Damodaran Committee: Experts believe that an internal ombudsman for every bank will not be helpful

They believe that most of the problems customers suffer are due to the unhelpful attitude of banking staff and that putting them in charge will not help

The recommendation by the Damodaran Committee on banking customer services to set up an internal ombudsman system for every bank could complicate the grievances redressal system and increase the time to resolve the issues, according to customers and experts.

Most of the problems that banking customers suffer is largely due to the uncooperative attitude of bank employees. Therefore, experts say, placing the overall authority for the resolution of customer grievances with the banks would hardly be beneficial. If banks were keen to provide good services there would have been no need for an ombudsman system in the first place, they say.

In its report, which was published by the Reserve Bank of India on Wednesday, the committee headed by M Damodaran, former chairman of the Securities and Exchange Board of India, said, "There is a need for the banks in developing their internal grievance redressal mechanism, to ensure only the minimum number of cases get escalated to the Banking Ombudsman (BO) and the scheme is strictly utilised only as an appellate mechanism."

The committee has recommended that every bank should appoint a chief customer service officer (CCSO), not less than the rank of a retired general manager of a scheduled commercial bank and preferably from outside the bank (under the advice of the RBI), who should also have necessary exposure in the working of the operational side of banking. The audit committee of the bank board would oversee the CCSO and the appointed officer should directly report to the bank's chairman, managing director or chief executive (CEO).

This, in other words, means that a person who wants to file a complaint about poor banking services would have to knock on the doors of the bank first, then appeal to the CCSO, and finally to the BO. At present, the customer can directly approach the BO, if he does not receive any satisfactory answer from the bank, or if the lender rejects his complaint.

The committee has recommended that "a person aggrieved with a banking service as hitherto will first complain to the bank, and if within a month does not receive a reply or is unsatisfied with the reply, will appeal to the CCSO of the bank. In view of CBS environment and latest technology available in communication, it is expected that the bank's CCSO would resolve the grievance within 30 days of the receipt of complaint, including the period required for conciliation meeting. On the failure to get a reply within a month from the CCSO, or if unsatisfied with the reply of the CCSO, the complainant can appeal to the BO of the relevant jurisdiction. The decision of the BO shall be final and no further appeal will be allowed."

Industry experts say such a move will only make the redressal mechanism time-consuming for customers. Also, there is not much guarantee that the bank will comply with the recommended rules, as most banks are known for the unhelpful behaviour of the staff towards customers.

If these recommendations are implemented, the role of the BO would be of an Appellate Authority. Those customers who are dissatisfied with the decision of the BO can approach formal institutions like consumer courts, civil courts, while the banks could seek the advice of the customer service department before approaching the courts.

The committee has also suggested amendments to the BO scheme, such as the complaint or appeal made to the BO should be within two years from the date of transaction, as against the current one year.

On the compensation issue, the committee suggested that it should be restricted to the actual loss only, as the BO not being a judicial forum, may not be able to award  compensation  for  any  mental  harassment which cannot be easily computed.

The Damodaran Committee has also recommended that the ombudsman scheme be extended to co-operative banks as well, as they are not covered yet. It also pointed out to the need to educate and make people aware of the ombudsman system through the help of the media.




5 years ago

The fact that a customer has a complaint and he/she would get a fair treatment from the very same bank ,is really not going to happen. Most often the Bank staff in collusion do try to support one of there own at any cost.The fact that a customer would like to get a third party involved preferably a lawyer would be the only way out. The purpose of an external person would only possibly bring out the truth in such a situation. The manner in which a internal would collude would only make things more dangerous for a customer.The fact that bankers are under a scrutiny for INTEGRITY . They should be forthcoming in promoting the trust they need to carry out business in the troubled relation whomsoever is at fault.Finally internal processes are genrally a "eyewash" so let get a makeover on this front pronto ,with no further delay

Reliance Securities launches regular stock purchase plan

According to the company, it has “already enrolled over 6,000 customers in its one-month pilot phase"

Anil Ambani group firm Reliance Securities today launched a systematic investment scheme—Regular Stock Purchase Plan—which allows customers to invest in equity market by making small, regular investments.

The company plans to offer customers a systematic way to invest directly in equity markets at regular intervals.

“Reliance Securities targets to get over 10,000 customers each month, scaling it to over 1 lakh customers in the first year itself. The company has already enrolled over 6,000 customers in its one-month pilot phase,” the brokerage firm said in a statement.

The plan offers two options for investments—amount-based and quantity-based.

“Under the amount-based option, a customer can invest a fixed amount in a desired stock at a set frequency for a selected tenure, while under the quantity-based option, a customer can purchase a fixed quantity of stocks at set frequency for selected tenure,” the statement said.

Reliance Securities ED Vikrant Gugnani said, “Buying regularly helps average out price volatility in the stock market. The plan is aimed to help investors in accumulating wealth by making small, regular investments over a period of time.

“Studies indicate that periodic investments in stocks or mutual funds have delivered far better returns than ad hoc investments done with a view to time the market.”

Mr Gugnani further noted that stock selection or fund selection “plays an important role.”

There is no lock-in period for holding the stocks. Purchased stocks can be sold at any time giving complete liquidity to customers, the statement said. It added that the set frequency could be daily, weekly or monthly and can be stretched over a three-year period.

Also, there are options to invest in stocks as well as ETFs (exchange-traded funds) available in the company’s basket. Reliance Securities currently offers 263 stocks and 17 ETFs in its basket for selection and will add more. There are no charges for enrolling for the plan. A one-time registration is required to activate this facility, which is free.


UTI Master Value Fund declares 10% dividend

On 29th July the NAV of the fund was Rs23.52 under the dividend payout option

UTI Mutual Fund today declared tax-free dividend of 10% for its scheme UTI Master Value Fund. The record date for the dividend is 4th August, the company said in a statement. All unit-holders registered under the dividend option of the scheme as on 4th August would be eligible for the payout. As on 29th July, the NAV (net asset value) of the fund was Rs23.52 under the dividend payout option.

UTI Master Value Fund is an open-ended equity oriented value fund. The investment objective of the scheme is capital appreciation through investment in stocks that are "relatively undervalued" to their expected long-term earnings growth.
As of 30th June, UTI MF had AUM (assets under management) of Rs69,105 crore.


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