A man you can bank on
Pushpa Girimaji

Do you have a complaint against a bank? Well, you can now send in your complaint to the Banking Ombudsman without stirring out of your office or home. Under the revised Banking Ombudsman Scheme 2006 announced by the Reserve Bank of India, you can register your complaint through e-mail. And considering the time and energy that you save in this, this is certainly an advantage. However, your complaint can go to the Ombudsman only after your representation to the bank has received no response or has been rejected.

The revised scheme, which came into effect from January 1 this year, enlarges the scope of the Ombudsman to redress consumer grievances against banking services. As against the earlier scheme of 1995, the revised scheme provides for redress against a larger number of grievances or complaints pertaining to deficient services in several areas including credit cards, debit cards, ATMs , pensions and even direct selling agents. In fact some of the newer areas of consumer complaints that have been brought into the ambit of the Ombudsman include: non-adherence by the bank or its subsidiaries to the instructions of Reserve Bank on ATM/Debit card operations or credit card operations; non-disbursement or delay in disbursement of pension; non-adherence to the fair practices code as adopted by the bank and levying of charges without adequate prior notice to the customer.

The new scheme provides for an appellate authority — the Reserve Bank of India. However, as in the 1995 scheme, here, too, an award given by the Ombudsman cannot exceed Rs 10 lakh and cannot be more than the actual loss suffered as a direct consequence of the act of omission or commission of the bank. But the new provision pertaining to complaints against credit card transactions says that while deciding the amount of compensation payable, the Ombudsman can take into account the loss of the complainant time, expenses incurred by the complainant, financial loss, harassment and mental anguish suffered as a result of the deficient service.

Under the new scheme, complaints against credit card companies may well constitute a large number, but earlier, the largest number of complaints pertained to loans and advances. A review of the working of the 1995 Ombudsman scheme undertaken by the RBI for four years from 1998 to 2002 showed that the maximum number of complaints pertained to loans. Complaints against deposit accounts formed the next highest category.

The review also revealed a strange phenomenon. While usually, the number of complaints before a redressal agency go up, here, the complaints actually came down over the years. While in 1998-99, the ombudsmen received 6,062 complaints, this number went down to 4,995 the next year. Even at 5,907 in 2001-2002, the number was still less than that in 1998. While one reason could be the improvement in the banking services, the other could be the declining confidence in the office of the Ombudsman. The latter theory is reinforced by the fact that not all awards given by the Ombudsmen were implemented by the banks.

During 1998-99 for example, out of 7,464 complaints (including the previous years’ pending complaints), only 4,147 were found to be maintainable. Out of these, 2,807 were disposed of and 1,340 were pending, 775 of them for over two months.

Among the complaints that were disposed of, 96.72 per cent were through mediation or reconciliation or recommendation. Where these failed, awards were given and there were 92 awards out of which 49 were not implemented by the banks! Similarly in 1999-2000 and 2000-2001, nearly 50 per cent of the awards were not complied with by the banks. Out of the 74 awards passed during 1999-2000, 34 were not implemented and the next year, out of 52 awards, 27 were not implemented. During 2001-2002, out of 44 awards, 16 were not implemented.

Referring to the delay/non-implementation of the awards of the Banking Ombudsman, the RBI, in its letter dated April 19, 2005, and addressed to all scheduled commercial banks, commented : "….It has however been reported that the banks enter into further correspondence and continue to delay the implementation of the awards. As the delays in redressal defeats the objective of the Banking Ombudsman Scheme, banks are advised to ensure that the awards are implemented immediately and with active involvement of top management".

So in order to instil consumer confidence in the scheme, the RBI has to ensure that the awards of the Ombudsman are implemented by banks with alacrity. In fact the notification issued by the RBI on December 26, 2005, on the new Ombudsman scheme says that the "banks shall comply" with the scheme. The regulator has to ensure that they actually do.