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Banking ombudsmen

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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.

Banking ombudsmen

  1. 1. By : Group 4 • Jayalaxmi Desai • Kevin Ladani • Manish Jagwani • Piyush Singh • Samarth Khare • Sameer Tigga 1
  2. 2. Topics Covered • Introduction • Banking Ombudsman Scheme, 2006 • Grounds of Complaints • Case Studies • Grievances Redressal • Rejection of Complaints • Appeals • Facts • Summary 1
  3. 3. Introduction
  4. 4. 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 individual’s complaint against maladministration especially that of public authorities. 2
  5. 5. 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
  6. 6. To be a visible and credible system of dispute resolution mechanism for common persons utilizing banking services Vision 4
  7. 7. • 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
  8. 8. Banking Ombudsman Scheme, 2006
  9. 9. 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
  10. 10. Qualification The Banking Ombudsman shall be a person of repute experience in the field of • Law • Banking • Financial services • Public administration or • Management sectors
  11. 11. • 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.)
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. 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
  16. 16. 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
  17. 17. Grounds On Which The Banking Ombudsman Can Receive And Consider Complaints 17
  18. 18. 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,
  19. 19.  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
  20. 20.  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
  21. 21. 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.
  22. 22. CASES 22
  23. 23. 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
  24. 24. 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 drawer’s cheque is forged or unauthorised, however clever the forgery is, the banker cannot debit his customer’s 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
  25. 25. CASE 2 The complainant’s 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
  26. 26. 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
  27. 27. 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
  28. 28. 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
  29. 29. Redressal of Greiveances
  30. 30. 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
  31. 31.  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
  32. 32. 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.
  33. 33. • 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.
  34. 34. Settlement Of Complaints
  35. 35. 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 .
  36. 36. Awards
  37. 37. 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.
  38. 38.  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
  39. 39. Rejection of Complaints
  40. 40. 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
  41. 41.  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.
  42. 42. 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.
  43. 43.  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.
  44. 44.  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
  45. 45. Fact Sheet Analysis Source : Annual Report on Banking Ombudsman 2011-12, Published by Reserve Bank of India
  46. 46. 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
  47. 47. 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
  48. 48. Mode Wise Complaints Received Mode 2009-10 2010-11 2011-12 Email 12% 14% 13% Online 14% 13% 14% Post/Fax 74% 73% 73% Total 79266 71274 72889
  49. 49. 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
  50. 50. 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%
  51. 51. 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
  52. 52. 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
  53. 53. 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
  54. 54. 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
  55. 55. 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%)
  56. 56. 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
  57. 57. 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
  58. 58. 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
  59. 59. • 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
  60. 60. References : • -Dake.pdf • • 71
  61. 61. Thank You 72