertain complaints covered by this Scheme received by Central
Government or Reserve Bank and forwarded to him for disposal. The
application generates unique complaint ID Automatic acknowledgement
generated on tracking of complaints RBI and Finance ministry can
also monitor the status of the complaints
No Complaint To Banking Shall Lie Unless The complainant had,
before making a complaint to the Banking Ombudsman, made a written
representation to the bank and the bank had rejected the complaint.
The complainant had not received any reply within a period of one
month after the bank received his representation. The complaint is
made not later than one year after the complainant has received the
reply of the bank to his representation or, where no reply is
received.
The complaint does not pertain to the same cause of action, for
which any proceedings before any court, tribunal or arbitrator or
any other forum is pending. The complaint is not frivolous or
vexatious in nature.
Settlement Of Complaints
SETTLEMENT OF COMPLAINT BY AGREEMENT 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 For the purpose of promoting a settlement of the
complaint, the Banking Ombudsman may follow such procedure as he
may consider just and proper .
Awards
AWARD BY THE BANKING OMBUDSMAN The Banking Ombudsman shall take
into account aspect while passing Award. The Award passed shall
contain the direction/s, if any, to the bank for specific
performance of its obligations and in addition to or otherwise, the
amount, if any, to be paid by the bank to the complainant by way of
compensation for any loss suffered by the complainant. The Banking
Ombudsman shall not have the power to pass an award directing
payment of an amount which is more than the actual loss suffered by
the complainant.
In the case of complaints, arising out of credit card
operations, the Banking Ombudsman may also award compensation not
exceeding Rs 1 lakh to the Complainant A copy of the Award shall be
sent to the complainant and the bank An award shall lapse and be of
no effect unless the complainant furnishes to the bank concerned
within a period of 30 days from the date of receipt of copy of the
Award
Rejection of Complaints
The Banking Ombudsman may reject a complaint at any stage if it
appears to him that the complaint made is : Not on the grounds of
complaint referred to in clause 8 or Beyond the pecuniary
jurisdiction of Banking Ombudsman or Rejection of Complaint 40
Requiring consideration of elaborate documentary and oral
evidence and the proceedings before the Banking Ombudsman are not
appropriate for adjudication of such complaint; or That it is not
pursued by the complainant with reasonable diligence; or In the
opinion of the Banking Ombudsman there is no loss or damage or
inconvenience caused to the complainant.
Appeal Before The Appellate Authority Any person aggrieved by
an Award or rejection of a complaint for the reasons referred to in
sub clauses (d) to (f) of clause 13 of RBI guidelines, 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.
Provided that the Appellate Authority may, if he is satisfied
that the applicant had sufficient cause for not making the appeal
within time, allow a further period not exceeding 30 days; Provided
further that appeal may be filed by a bank only with the previous
sanction of the Chairman or, in his absence, the Managing Director
or the Executive Director or the Chief Executive Officer.
Dismiss the appeal; or Allow the appeal and set aside the
Award; or Remand the matter to the Banking Ombudsman for fresh
disposal in accordance with such directions as the Appellate
Authority may consider necessary or proper; or Modify the Award and
pass such directions as may be necessary to give effect to the
Award so modified; or Pass any other order as it may deem fit
Action To Be Taken By Appellate Authority
Fact Sheet Analysis Source : Annual Report on Banking Ombudsman
2011-12, Published by Reserve Bank of India
Number of Complaints Received 2009-10 2010-11 2011-12 No. of
OBO 15 15 15 Complaints Received 79266 71274 72889 Increase over
previous year 15% (-11%) 2% 46
Population Group Wise Distribution of Complaints 2009-10
2010-11 2011-12 Rural 32% 11% 11% Semi Urban 14% 15% 16% Urban 21%
30% 34% Metropolitan 34% 44% 39% Total 79266 71274 72889
Bank Group Wise Bank Group 2009-10 2010-11 2011-12 Nationalised
Bank 24% 29% 31% SBI and Associates 29% 31% 35% Private Sector
Banks 28% 24% 21% Foreign Banks 14% 10% 7% RRBs/ Urban Co-
Operatives 2% 2% 2% Others 3% 4% 4% Total Complaints 79266 71274
72889
Category Wise Distribution of Complaints Grounds of complaints
2009-10 2010-11 2011-12 Deposit Accounts 5% 2% 2% Remittances 7% 6%
5% Cards Related 24% 24% 21% Loans and Advances 8% 6% 8% Levy of
Charges without Notice 6% 6% 5% Pension payments 6% 8% 8% Failure
to meet commitments 14% 23% 25% DSA/ Recovery Agents 2% 2% 1% Notes
and Coins .2% .2% .2% Others 24% 10% 10% Out of Subject 3% 11%
5%
Position of Disposal of Complaints No. of Complaints 2009-10
2010-11 2011-12 Received during the year 79266 71274 72889 Brought
Forward from previous year 9433 5364 4618 Handled during the year
88699 76638 77507 Disposed off during the year 83335 72020 72885
Rate of Disposal 94 94 94 Carried forward 5364 4618 4622
Classification of Complaints Disposed 2009-10 2010-11 2011-12
Maintainable 46555 (56%) 35499 (49%) 37455(51 %) Non maintainable
(Being First Resort Complaints) 16523(20%) 16755(23%) 14352(20% )
Non Maintainable (others) 20257(24%) 19766(28%) 21078(29% ) Total
Non Maintainable 36780(44%) 36521(51% ) 35430(49 %) Total
Complaints Disposed 83335 72020 72885
Modes of Disposal of Maintainable Complaints Disposal Mode
2009-10 2010-11 2011-12 By Mutual Settlement 67 60 54 By award 1 1
1 By Rejection 32 39 45 Total Complaints Disposed 46555 35499
37455
Cost of Handling Complaints 2009-10 2010-11 2011-12 Total Cost
(in million Rs.) 197.4 260.7 281.1 Complaints Disposed 83335 72021
72889 Cost per complaint (in Rs) 2368 3619 3858
Position of Appeals Received 2009-10 2010-11 2011-12 Appeals
brought forward 121 34 0 Appeals from complainants during the year
271 93 314 Appeals from bank during the year 37 40 37 Total Appeals
Received during the year 308 13 351 Total Appeals handled 429 167
351 Appeals Disposed 395 167 338 Appeals Pending at the close 34
(8%) 0 13(4%)
Disposal of Appeals 2009-10 2010-11 2011-12 Appeals remanded to
BO 23 (6%) 9 (5%) 0 Appeals withdrawn / settled 20 (5%) 32(19%) 1
(.3%) Appeals rejected by AA 269 (68%) 71 (43%) 327(97 %) Appeals
allowed by AA 83 (21%) 55 (33%) 10 (3%) Totals Appeals Disposed 395
(92%) 167 (100%) 338 (96%) Appeals pending as on June 30 34 (8%) 0
13 (4%) 66
Working Group In January 2013, seeking to improve banking
services and ensure speedy redressal of grievances of customers,
the Reserve Bank of India has set up a working group to update the
Banking Ombudsman Scheme, 2006. Two BOs, representatives from
regulatory Departments of RBI, IBA(Indian Banks Association) and
BCSBI(Banking Codes and Standards Boards of India) are the members
of the Working Group
Terms of reference of the Working Group are: i. Grounds of
complaints that have become redundant ii. Grounds of complaints
that need to be added to reflect consumer aims. To examine need for
extending the pecuniary jurisdiction of the BOS To examine the
issues involved in extending the BOS to Non-Scheduled Urban
Co-operative Banks and District and State level Apex Co- operative
Banks Cont..69
To examine the recommendations of the Committee on Customer
Service in Banks (Damodaran Committee) and the recommendations of
the 183rd report of the Rajya Sabha Committee on Subordinate
Legislation Review of the grounds of appeal under the BOS - to
identify appropriate Clauses of the Scheme for the purpose 70
