The office of the Banking Ombudsman (BO) has disposed of almost 70% of the complaints through mutual settlement or agreement and issued awards in only 0.11% or just 98 cases out of the 92,264 maintainable cases during 2018-19, reveals a report from the Reserve Bank of India (RBI). The annual report is for 12 months till 30 June 2019.
"The BO scheme promotes settlement of complaints by agreement through conciliation and/or mediation by BOs. If the parties fail to arrive at an acceptable agreement, the BO gives a decision or passes an Award. There has been a marked increase in the number of complaints resolved by agreement in the last two years. As detailed in table below 69.88% of the maintainable complaints were resolved through agreement as compared to 65.82% during 2017-18 and 42.43% during 2016-17, indicating mediation is being used as an effective tool in complaint resolution," the report says.
Commenting on the next course of action, the RBI says, it would formulate a policy to strengthen the system based on root cause analysis (RCA) of major areas of complaint for which offices of BO and Consumer Education and Protection Cell (CEPC) had conducted a study.
“The study revealed that the major reasons for complaints arise from lack of customer awareness regarding RBI instructions and safe banking practices, lack of sensitisation regarding customer protection among front desk staff of banks, instances of non-implementation of RBI instructions and variation in practices adopted by banks in areas where detailed guidance is not listed in the extant regulations. The findings of the RCA are being examined for necessary regulatory and supervisory action with an objective of strengthening consumer protection among the entities regulated by RBI,” the central bank added.
As per the report, during 2018-19, the 21 offices of BO from across the country received 1.94 lakh complaints, an increase of 20% from previous year, from bank customers. This ranges from non-observance of fair practices code (19.17%), ATM and debit card issues (18.65%), mobile and electronic banking (7.5%), failure to meet commitments (6.81%) and credit card complaints (6.78%).
While non-observance of fair practices code at 19.17% continued to remain major ground for complaints during the year, its percentage came down from 22.10% in the previous year.
Complaints received on grounds relating to pension, levy of charges without notice, credit cards and remittance have declined this year vis-a-vis previous year.
However, number of complaints pertaining to ‘mis-selling’ have gone up to 1,115 complaints during this year from 579 complaints in 2017-18, showing an increase of 92.57%.
Complaints relating to ATM or debit cards comprised 18.65% of total complaints, up from 15.08% in the previous year. Of the total number of ATM and debit cards complaints, a major sub-category was ‘Account debited but cash not dispensed by ATMs’ which accounted for almost 53% of the ATM related complaints.
Of the total number of complaints received in BOs, nationalised banks and State Bank of India (SBI) taken together accounted for 61.91% during the past three years. The share of private sector banks went up to 28.04% during this year from 25.94% of total complaints received in past year. The regional rural banks (RRBs) and scheduled primary urban cooperative banks together accounted for 1.87% of total number of complaints. The complaints against the new entities such as payment banks (PBs) and small finance banks (SFBs) increased three times to 0.90% from 0.30% during the past year, the report shows.
The number of maintainable complaints rejected has come down in absolute number to 26,905 in 2018-19 from 28,259 in 2017-18. The maximum number of rejections were on the ground that the complaint was ‘not on grounds of complaint (Clause 8) or not filed in accordance with required provisions of Clause 9 (3).
More rejections on this ground calls for creating greater awareness among complainants about BO Scheme, the report says, adding launch of complaint management system (CMS) for lodgement of complaints is expected to address this issue.
According to the report, complaints have been disposed of as non-maintainable largely due to incomplete information given in the complaint, complaints falling outside the territorial jurisdiction of the BOs, first resort complaints (FRCs) and complaints not falling under the grounds listed under Clause 8 of BO Scheme
RBI says, complaints requiring elaborate documentary and oral evidence are rejected by the BOs. Such rejections were made appealable from 1 July 2017 with an objective to review these decisions at the appellate authority (AA) level. Consequently, the number of such disposal declined to 2,337 in 2017 –18 and 193 in 2018-19 from 3,883 in 2016-17.
Several times, bank customers approach the Banking Ombudsman first instead of raising their grievance with the bank manager, and then escalating to the nodal officer level. When such first resort complaints or FRCs are filed directly at the Ombudsman, the complainants are advised to follow laid down procedure with a copy to the concerned bank for suitable redressal. During the year, 5.13% of the non-maintainable complaints were FRCs, the report says.
Last year in February, RBI introduced BO Scheme for non-Banking financial companies (NBFC-O Scheme). The Scheme is applicable to NBFCs which are authorised to accept deposits; or have customer interface, with assets size of Rs100 crore or above (effective from 26 April 2019), as on the date of the audited balance sheet of the previous financial year, or with any such asset size prescribed by the central bank.
During 2018-19, the four offices of NBFC-O received 3,991 complaints, almost double from the previous year. NBFC Ombudsman office at New Delhi accounted for 34.05% of the complaints received followed by Chennai at 28.16%, Mumbai at 24.93% and Kolkata at 12.85%.
With 40.44% of the total complaints received, non-adherence to the fair practices code was the major category of complaints received in the offices of NBFC-Os followed by non-observance to RBI directions to NBFCs at 17.21%, levying of charges without notice at 12.63%, and lack of transparency in contract or loan accounted for 9.17% of total complaints, the report shows.
The NBFC-O disposed almost 80% of total 939 maintainable complaints through mutual settlement or agreement. There was no award issued in this category by the Ombudsman.
According to RBI, the Centralised Public Grievance Redress and Monitoring System (CPGRAMS), an initiative by the central government is providing better alternate channel to customer for filing complains with regulators. During 2018-19, the complaints received through this portal went up by 115.44% to 321 from 149 in the previous year.