Banking
Banking Ombudsman is not working

Is the Banking Ombudsman a broken system of grievance redress?

The latest report of the banking ombudsman’s office seems to confirm what many of us have suspected for over a year—that banking ombudsmen are closing cases and rejecting complaints every time there is even a whiff of another regulator involved. Consequently, bank customers, who have been hard-sold third-party products by wealth managers and relationship managers of banks, by exploiting a fiduciary relationship, are left high and dry.

Of the 75,183 complaints received in 2012-13, only half were found maintainable. Even of these, 49% were rejected for various reasons such as the amount involved or not having followed the process of approaching the bank first. Significantly, in just 1% of the cases—312 to be precise—was an order passed. There is something really wrong with this number at a time when consumer organisations like Moneylife Foundation have argued for exemplary damages as the fastest way to make banks more customer-focused.

Interestingly, a quarter of the complaints related to credit and debit card issues, which clearly remain a stress point for consumers and that mischief, like issue of unsolicited cards, skimming of cards, wrong debits, charging fees on free cards and using credit card to deduct mis-sold insurance, continues unabated. A hefty 26% were about the bank’s failure to adhere to its fair banking practices code. The fact that this becomes a matter of complaint to the banking ombudsman suggests that the statutory service committees of banks are probably not doing their job and are unconcerned about the BCSBI code, knowing that there is no consequence to ignoring it. The Reserve Bank attributes it to lack of awareness among bank staff about the fair practices codes. With over 72% of complaints coming from urban areas, it is clear that lack of awareness about redress mechanisms is also a huge problem.

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COMMENTS

Dayananda Kamath k

3 years ago

long back i have written to rbi that they are the sponsors of all financial scams in india by their deriliction in duty, with examples. some times they accept any vague reply as satisfactory to them then what odinaery man can do. even rti quiry will be bounced back.

Bhaskar

3 years ago

The quality of service in public and private sector banks are pathetic. The fess levied by banks for various services "non rendered" are arbitrary and high. Viewed against this background and the prospect that in the future years we are going to be serviced by ill trained staff this model of customer redressal is not going to work. Consumer rights organisation/individuals should be coopted by individual bank managements for redressal. In fact these bodies should be represented at management
levels. Relying of RBI my experience says is a waste of time and money. Activists should fight for these representations in the board

Simple Indian

3 years ago

With even the Deputy Governor of RBI I/c of Customer Services turning a blind eye to customers' grievances, we can hardly expected the Banking Ombudsman to show any enthusiasm in addressing or even facilitating resolution of genuine complaints against erring Banks / Branches by aggrieved customers.

REPLY

Vikas V Deodhar

In Reply to Simple Indian 3 years ago

Dear All victims of Non-functioning of Ombudsman,

I have a long experience of Complaints to Ombudsman about unlawful charges by Banks, particularly foreign Banks like HSBC, Standard Chartered. The complaints sent to Ombudsman get abruptly closed on the basis of very unacceptable reply from the Banks and without getting to the proof of the complaint.
I am anxious to know what further steps can be taken. Can I go to Consumer Court ? Can I make the Bank and also the Ombudsman itself for dereliction of duty because he/she has closed the

Vikas V Deodhar

In Reply to Simple Indian 3 years ago

Dear All victims of Non-functioning of Ombudsman,

I have a long experience of Complaints to Ombudsman about unlawful charges by Banks, particularly foreign Banks like HSBC, Standard Chartered. The complaints sent to Ombudsman get abruptly closed on the basis of very unacceptable reply from the Banks and without getting to the proof of the complaint.
I am anxious to know what further steps can be taken. Can I go to Consumer Court ? Can I make the Bank and also the Ombudsman itself for dereliction of duty because he/she has closed the

Vikas V Deodhar

In Reply to Vikas V Deodhar 3 years ago

Dear All victims of Non-functioning of Ombudsman,

I have a long experience of Complaints to Ombudsman about unlawful charges by Banks, particularly foreign Banks like HSBC, Standard Chartered. The complaints sent to Ombudsman get abruptly closed on the basis of very unacceptable reply from the Banks and without getting to the proof of the complaint.
I am anxious to know what further steps can be taken. Can I go to Consumer Court ? Can I make the Bank and also the Ombudsman itself as respondent, for dereliction of duty because he/she has closed the Complaint without giving me an opportunity of personal hearing when I can produce further proof of default by the Bank. I had requested for personal hearing in my Complaint.
In all I observe that under RBI, Ombudsman is not taking care of Bank Customer Complaints, RBI Code of Business practices does not even take cognizance of very damaging violations of the Code of Banking Service.
Can I get guidance from Moneylife Legal Cell, for filing Complaint in Consumer Court ?

Highlights of Interim Budget 2014

The finance minister reduced excise duty on capital goods to 10% from 12% and on mobile handsets to 6% and in the case of automobile having different duty rate, the reduction is by 2-6%.

Finance Minister P Chidambaram has spared items used by the common man from price hikes in his tax proposals for the interim Budget 2014-15. He also reduced duties on automobiles.

 

Chidambaram also reduced the excise duty on capital goods to 10% from 12% and on mobile handsets to 6% and in the case of automobile having different duty rate the reduction is by 2-6%. These reductions will be applicable till 30 June 2014.

 

The customs duty has been reduced on the non-edible oils used in soap, making it 7.5% and exemption of countervailing duty on specified machinery for road construction has been withdrawn. The minister also exempted service tax on warehousing of rice and blood banks.

 

Following are the highlights of Interim Budget 2014-15:

 

* Income tax rates kept unchanged

 

* 10% surcharge on ‘super-rich’ having annual income above Rs1 crore to continue

 

* 10% surcharge on domestic corporates with income of Rs10 crore

 

* Foodgrain production estimated at 263 million tonnes in 2013-14

 

* Fiscal deficit at 4.6% in 2013-14 and 4.1% next year, revenue deficit at 3% in 2013-14

 

* Current Account Deficit (CAD) to be $45 billion as against $88 billion in 2012-13

 

* Excise duty on small cars, motorcycles and commercial vehicles cut to 8% from 12%

 

* Excise duty on SUVs cut to 24% from 30%

 

* Large and mid-segment cars to 24-20% from 27-24%

 

* Excise duty on mobile handsets to be 6% on CENVAT credit to encourage domestic production

 

* Excise duty cut on capital goods, non-consumer durables cut from 12 to 10%

 

* Moratorium on interest on student loans taken before 31 March 2009; to benefit 9 lakh borrowers

 

* $15 billion addition to foreign exchange in 2013-14

 

* Disinvestment target for FY14 cut to Rs16,027 crore versus Rs40,000 crore; next year Govt eyeing Rs36,925 crore

 

* Lowers residual stake sale target to Rs3,000 crore from Rs14,000 crore for this fiscal

 

* Govt obtains information in 67 cases of illegal offshore accounts of Indians

 

* Govt’s net borrowing in next fiscal to be Rs4.57 lakh crore

 

* Plan expenditure cut by Rs79,790 crore for current fiscal

 

* Allocates Rs1,000 crore more to Nirbhaya Fund

 

* CCI cleared 296 projects worth Rs6.6 lakh crore by end-January

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COMMENTS

Yerram Raju Behara

3 years ago

Vote on Account Budget 14-15 presented today is more an accounting than budget as all the income and expenditure for the next six months has to be spent on account. Fiscal deficit is a jugglery of figures. He postponed payments due during the last three months and demanded advance payments of dividend from all the banks and the PSUs and even asked the RBI to transfer its surplus to contain the deficit. In the process what would happen is that the government that comes to power has a responsibility to pay up all the pent-up dues and forego all the receipts for the six months April –October 2014 if they are at the expected level because they were all on the basis of some assumptions of revenues and expenses projected for the next financial year. He is for sure going to handover empty treasury to his unknown successor.
‘A closer scrutiny shows that this is all smoke and mirrors by laying claims to all kinds of receipts even as crucial outgo in some big-ticket expenditure items such as subsidies have been deferred to the first quarter of the next fiscal year. Manmohan Singh, as finance minister, did something similar in 1992-93 by claiming extra taxes, which had to be refunded in the next fiscal year’, Livemint comments.
Nobody knows how the domestic and global environment would turn out. But the hope is that it would be better if we are to go by some global trends.
As for the country, Agriculture growth has reached the benchmark of 4%. But manufacture growth is a matter of serious concern at a negative 0.6%. Services sector growth is way behind a double digit figure and hence the expectation of 4.9% growth this fiscal behind last year. When the real growth rates unfold, as we saw the revisions of the previous years going southwards, the future may prove less than the 4.9%.
Inflation, this period around every year the prices will be a few notches down. The food inflation is shown as 6.6% the lowest during the last 24months. WPI is shown at 3-4%. Official Inflation accounting and the actual price rise affecting the common man are at wide variance. Therefore, the sustainability of these figures viewed in the context of rise in fuel prices and gas prices is totally suspect, with formidable deficits ahead as indicated in VOA budget: Food security subsidy: Rs.1.15lakh crores; Fertiliser Subsidy; Rs.76000cr; Fuel Subsidy, Rs.65000cr. Plan Expenditure is Rs.5.52Lakh crores and the subsidy total just in those three heads is Rs.2.56lakh crores. There are direct tax dues of over Rs.4lakh crores and these are unlikely to be coming forth in the next six months. In a slow moving economy with depressing manufacturing sector and services sector, the revenues of the government are bound to take a hit.
Chidambaram has a knack of playing with banks and credit. He announced agriculture credit increase in the budget from Rs.7lakh crores to Rs.8lakh crores. The outflow is totally unrelated to budget. What one needs to look at is whether the interest subsidy and prompt payment incentive has been budgeted consistent with the outflow of Rs.8lakh crores budgeted. Here the figures indicate the net agricultural working capital credit flow would not cross Rs.3-4lakh crores. Education loan moratorium would hit the banks and not the government and therefore he could safely announce this. There is no budget flow to compensate the banks. In the context of Basel III where the capital shortfall is already staring at the banks, and with a huge Rs.4lakh and odd crores of NPAs and consequent provisioning on reclassification of assets, banks need heavy recapitalization in the next six months and the VOA budget conveniently ignores this aspect because the FM just does not have the needed money in any corner.
The tax concessions announced may lead to some relief in capital goods sector. Is this enough to pep up the economy? The policy front is very sluggish. The deliverance is totally poor. Corruption has been endemic. The economic scenario is more depressing than in the 1990s in real terms. On the monetary policy front the improvements programmed would turn deliverables after a lag but only with due fiscal support. Neither the ambitious allocations nor expectations reveal the rational expectations of a VOA Budget.
When do the sops reach the market? A minimum gap of three months: the elections would by then have been over. The new government would come to power. The Congress going by the recent happenings and with a number of key financial sector reforms waiting, should be preparing for sitting in Opposition benches honorably.
The next government will inherit an economy that has lost its dynamism. The key to a sustainable economic recovery is getting investment activity back on track. And good fiscal management will be the key task. The last act of this government should be a useful cue for the first act of the next government but bad financial ethics.
The economic mismanagement of the past few years has several ingredients besides fiscal profligacy: lack of reforms, policy instability, poor governance. The journey out of the trough may not be a short one, but the full budget that is to be presented after the coming general election should build on the recent fiscal success to further strengthen national finances.
If wishes were horses voters would be riders. The voter of today is more informed than today and he can’t be bullied by the poetic justice of the Finance Minister.

Indian market trends

The Sensex fell 2% and the Nifty dipped 1% during the fortnight ended 13 February 2014. ML...

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