Money & Banking
RBI appoints working group to review Ombudsman Scheme

The working group headed by Suma Varma, will also 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

Mumbai: Seeking to improve banking services and ensure speedy redressal of grievances of customers, the Reserve Bank of India (RBI) has set up a working group to update the Banking Ombudsman Scheme, 2006, reports PTI.

 

The working group, to be headed by senior RBI official Suma Varma, will also 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 (BOS), 2011-12.

 

The Group will include two Banking Ombudsman, 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.

 

Presently, there are 15 Banking Ombudsman 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.

 

Presently, there are 27 grounds on which customers can approach the Banking Ombudsman citing deficiency in banking services.

 

As per 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 Ombudsman was 94% during 2011-12, the same as that done during the previous year, it added.

 

The largest number (25%) of customer complaints were about failure to meet commitments/non-observance of fair practices code, followed by (21%) card related (ATM/Debit/Credit) complaints and complaints relating to deposit accounts (12%).

 

Card related complaints constituted the single largest ground of complaints, it said.

 

Out 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.

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Bankers seek slew of tax incentives in next Budget

In their pre-budget consultations with the Finance Minister, bankers also sought permission to issue tax-free bonds like other financial institutions for raising funds and augmenting business

New Delhi: Bankers have demanded tax sops like increasing the tax deducted at source (TDS) limit on fixed deposit to Rs25,000, incentives for investment in infrastructure bonds and a reduction in the lock-in period for tax saving deposits to three years, reports PTI.

 

In their pre-budget consultations with Finance Minister P Chidambaram, bankers also sought permission to issue tax-free bonds like other financial institutions for raising funds and augmenting business.

 

Representatives from 22 banks and financial institutions pitched for increasing the TDS limit on fixed deposit to Rs25,000. At present, TDS on interest earned from fixed deposits of Rs10,000 and above.

 

They also sought tax exemption of Rs20,000 under Section 80CCF for investing in infrastructure tax free bonds and suggested inclusion of housing sector in the infrastructure segment.

 

After the meeting with the Finance Minister, SBI Chairman Pratip Chaudhuri said: "There was a requirement that this lock-in period on tax savings deposits be reduced from five years to three years to bring it in line with tax saving equity linked saving schemes (ELSS)".

 

While seeking transparency in gold and real estate transactions at par with equity transaction, bankers suggested that any restriction on gold import should be done carefully and in a calibrated manner.

 

"Gold import has also a co-relation with jewellery export. So if we try to bring down gold import, it could also affect jewellery export," Chaudhuri told reporters

 

Chidambaram in his opening remarks said: "Without vibrant and viable financial market architecture, there cannot be any sustainable economic growth. Efficient intermediation by financial markets lead to higher economic growth by increasing savings and their optimal allocation for productive uses".

 

Chidambaram said financial institutions have the capacity to promote economic growth as they allocate savings to those investments which have potential to yield higher returns.

 

Major steps have been taken to reform India's regulatory framework in line with international best practices, he said, adding that the country is now one of the most vibrant and transparent markets in the world.

 

Other suggestions made by the bankers include extension of agriculture interest subvention scheme to self-help groups and exemption of social security insurance schemes from service tax.

 

"Some of the banks...made a request that they should also be allowed to issue tax-free bonds as has been allowed to other financial institutions because banks have good distribution network and can finance infrastructure projects," Chaudhuri said.

 

Bankers who attended the meeting include, Indian Overseas Bank CMD M Narendra, UCO Bank CMD Arun Kaul, Punjab National Bank CMD K R Kamath, ICICI Bank MD Chanda Kochhar, Axis Bank MD Shikha Sharma and Chairman of IDFC Ltd Deepak Parekh.

 

Besides, RBI Deputy Governor KC Chakrabarty also attended the meeting.

 

Chaudhuri said that banks suggested that either security transaction tax (STT) should be abolished on equity market or commodity transaction tax (CTT) should be imposed on commodity trading to attract investment in the capital market.

 

"...much of the money which could have been invested in the stock market is now going into this commodity market.

 

Either you have a commodity transaction tax or you abolish the STT," he said.

 

Banks also suggested that some tax concessions should be given for issuing perpetual bonds, which is counted as Tier I or equity capital.

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RBI cancels registration of Emcorp Finance, Care Credit and Investments

Certificate of registration of Chennai-based Emcorp Finance was cancelled on 3rd December, while that of Coimbatore- based Care Credit and Investments Company was cancelled on 10th December

Mumbai: The Reserve Bank of India (RBI) said it has cancelled registration of two non-banking financial companies (NBFCs)-- Emcorp Finance Ltd and Care Credit and Investments Company Pvt Ltd, reports PTI.

 

"Following cancellation of the registration certificate the companies cannot transact the business of a non-banking financial institution," the RBI said.

 

Certificate of registration of Chennai-based Emcorp Finance was cancelled on 3rd December, while that of Coimbatore- based Care Credit and Investments Company was cancelled on 10th December.

 

The RBI, however, did not provide reasons behind cancellation of the certificates of registration.

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