The Banking Ombudsman rejected 49% of complaints while passing awards in just 1% or 312 cases. Does this also mean, bank employees are getting away easily and without any penalty?
The Banking Ombudsman (BO) handled 75,183 complaints during 2012-13, which include 4,642 complaints brought from previous year. Out of the total 75,183, it found 56% or 39,400 complaints maintainable. However, even in maintainable complaints, it rejected almost 49% or 19,205 complaints while passing awards in just 1% or 312 cases and resolved 50% or 19,833 through mutual settlement. This also highlights the need to have certain norms that can make bank staff accountable for the suffering of customers.
According to a Reserve Bank of India (RBI) report on BO scheme for FY13, complaints related with failure to meet commitments, non observance of fair practices code or BCSBI codes were a major ground of complaint. The BO received 18,130 complaints or 26% of the complaints received during the year.
"A large volume of complaints on this ground indicates lack of awareness about these Codes among bank staff as also the customers. Banks need to devote special attention to this aspect and provide ongoing training to their staff on the Codes," the report said.
This was followed by complaints related with cards. The BO received 17,867 or 25% of total complaints against cards, out of which 10,123 were related with ATM or debit cards. "Broadly, the reasons for these card-related complaints are; issue of unsolicited cards, sale of unsolicited insurance policies and recovery of premium, charging of annual fee in spite of being offered 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, wrong debits to account, non-dispensation/short dispensation of cash from ATM, skimming of cards," the report says.
Loans and advances, pension payments, deposit accounts, levy of charges without prior notice were other major source of complaints. In loans and advances, complaints were mainly related to non-sanction/ delay in sanction of educational loans, charging of excessive rate of interest, non-return of registration certificate in case of vehicle loans, non-issuance of no-due certificate, non-return of title deeds of properties pledged and wrong reporting to CIBIL.
Complaints related to pension, though remained static at 8% over last three years, were a major area of grievance during FY13 for the BO. These complaints were mainly regarding delayed payments, errors in calculations, difficulties in switching over to family pension.
Non-maintenance of minimum average quarterly balance (AQB) in savings and current accounts, renewal charges, processing fees and pre-payment penalties in loan accounts, cheque collection charges were some of the reasons for complaints pertaining to levy of charges without prior notice, the report said.
Earlier, while speaking at the Annual Conference of Banking Ombudsmen in January 2013, Dr KC Chakrabarty, deputy governor of RBI had said, "...though the fact that the offices of the Banking Ombudsman receive more than 70,000 complaints a year bears a testimony to the credibility of the Banking Ombudsman Scheme, it also reflects on the poor redress system of banks as it shows that the customers repose greater faith in the Banking Ombudsman."
He emphasised banks to make efforts to strengthen their grievance redressal mechanism by proactively reviewing their processes, improving efficiency and delivering promised services in a fair, non-discriminatory and transparent manner. He stressed that the banks needed to address issues of safety and security in electronic banking to increase customer confidence and also to bring in uniformity in the service charges levied.
Mode of complaints
Post, fax and courier continued to remain a popular mode of lodging complaints with OBOs with 72% of total complaints received through this mode. Electronic mode was preferred by 28% of the complainants. As compared to last year, there was a marginal increase of 1% in complaints received through electronic mode.
According to the report, New Delhi, Kanpur, Mumbai and Chennai were the four Offices of Banking Ombudsman (OBOs), which received more than 50,000 complaints against banks. These four OBOs accounted for almost 50% of the complaints received by all OBOs. OBOs at Ahmadabad, Chennai, Guwahati, Mumbai, New Delhi and Patna recorded increase in complaints received whereas Bangalore, Bhopal, Bhubaneswar, Chandigarh, Hyderabad, Jaipur, Kanpur, Kolkata and Thiruvananthapuram recorded a decline in receipt of complaints over the previous year. On an average, each OBO received 4702 complaints during the year.
The source of complaints remained heavily skewed towards customers from metro or urban areas. Complaints from urban and metro areas continued to account for about 72% of the total complaints received as compared to about 28% complaints received from rural and semi-urban areas during the year 2012-13.
"Some of the reasons that can be attributed to the greater share of complaints from urban and metro areas are, increased availability of banking services, financial literacy and expectation level of bank customers and greater awareness about the BOS among residents of such areas as compared to their counterparts in semi-urban and rural areas. With increasing penetration of banking services into rural hinterlands and ongoing drives aimed at universal financial inclusion and financial literacy, this mix is expected to undergo significant change in coming years. Marginal increase of 1% in complaints received from rural areas this year is indicative of this trend," the report says.
Complaints against SBI group highest
During 2012-13, the highest number of complaints (33%) were received against SBI group followed by other nationalised banks (31%), private Sector banks (22%) and foreign banks (7%).
Compared to previous year, there was a fall of 2% in complaints against SBI and its associates, whereas, complaints against private sector banks increased by 1%.
The complaints which do not pertain to grounds of complaint specified in the BOS and those complaints where procedure for filing the complaint laid down in the BOS is not followed are classified as non-maintainable. All other complaints are classified as maintainable and dealt with as per the provisions of the BOS 2006.
Over last three years, percentage of maintainable complaints has increased gradually from 49% in 2010-11 to 56% (39,400) in 2012-13. Percentage of non-maintainable complaints has declined to 44% or 30304 in FY13 from 51% or 36,522 in 2010-11.
Of the total maintainable complaints, 50% (19,833) complaints were resolved by mutual settlement. Awards were passed in 1% (312) of the cases, whereas 49% (19,205) of the complaints were rejected/withdrawn.
During the year 2012-13, 44% of the complaints received were non-maintainable. However, over the last three years, this percentage has come down from 51% to 44%, the report said.
Appeals against the decision of BOs
Although customers are becoming more aware about the applicability of this scheme, the report says, there is still need to create awareness among banking customers and bank staff. Even the number of non-maintainable complaints filed before the Appellate Authority shows the lack of awareness or knowledge among customers.
During the year, the Appellate Authority (Deputy Governor in charge of Customer Service Department at RBI) received 360 appeals/ representations out of which, only 52 were maintainable as per the provisions of clause 14 of the BOS. The Appellate Authority closed 308 representations pertaining to complaints under the non-appealable clauses of the Scheme.
Open House event of Moneylife Foundation
The report without naming anyone mentions about the "Open House with Dr KC Chakrabarty") event. This Open House event was organised by Moneylife Foundation in Mumbai. It says, "The major issues discussed/ debated were competition not having intended consequences for consumers of banking services, de-regulation of interest rates/ service charges had resulted in exploitation/ cartelization, mis-selling of third party products by banks, misreporting by banks to CIBIL and the consequent harassment, RBI to decide on reasonableness of charges and not delegate to Indian Bank's Association (IBA)/ Board of banks, simplification of know your customer (KYC) norms, improving effectiveness of grievance redress mechanism and regulating the sale of gold coins by banks."
In a letter to the Principal Auditor General of Haryana, Dr Ashok Khemka, under attack for his pathbreaking effort to introduce better quality of roofing in food storage godowns, has openly identified two tainted senior officers as gunning for him because of personal reasons
In response to Haryana government’s move to charge Dr Ashok Khemka with various irregularities in connection with his path breaking decision to introduce better quality roofing for warehouses, Dr Khemka has sent a strongly worded point-by-point rebuttal to Principal Accountant General (Audit) of Haryana, while alleging bias on the part of two tainted state government functionaries for cancelling a dubious land deal of Robert Vadra, Sonia Gandhi’s son-in-law, in October 2012.
The letter, written in the third week of January alleges that “the motive of the ruling political executive is to malign my reputation in the public eye for daring to annul the mutation of a land deal of Skylight Hospitality, a company of Mr Robert Vadra, on 15 October 2012.”
Dr Khemka alleges that “Mr SS Dhillon and Mr Roshan Lal are acting in a criminal and vindictive manner in collusion with the ruling political executive to frame me.”
SS Dhillon is Principal Secretary to Chief Minister while Roshan Lal is the Principal Secretary Agriculture. Both of them have a checkered record, compared to Dr Khemka’s unblemished record to exemplary public service.
Dr Khemka is an engineering graduate from IIT Delhi and PhD in Computer Science from the Tata Institute of Fundamental Research, who chose to join the Indian Administrative Service (IAS) in 1991 to serve the country.
He has had repeated run-ins with the four chief ministers of the Haryana government ever since he joined the IAS, for which has been transferred 44 times. But it is his cancellation of the Vadra land deal that has got the political establishment to hit at him beyond just transfers. He is now sought to be framed to change the roofing in food storage godowns from harmful asbestos sheets to better quality roofing sheets called galvalume, in the interests of the workers, when he was the managing director of Haryana State Warehousing Corporation (HSWC) in 2009. This was a pathbreaking decision because the Food Corporation of India (FCI) has subsequently made galvalume sheets mandatory.
In his letter to the AG (Haryana), Dr Khemka alleges that Roshan Lal is trying to retaliate against him because he had filed a complaint with the Central Bureau of Investigation (CBI) on 4 March, 2013 on discovery of a scam involving purchase of 99,996 quintals of wheat seeds at high rates without open and competitive tenders from a private middleman in November 2010. On 3 December 2013 Dr Khemka made a detailed representation to the Chairman of Parliamentary Standing Committee on Agriculture, reporting the modus operandi adopted in Haryana to misappropriate central subsidies of the Agriculture Ministry. An enquiry by the Parliamentary Standing Committee on Agriculture is reportedly underway.
Dr Khemka has also identified the current Principal Secretary to Chief Minister, as participating in the witch-hunt against him because he had exposed Dhillon’s role in “several land-licensing and land-release scams while he (Dhillon) was posted as Director General of Town & Country Planning and Urban Estates Departments.” Dhillon’s role in licensing and release of state land in favour of a private builder was severely indicted in a judgment of 20 December 2013 of the Punjab & Haryana High Court.
Our emails sent to SS Dhillon and Roshan Lal remained unanswered till writing this report.
While the AG, supposedly an independent and constitutional authority, has been drafted in to probe Dr Khemka’s decisions, no records are being made available him for inspection despite written requests. The state government is apparently asking for a parallel enquiry by the CBI based on the same set of allegations without waiting for the final audit report of AG.
According to Dr Khemka’s letter to AG, “this shows utter lack of faith on the part of functionaries in the State Government in the special audit being conducted by a Constitutional authority.”
In a report, the Hindustan Times has said that the Haryana government has decided to defer the reference for a CBI probe into the allotment of Rs18.04 crore work orders for installing galvalume roofing sheets on warehouses by Dr Khemka.
You may also want to read…
Warren Buffett has become the world’s most successful investor by seeking out companies that...