Banking Ombudsman Scheme 2006 - Structure & Functioning
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Transcript of Banking Ombudsman Scheme 2006 - Structure & Functioning
Banking Ombudsman Banking Ombudsman Scheme 2006Scheme 2006
- Structure & Functioning- Structure & Functioning
31st January 2009
Road map
A historical perspective Legal basis and scope of the Banking
Ombudsman Scheme Vision & Goals Structure and processes Sharing of experiences The way ahead
Backdrop
Growing Public Policy concern Customer dissatisfaction - a topic of discussion in
various fora including the floor of Parliament Growing customer expectations with increasing
Awareness of rights. The satisfaction levels of customers is the touch
stone on which the quality of service is toned. Market discipline issues and need for policy
intervention
Customer Service – Policy Evolution
Formulated the Banking Ombudsman Scheme 1995 and revised in 2002 to enhance the scope of complaint redressal.
Set up the Committee on Procedures and Performance Audit of Public Services in 2003 to look into the issues relating to banking services rendered to the common man.
Banks were advised in December 2003 to constitute an Adhoc Committee to undertake Procedures and Performance Audit on public services rendered by them.
Customer Service – Policy evolution …contd..
Banks were advised in August 2004 to constitute Customers' Service Committee of the Board to bring about ongoing improvement in the quality of customer service rendered.
Banks were asked in April 2005 to convert the Adhoc Committees into Standing Committee on Customer Service to serve as a focal point for customer service in banks with powers to evaluate the functioning in various departments of the banks.
Customer Service – Policy Evolution: contd..
RBI facilitated the formulation of Fair Practices Code for Lenders and Codes of Conduct in respect of credit card operations, direct sales agencies and calculation of dues and repossession of security.
RBI prescribed proper disclosures by banks relating to aspects such as maintenance of minimum balances in accounts, issue of cheque books, entry in pass books, statement of accounts, formulation of transparent cheque collection policy by banks, etc.
Customer Service Policy Evolution: contd
RBI introduced in June 2005 simplified procedures to facilitate expeditious and hassle free settlement of claims of deceased depositors.
RBI issued in November 2005, comprehensive guidelines on credit card operations to protect the interest of credit card holders.
A clean note policy was formulated and implemented to improve quality of currency in circulation and ensure sufficient availability of fresh currency and coins.
Customer Service - Policy Evolution: contd
Banks were also advised to formulate a transparent and comprehensive deposit policy setting out the rights of the depositors in general and small depositors in particular.
RBI has facilitated the setting up of the Banking Code and Standards Board of India.
For the first time, RBI in its report on Trend and Progress of Banking in India 2004-05 listed the complaints received against Scheduled Commercial Banks under the caption "Customer Services in Commercial Banks" to highlight the issue of customer service in banks.
Customer Service - Policy Evolution: contd
RBI advised banks, in April 2005 to place all the awards passed by the Banking Ombudsman before the Customer Service Committee to enable them to address issues of systemic deficiencies existing in banks, if any, brought out by the awards.
RBI also advised banks to place all the awards remaining unimplemented for more than three months with the reasons therefore before the Customer Service Committee to enable the Committee to report to the Board such delays in implementation without valid reasons and for initiating necessary remedial action
Customer Service - Policy Evolution: contd
In December 2005, the Banking Ombudsman Scheme was revised (termed as the Banking Ombudsman Scheme, 2006) to widen its scope and improve its effectiveness and accessibility to the public.
GENERAL PARTICULARS OF THE SCHEME
Legal Basis: Notified in terms of Sec 35A of Banking Regulation Act 1949
Purpose of the Scheme: Expeditious and inexpensive redressal of customer complaints.
Areas covered: Deficiency in banking servicesdeficiency in sanctioning of loans and
advances Other specified matters
Banking Ombudsman Scheme
1995 2002 2006Institutions covered
Commercial banks
Scheduled primary cooperative banks
Commercial banks
Scheduled primary cooperative banks
RRBs
Commercial banks
Scheduled primary cooperative banks
RRBs
Stages of Redressal
Settlement
Recommendation
Award
Agreement
Award
Review
Agreement
Award
Appeal
Staffing BO -By a Selection Committee- Retired personnel
Secretary- RBI
Deputy Secretary & Staff- SLBC Bank
BO -By a Selection Committee- Retired personnel
Secretary- RBI
Deputy Secretary & Staff- SLBC Bank
Serving Chief General Manager/ General Manager
Secretary- RBI
Deputy Secretary & Staff- RBI
Banking Ombudsman Scheme
1995 2002 2006Funding Participating
BanksParticipating Banks
RBI
Procedure
Complaint Receipt
Prescribed application in writing
Prescribed application in writing
Online/email/by post Prescribed application not insisted
www.bankingombudsman.rbi.org.in
Nature of Complaints
Not specified Specifically prescribed clause 12
Specifically prescribed clause 8
Cases of fraud cannot be handled
Cases of fraud can be handled
Focus on resolution of grievances
VISION
To provide an inexpensive, transparent and credible mechanism ensuring fair
treatment of the common person utilizing Banking services
Goals To ensure customer facilitation and protection
through redressal of grievances of users of banking services in an inexpensive, expeditious, fair, reasonable and hassle free manner that will provide impetus for improved customer service on a continuous basis
Provide feedback for framing appropriate and timely guidelines
Enhance awareness of the scheme itself
Enhancements provided by the 2006 Scheme :
Wider ScopeSimpler proceduresBetter focus Greater involvement of RBI
Organizational Chart
DeputyGovernor
(Appellate Authority
Executive Director
Customer Services Department
Office of the Banking Ombudsman
Redressal Process
Receipt of complaint
Review by BO
RejectNon Maintainable
Maintainable
Maintainable Complaints
Referred to Bank
Resolved by mutual settlement(Clause 11)
Unresolved Complaints
Award (Clause 12)
Bank & Complainant can File an Appeal
Reject (Clause 13)
Complainant’s right to Appeal
Complainant to accept & Bank to implement
Appellate Authority
CSD, CO
Banking Ombudsman
Customer
Legal Department
Bank to Implement
Set aside the awardRemand the matter to BO
Modify the awardPass any other order
Regulatory Departments
Procedure for lodging complaints
Essential – grievance to be taken up with bank first;
Aggrieved persons not satisfied by a bank’s service and its resolution of complaint can apply to the Banking Ombudsman within one year;
Complaint in prescribed format or in any other but incorporating all the required information.
Complaints can be submitted online/ email/in hard copy
Complaints from individuals/ their representatives( except advocates)/GOI/RBI
Complaints Redressal ProcedureMaintainability of Complaint
Prescribed time –rejection of complaint/non receipt of reply within one month of his representation / non satisfaction of reply
not later than one year after the cause of action not time barred as per the Indian Limitation Act
1963Not a subject matter on which BO decision has
already been takenNot a subject matter which is before court/
tribunal/ arbitrator/ other forum
Grounds of complaint . . . Banking Services
non-payment or inordinate delay in payment or collection of – cheques, drafts, bills etc.;– inward remittances
non-acceptance of – small denomination notes– coins or charging commission for acceptance
Grounds of complaint . . . Banking Services
failure to issue or delay in issue, of drafts, pay orders or bankers’ cheques;
non-adherence to prescribed working hours; failure to honour guarantee or letter of
credit commitments ; failure to provide or delay in providing a
banking facility (other than loans and advances) promised in writing by a bank or its direct selling agents;
delays, non-credit of proceeds to parties' accounts, non-payment of deposit or non-observance of the Reserve Bank directives, if any, applicable to rate of interest on deposits in any savings, current or other account maintained with a bank ;
delays in receipt of export proceeds, handling of export bills, collection of bills etc., for exporters provided the said complaints pertain to the bank's operations in India;
Grounds of complaint . . . Banking Services
Grounds of complaint . . . Banking Services
complaints from Non-Resident Indians having accounts in India in relation to their remittances from abroad, deposits and other bank-related matters;
refusal to open deposit accounts without any valid reason for refusal;
levying of charges without adequate prior notice to the customer;
non-adherence by the bank or its subsidiaries to the instructions of Reserve Bank on ATM/Debit card operations or credit card operations;
Grounds of complaint . . . Banking Services
non-disbursement or delay in disbursement of pension (to the extent the grievance can be attributed to the action on the part of the bank concerned), but not with regard to its employees;
refusal to accept or delay in accepting payment towards taxes, as required by Reserve Bank/Government;
refusal to issue or delay in issuing, or failure to service or delay in servicing or redemption of Government securities;
Grounds of complaint . . . Banking Services
forced closure of deposit accounts without due notice or without sufficient reason;
refusal to close or delay in closing the accounts;
non-adherence to the fair practices code as adopted by the bank; and
any other matter relating to the violation of the directives issued by the Reserve Bank in relation to banking or other services.
Complaints - Loans and Advances
non-observance of RBI 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
non-observance of any other directions or instructions of the RBI from time to time.
Excluded
Complaints arising out of frauds and forgery and subjudice cases (Supreme Court’s observation that it would not be appropriate for BOs to give a finding on forgery or to form an opinion on cases already referred to courts)
Charges for application . . .
There are no charges to be paid by the applicant to the Banking Ombudsman
Processes
Proceedings are summary in nature Procedure discretionary as the Banking Ombudsman may
consider just and proper Not bound by any rules of evidence Each case is dealt on a stand alone basis and cannot be
cited as precedent Disposals take into account evidence, the principles of
Banking Law & Practice, instructions, guidelines and directions of RBI
Right of the complainant to approach any court or forum at any time during or after the proceedings is not affected
Stages of settlement
The Banking Ombudsman
– first endeavours to promote a settlement between the parties through mediation/ conciliation,
or else
– proceeds to make an Award on merits of the case.
Compliance with the Award
Customer to give acceptance within 30 days
Within one month of receipt of complainant’s confirmation
Appeal against the Award
Both the bank and the complainant can appeal
Time limit: 30 days
Appellation Process
Banks to get the sanction of the Chairman/ CEO Appellate Authority can;
Dismiss the appeal
Allow the appeal and set aside the award
Remand the matter for fresh disposal
Modify the award
Pass any other order as it may deem fit
Dealings with the bankNodal Officers appointed by banks at
Zonal/Regional Office levels
BO to deal through the Nodal Officers.
All bank branches to display the name of the Banking Ombudsman and contact particulars
Finance Ministry instructions vide letter dated August 11, 2005 for computerization and online complaint monitoring system for Banking Ombudsman Scheme by September 30, 2005.
Complaint Monitoring Application was successfully tested and hosted on the RBI’s Secured Internet Website. It is in operation since September 30, 2005 .
Banking Ombudsmen Complaint Monitoring Application on RBI’s
Secured Internet Website
Features of the Monitoring Mechanism
It is common to all Banking Ombudsmen offices. Each Banking Ombudsmen office will feed in the
complaint details on the application. The application generates a unique complaint id,
which can be used by Banking Ombudsmen, RBI and Finance ministry to monitor/track the status of a particular complaint.
Automatic acknowledgement generated on tracking of complaints
RBI and Finance Ministry can monitor the overall status of complaints at all the Banking Ombudsmen offices.
Right to Information Act and Banking Ombudsman SchemeThe following are in the public domain:
The BO Scheme FAQs Complaint Application form BO addresses & email ids Annual Review of the Scheme
Right to Information Act and Banking Ombudsman Scheme
The Complainant can get the status of his complaint till disposal
At disposal the Award gives reasons for decision taken
Each decision of the Appellate Authority is a speaking order
BENEFITS OF THE BO SCHEME
Prompt and impartial resolution of complaints
No cost to the customer Assessment based on overall fairness, good
business practices, accepted banking law and practice
Road Ahead Focus on customer education and financial
literacy Customer Awareness and Empowerment Understanding rights and responsibilities Percolation of the spirit of the Banking
Code and Standards as adopted by the bank down the rank and file to the level of the service delivery interface
ThankThank
YouYou
Average cost per complaint
Year Amount
(Rs)
2003-04 7413
2004-05 6315
2005-06 3045
2006-07 2538
2007-08 2611