Regulations
Internal Ombudsman of Banks
RBI’s new initiative raises the question: have Customer Services Committees failed?
 
On 14th May, the Reserve Bank of India (RBI) asked banks (all public sector banks and only certain private and foreign banks) to appoint an ‘internal ombudsman’ to resolve consumer complaints. Importantly, the ombudsman, to be designated ‘chief customer services officer’ should not have worked with the bank in which s/he is appointed. 
 
The private and foreign banks asked to appoint an ombudsman include ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, IndusInd Bank, Standard Chartered Bank, Citibank and HSBC. This move is a change from RBI’s earlier adamant stance that a three-layer customer services committee, prescribed during the tenure of Governor Dr YV Reddy, was adequate to resolve customer complaints. But an internal ombudsman is only half a solution. 
 
RBI is now saying that the internal ombudsman would ensure ‘undivided attention’ to resolution of customer complaints. This is probably its way of giving some sanctity to the Charter of Customer Services that it released in December 2014. 
 
This Charter asks banks to treat customers fairly and has identified all their key concerns; however, it is rendered meaningless by failing to prescribe costs and consequences for deficiency in service or harassment of customers. 
 
Will the internal ombudsman, appointed by the bank be empowered to issue tough orders, or grant costs and compensation? 
 
Detailed guidelines on the working of the ombudsman are yet to be released; but RBI says it is a step prior to approaching RBI’s Banking Ombudsman. Rajiv Lall, chairman of IDFC, which is turning into a bank, was quoted recently as saying, “All the research we have done suggests that customers have an uncomfortable relationship with their banks.” Had RBI started out with a recognition of this fact, it would have realised that we have a long way to go before customers begin to trust their banks again.

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COMMENTS

Gopalakrishnan T V

2 years ago

The very fact that RBI wants an internal ombudsman to be appointed in banks is a clear admission that the present arrangement to address grievances of Customers by the banks' three tier Customer Committees has failed. The banks have become insensitive to customers problems and thanks to invasion of technology most of the banks have developed standardised replies regretting for the inconveniences but not resolving the issues the customers have raised. Even if the matter is taken up personally at the Chairman's level, the customers do not get even any reply or even an acknowledgement. KYC has become very handy indirectly to retain the customers as the procedures and problems involved to change the accounts from one bank to another are really a handicap and trouble some and not worth the trouble. It has become a fait accompli for customers to continue with the banks with all inconveniences and grievances and banks have also come to know of it. Human intervention and approach from banks are seldom attempted these days by most of the banks and in a way the machines are helpful as the customers do not have to put up with arrogance and indifferent attitude of the staff members.

MOHAN SIROYA

2 years ago

P> S It is imperative that RBI, at it cost must issue notification to this effect in all leading newspapers so that the general public is made aware of this new Appointment. Further, all covered banks must be directed to be transparent by putting appropriate notices about this appointment, name and contact details of such Internal Ombudsman. It should also be added in the 'Grievance Redressal Procedure of the bank on its website too.

MOHAN SIROYA

2 years ago

At the out set thanks to Moneylife for making all aware of this RBI guideline about Internal Ombudsman.
But how such a person who is on pay roll of the bank, can pass orders holding he employer bank guilty? Even if he/she does, yes there is no provision for any compensation or penal action. So this 'Internal Ombudsman ' scheme too will remain useless to customers as the earlier three layer committees for grievance redressal were there.
However, in all fairness, let us give a chance to see what customer satisfaction this new arrangement brings. After all, RBI deserves a thank for creating another venue for intervention. BUT THOSE CUSTOMERS WHO ARE IN HURRY, are free to approach the RBI Ombudsman . So where is worry ?

R B UPADHYAY

2 years ago

This will be a welcome step by the R B I. But the salary of such ombudsman should be paid by R BI and reimbursed by the concerned bank.

Vaibhav Dhoka

2 years ago

Customer services wing at Bank of Maharashtra is dismal.Do they have internal ombudsman?

Modi government will tackle black money issue: Amit Shah
The Narendra Modi-led central government is determined to tackle the black money issue, BJP president Amit Shah said here on Tuesday.
 
"The Modi government is determined to tackle the black money issue," said Amit Shah while addressing the media on the completion of one year of NDA government.
 
Shah also said the previous United Progressive Alliance (UPA) government failed to tackle the issue of black money.
 
He said the NDA government has performed well and added that there has been no corruption under the Modi government. 

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COMMENTS

Dayananda Kamath k

2 years ago

I have my own doubt about this govt tackling black money issue even today all the govt agencies are helping creating and transferring of black money. easily one of the biggest culprit is RBI. by not monitoring export advance received and liberalized remittance scheme. it is also not monitoring the nri gold import scheme. and all these have been brought to the notice of the upa as well as narendra modi govt and rbi. there is big gold gate which has been burried by all the govt authorities including the pmo and presidents office. If they are very serious let them initiate action on my complaint to directorate of public grievances with the action every govt authority has failed in their constitutional duty.

Building an entrepreneurial ecosystem in India
Development, industrialization and jobs are intrinsically linked to entrepreneurship
 
The Narendra Modi government completed one year in office on Monday (May 25). One of the centerpieces of why the BJP-led NDA dispensation came to power was is its focus on development and governance.
 
Development, industrialization and jobs are intrinsically linked to entrepreneurship. The greater the number of entrepreneurs in a society the greater are the chances of prosperity for the people residing in it. Entrepreneurship is critical as it also leads to innovation, betterment in the quality of life and greater social progress within a society. 
 
While it is worthwhile to notice that the present government has for the first time introduced a Ministry of Entrepreneurship (with Skill Development), the fact remains that India’s record is at best poor at nurturing entrepreneurs and creating an entrepreneurial ecosystem. Can the present government dream of creating the next Silicon Valley? That would require taking stock of the present reality in the entrepreneurial space necessary for betting conditions in the future. India’s position on global indices as well on several other indicators of entrepreneurship at present is alarming. Though the present government is taking steps to better some of these, the approach seems to be piecemeal. 
 
The GEI (Global Entrepreneurship Index 2015) places India at a dismal 104th rank below all the BRICS economies that stood thus (China-61, Russia-70, Brazil-100). The best-performing country on the Index is unsurprisingly, the US. On the three pillars too which make up the composite index, India performs relatively better on Entrepreneurial Attitude pillar, (95), at an average level on the Entrepreneurial Aspiration pillar (104) and relatively poorly on the Entrepreneurial Ability pillar (107). 
 
Another major study undertaken in 2013, on Indian entrepreneurship is The Global Entrepreneurship Monitor (GEM). It pointed out that the entrepreneurial attitude (particularly on viewing entrepreneurship as a desirable career choice), relatively speaking with other BRICS economies was low in India. Only 61 percentof the adults in the sample (in the age bracket of 18-64) looked at entrepreneurship as a desirable career option. The figure was 70 percent in BRICs economies and 77 percent in factor-driven economies. 
 
Also, the same study used a measure of total TEA - Total Early Stage Entrepreneurial Activity. This is described in the study as the percentage of individuals in the sample age between 18 and 64 years who are in the process of either starting a new business or have recently started one. India performed relatively poorly on this measure in comparison to other BRICS countries, with only Russia behind it. 
 
The data in enterprise surveys from the World Bank reveals an interesting story. The new firm density described by the enterprise surveys as number of new corporations created per 1,000 working age (16-64 years) individuals is found to be dismally low in India. On an average, we create 288 times less number of corporations per 1,000 working age individuals as compared to Hong Kong. In absolute numbers too, cumulatively from a period of 2004-12 the newly registered corporations were lesser in India than much smaller places like Hong Kong. 
 
It brings one to a related issue of clusters and why India has faltered in a coherent cluster approach that enables enterprise creation. The fact that exports from the country have not been able to keep pace with the imports points to rising domestic demand. In addition, it also points to a failure on the part of India to ‘make’ and equally importantly ‘market’ our goods and services well in the global economy. While Indians (at least some of them) prefer to buy Italian leather shoes, the fact that we do not have companies/shoemakers in Agra selling at half the price shows our inability to market our products well. 
 
A place where we have been able to do relatively well is the IT/ITeS segment with $98 billion exports in 2014-15. However, the fact remains in most export segments we have languished. The thrust on Make in India is thus understandable. Augmentation of large corporations with the development of MSME clusters, especially with newer enterprises and entrepreneurs, will go a long way in bettering prospects for the future. It will bring not only jobs but also raise the standard of living of some one million people that will enter the workforce every month for the coming decade. 
 
It is worthwhile to keep in mind that Silicon Valley as a cluster arose out of specific historical developments in time (like access to VC capital, Stanford’s Institutional support, US defense spending). However a similar if not same ecosystem can be nurtured in the Indian context. It would require the following key elements:
 
* Education: Educational institutions that enable independent thinking and foster risk taking in students.
 
* Funding: India is a fairly nascent market with respect to angel investments and VCs, equivalent to approximately $1 billion annually at present. This will have to be considerably expanded. 
 
* Technology development: To be done by talented and educated individuals.
 
* Access to Infrastructure: Include basic requirements like power supply, land, the internet, et al.
 
* Social and cultural support: For taking failure as a part of the learning curve and a stepping-stone to success.
 
* Better Regulations: In ease of setting up and winding a formal business. 
 
* Stringent IP protection regime: For the protection of entrepreneurs against larger players.
 
* Trust, teamwork and a spirit of collaboration: Among institutions, networks, and people. 
 
The present scenario throws up some fundamental questions about the basis of entrepreneurship? In our view, specialization, innovation and marketing (SIM) should be the basis of entrepreneurship that would drive more value creation in the Indian context. Newer business models that focus on society, scale and simplicity would better the outcomes for India in the future. 

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