Banking Ombudsman Report of 2011-12

Banking Ombudsman Report of 2011-12 shows customers getting the short shrift

Per branch complaints are high, ATM/Debit card complaints are rising and only 1% of the complaints to the ombudsman disposed off with an award

The RBI Banking Ombudsman Report 2011-12 is out. The report brings with it details of functioning of the banking ombudsman scheme in India and also certain interesting aspects of complaints against banking operation in India. The number of complaints is hardly a good number considering the quality of banking service and the spread ofbanking operations. Total 72,889 complaints were received by the banking ombudsman in the year 2011-12. This number has been more or less consistent over a period of last three years. Other aspects of the report are as follows:

Per branch complaints are very high in case of foreign banks and new private sector banks:  The Banking Ombudsman Report 2011-12 shows that per branch complaints are very high in case of foreign banks. In spite of a steady decline since 2009-10, the number of complaints per branch is still 18.43. This is around 70 times higher than old private sector banks and 41 times higher than nationalized banks. It has often been seen that foreign banks have been taking customers for a ride in case of credit card issuance and offering banking products which lack transparency. Also foreign bankcustomers are more aware about the ombudsman scheme and hence more complaints are lodged by these customers.

ATM/Debit cards related complaints are on the rise: The report expresses concern over the rise in the number of complaints against ATM/debit cards. The main reasons because of which complaints have been registered against ATM/debit cards are as follows:

I. Frequent breakdowns

II. Discrepancies in cash dispensation

III. Cash-out (machines running out of cash)

IV. Quality of notes

V. Grievance redressal

Around 21% of the total complaints have been received under the category ATM (Debit\Credit card) category. The banking ombudsman report expresses concern over this and says, “High number of complaints related to ATM operations is a cause of concern. Though the spread of branch/ATM network is one of the reasons for this rise; there are other reasons which need a close monitoring of ATM operations by banks.”

The ratio of ‘Award’ in the complaints received by banking ombudsman is very low:  Out of the total complaints received by the ombudsman, only 1% of it was disposed by an award by the ombudsman. Around 54% of the cases were disposed off by mutual consent. However, what is surprising is that 45% of the complaints were rejected by the ombudsman.

The cost of handling complaints is on the rise:  The cost of handling complaints is on the rise as far as the banking complaints are concerned. While the number of complaints has gone down, the cost has almost gone up by more than 50% during last three years.

The bank ombudsman report reiterates the fact that the customer must first lodge his/her complaint concerning service deficiency with the bank and if no reply is received from the bank within 30 days or the reply given by the bank is not satisfactory or the complaint is rejected by the bank, the complainant could approach the ombudsman for the redressal of his/her grievance. Also since banking ombudsman is authorized to cover only specific areas of customer complaint, it will be in the interest of the customer to check whether the complaint to be raised by him falls under banking ombudsman’s jurisdiction. What is heartening to note is that The Reserve Bank of India (RBI) has decided to set up a working group to review the banking ombudsman scheme.

http://www.moneylife.in/article/banking-ombudsman-report-of-2011-12-shows-customers-getting-the-short-shrift/30576.html

Banking ombudsmen see surge in plaints

MUMBAI: There has been a surge in customer complaints received by banking ombudsmen across India relating to deposit accounts. Central bankers feel that this is largely related to know your customer (KYC) norms and non-transparency on the part of banks with regards to their deposit schemes. 

According to the annual report of the Banking Ombudsman Scheme for 2012 published byReserve Bank of India (RBI), the number of complaints pertaining to deposit accounts has jumped more than five times to 8,713. 

"Though no reason can be ascribed for this trend, issues related to KYC norms is one of the major components of these complaints. Further, the banks are not properly and fully disclosing the different risks associated with their liability products," the annual report said. The surge in complaints regarding deposit accounts is significant considering that banks have embarked on a move to scale up number of accounts to achieve the government objective of one account per household scheme, which will be implemented in 2013 to enable direct transfer of benefits. 

Until 2011, complaints relating to deposits accounts were only 2% of all complaints. They now account for 12% of all petitions to the ombudsman offices. 

Complaints about failure of a bank to meet the fair practices code was the biggest ground for petitions made to the Ombudsmen with 18,365 complaints under this category constituting 25% of total complaints. 

Out of total 14,492 complaints relating to cards, 9,348 complaints were those pertaining to ATM and debit cards. Broadly, the complaints are on account of issue of unsolicited cards, unsolicited insurance policies and recovery of premium, charging of annual fee in spite of being offered as 'free' cards, authorization of loans over phone, wrong billing, settlement offers conveyed telephonically, non-settlement of insurance claims after the demise of the card holder, excessive charges, wrong debits to account, non-dispensation of money from ATM, and skimming of cards.

The banking ombudsman scheme was first introduced in 1995, it was amended twice in 2005 and again in 2009. Over the years the scheme has been changed to include issues such as internet banking and other issues that have arisen as a result of development in banking technology. The scheme is in for a major overhaul with RBI appointing a committee under the chairmanship ofSuma Varma, chief general manager, customer service department, to review the scheme. 

The committee was constituted after changes to the banking ombudsman scheme were recommended by various panels. The Damodaran committee on customer service in 2010 had suggested that banks have an in-house authority to adjudicate on customer complaints and that the ombudsman should be more of an appellate authority. The Rajya Sabha Committee on Subordinate Legislation in its 183rd report had also made some suggestions on the banking ombudsman scheme.

http://timesofindia.indiatimes.com/business/india-business/Banking-ombudsmen-see-surge-in-plaints/articleshow/17919633.cms

Ombudsman scheme to be reviewed

Press Trust Of India / Mumbai Jan 08, 2013, 00:28 ISTTo improve banking services and ensure speedy redressal of customer grievances, the Reserve Bank of India has set up a working group to update the Banking Ombudsman Scheme (BOS), 2006. The group, to be headed by senior RBI official Suma Varma, will take into account recommendations of the Damodaran Committee on improvement of customer services in banks and suggestions of the Rajya Sabha Committee on subordinate legislation. With a view to examine the Scheme in its entirety, an internal working group has been constituted in RBI under the Chairmanship of Suma Varma, Chief General Manager, Customer Service Department, RBI,” said the Annual Report of the Banking Ombudsman Scheme, 2011-12. The group will include two banking ombudsmen, representatives from regulatory wings of RBI, Indian Bank’s Association (IBA) and Banking Codes and Standards Board of India (BCSBI). The working group will identify grounds of complaints that have become redundant and add new grounds reflecting aspirations of customers. It would also examine the possibility of extending the scheme to cooperative banks and review the grounds of appeal under the BOS. The Damodaran Committee was set up in 2010 by RBI to look into banking services rendered to retail and small customers, including pensioners and also to look into the system of grievance redressal mechanism prevalent in banks, its structure and efficacy and suggest measures for expeditious resolution of complaints. BOS was notified in 1995 and has been revised four times since then in 2002, 2006, 2007 and 2009 to make it more relevant and effective. At present, there are 15 banking ombudsmen with specific jurisdiction covering the 29 states and seven Union Territories. The BOS covers grievances related with credit card complaints, internet banking, deficiencies in providing the promised services by bank and its sales agents, levying service charges without prior notice to the customers, etc. Among others it also covers complaints regarding non-adherence to the Fair Practices Code adopted by individual banks, non-adherence to Banking Codes and Standards Board of India’s Code of Bank’s Commitment to Customers. As of now, there are 27 grounds on which customers can approach the banking ombudsman citing deficiency in banking services. According to the annual report, the banking ombudsman offices received 72,889 complaints in 2011-12 versus 71,274 complaints in the previous year. “Kanpur and New Delhi continued to be the centres receiving the highest number of customer complaints in 2011-12, followed by Chennai and Bhopal,” it said. The rate of disposal of customer complaints by banking ombudsmen was 94 per cent during 2011-12, the same as that done during the previous year, it added. The largest number (25 per cent) of customer complaints were about failure to meet commitments/non-observance of fair practices code, followed by (21 per cent) card related (ATM/debit/credit) complaints and complaints relating to deposit accounts (12 per cent). Card-related complaints constituted the single largest ground of complaints, it said. Of the total 14,492 card related complaints, 9,348 complaints were related to ATM/debit cards. Wrong debits to account, non-dispensation of money from ATM, skimming of cards, unsolicited cards, unsolicited insurance policies, recovery of premium, charging of annual fee despite offer of card as ‘free’ card, authorisation of loans over phone, wrong billing, settlement offers conveyed telephonically, non-settlement of insurance claims after the demise of the card holder, excessive charges were among the major reasons for complaints. http://www.business-standard.com/india/news/ombudsman-scheme-to-be-reviewed/498113/