The Reserve Bank of India (RBI) introduced its Banking Ombudsman (BO) Scheme as an expeditious and inexpensive forum for bank customers for the resolution of complaints relating to certain services rendered by banks.
However, over the years, the BO is also proving to be a white elephant living in an ivory tower and more interested in protecting banks at the cost of customers. One reason could be the lack of power with the BO to act against wrongdoings of banks. However, in many grievance redressal cases, it is found that there was complete lack of interest or understanding of issues raised by consumers in the BO offices. In fact, the BO even bars customers from filing an appeal or raising the grievance again. But more about it later.
The annual report released by RBI for the 12 months till 30 June 2020 shows that the BO issued awards in only 68 cases, that is 0.04% of the total 173,958 maintainable cases. Maintainable complaints are those that are made to the BO, relating to the grounds of a complaint specified in Clause 8 of the Banking Ombudsman Scheme (BOS) 2006 and are in line with the requirements laid down in the Scheme.
On the other hand, the BO disposed of almost 72.34% of the complaints through mutual settlement or agreement. If the parties fail to arrive at an acceptable agreement, the BO gives a decision or passes an award. At this point, the record of BO falters.
During the year, 68 awards were issued by BOs of which 38 were implemented. Highest number of awards issued (24) and implemented (16) are from the BO in New Delhi-I. This is followed by Thiruvananthapuram, where 10 awards were issued, of which six were implemented. Surprisingly, there are eight BO offices, where not a single award was issued. This includes two BO offices in Mumbai, and one each from Patna, New Delhi-III, Jammu, Jaipur, Hyderabad and Ahmedabad.
Coming back to the issue of lack of understanding in the BO offices, I found that my complaint was not merely rejected but the BO also closed all options for me to escalate it when I was not satisfied with the outcome.
Here is what the BO, Mumbai told me: "As your complaint has been closed under a non-appealable clause, therefore, your representation, against the rejection of your complaint by the banking ombudsman is not maintainable under any of the provisions of the scheme, and hence the same cannot be examined by the appellate authority under BO Scheme, 2006. It is further advised that complaints closed under the non-appealable clause cannot be reopened under the banking ombudsman scheme, 2006."
So, what exactly was my complaint, you may ask?
My complaint was simple. I had applied for a Flipkart-Axis Bank- credit card. I am a customer of Axis Bank for the past 11-12 years and have good banking relations. After my application, the team from Axis Bank visited our office and collected my photo ID proof and proof of income from me for the credit card. As mentioned by Axis Bank on its portal, I submitted my ITR as proof of income.
However, after accepting the documents from me, an existing customer, Axis Bank demanded income-tax (I-T) computation sheets. I said, fine, but show me where it is written or stated that I am required to submit I-T computation sheet after sharing my ITR, which is accepted by everyone as valid proof of income.
Axis Bank representatives told me that they need the I-T computation sheet as per their internal policy. I asked them to share the internal policy, which mandates I-T computation sheet as proof of income.
There were no answers.
I escalated this to higher authorities from Axis Bank, including its managing director (MD) and chief executive (CEO) Amitabh Chaudhary.
Still there was no proper reply to my query.
Everyone in Axis Bank kept telling me it is their internal policy and, hence, it cannot be shared (even with a customer with long years of banking relations with them!). Since the application for the credit card would have affected my credit history and score, I told Axis Bank that I have every right to know these things.
And everyone in Axis Bank, including the MD & CEO, were shying away from telling me the exact reasons for seeking the I-T computation sheet or even sharing the application number.
Let me also make it clear, I had no issues in sharing the I-T computation sheet, all I was asking Axis Bank was, to show me the policy, rule, or the guidelines for it. They never did.
I then filed a application under the Right to Information (RTI) Act with RBI seeking information on rules and regulation to be followed by Axis Bank while handling credit card issues.
In the RTI application, I had asked for..
1. Copy of the rules, regulations or guidelines stipulated by RBI to decide the eligibility criteria for an existing customer of Axis Bank, who wishes to obtain a credit card from the same bank.
2. Copy of the rules, regulations, guidelines, circular and notification, if any, issued by the Reserve Bank that allows Axis Bank to decide its own internal rules, regulation, or policy for providing credit card to an existing customer.
3. Copy of the internal policy, rules, and regulation of Axis Bank for deciding eligibility criteria for providing a credit card facility to an existing card.
In its reply, RBI stated...
1. We have not issued any specific instructions in this regard. However, you may refer to para I (2.4), para I (2.5), para I (2.6) and para I (4) of our master circular DBR.No.FSD.BC.18/ 24.01.009/ 2015-16 on credit card, debit card and rupee denominated co-branded prepaid card operations of banks and credit card issuing NBFCs dated July 1, 2015
2. Para I of our master circular mentioned in the reply to above query above consolidates general guidance to banks/ NBFCs on their credit card operations, and the requisite systems and controls in managing their credit card business. You may refer to Para I (2.2) and Para I (2.3) of this master circular.
3. We do not have any specific information in this regard. However, you may refer to our master circular mentioned in the reply to the above query.
Under the RBI's master circular DBR.No.FSD.BC.18/ 24.01.009/2015-16: "Each bank must have a well-documented policy and a fair practices code for credit card operations. The fair practices code should incorporate the various guidelines on the subject issued by RBI from time to time, as well as the relevant guidelines contained in this master circular."
Further, as per the master circular from RBI, Axis Bank is mandated to convey in writing the decision taken and the main reason/ reasons which in the opinion of the Bank have led to the rejection, if any.
Neither Axis Bank shared its policy for mandating the I-T computation sheet, nor did it take any decision on my credit card application for about eight months. Meanwhile, I again escalated my issue with many senior officials from Axis Bank, including its MD and chief executive (CEO) as well as the nodal officer. But there was no reply.
I then filed a complaint with the BO after checking whether my complaint falls under its jurisdiction.
The BO on its page related with frequently asked questions (FAQs) says, it can receive and consider any complaint relating to non-adherence by the Bank or its subsidiaries to the instructions of RBI on credit card operations. Or in short, not following RBI directions on credit card operations is one of the valid grounds of complaints.
After filing the complaint, I received only an email from BO sharing my complaint number. Nothing happened for next two-three months.
The BO sent me an email seeking my response on replies given by Axis Bank. I sent my detailed response to the BO.
Then, one fine day, the nodal officer from Axis Bank sent me an email offering some other credit card without giving any explanation.
The generous nodal officer informed me, "We are glad to state that basis your relationship with the bank, there is pre-approved credit card offer for you for XXX credit card & you can apply for the same through mobile banking. Please also note that in case of the preapproved offer you would not be required to submit the documents."
I forwarded this email to the BO. In my email I stated, “...this offer from Axis Bank for some unrequired and unnecessary (for me) credit card sounds like an afterthought or in better words as a 'bribe' to me. Axis Bank should better explain the reasons for offering me such an unwanted credit card post my complaint to the BO."
I kept checking the BO site for further updates but there was none. Then there was a mention that my complaint has been closed. I tried to open the linked document, which asked me for a one-time passcode (OTP), which I never received.
I then sent an email to the BO seeking details about the decision. I also found that the BO has used a wrong mobile number instead of my registered mobile, due to which I never received any updates or the OTP.
The BO on 12 May 2021, informed me that my complaint had been closed.
What shocked me was that it stated, "Your Complaint was closed on 17 March 2021 under clause 13(1)(c) of BO Scheme, 2006. Clause 13(1)(c), i.e., beyond the pecuniary jurisdiction of Banking Ombudsman prescribed under clause 12 (5) and 12(6), is a non-appealable clause under the BO Scheme, 2006, against which no appeal can be entertained.
"As your complaint has been closed under a non-appealable clause, therefore, your Representation, against the rejection of your complaint by the banking ombudsman is not maintainable under any of the provisions of the scheme, and hence the same cannot be examined by the appellate authority under BO Scheme, 2006. It is further advised that complaints closed under the non-appealable clause cannot be reopened under the banking ombudsman scheme, 2006."
And after closing all doors, the BO told me that they have rectified my mobile number in their record. This recalls the fable of the doctor, who declared his operation as a success. The macabre reality, however, was that the patient died.
My grievance was not about obtaining a credit card but how Axis Bank was openly flouting the rules, regulations and guidelines as well as violating master circulars issued by RBI.
However, the BO assumed that I was seeking a credit card and in its own way had asked Axis Bank to provide me with an irrelevant one.
The point is, I have a good credit history and score that is considered as top by lenders. So, if at all I need, I can apply and obtain a credit card from any lender.
Summary of the BO order is to protect the integrity and authority of Reserve Bank of India from violators like Axis Bank, customers like me have to go and approach the courts at own cost.
This reminds me of Dr KC Chakrabarty, former deputy governor of RBI and trustee of Moneylife Foundation. In January 2013, while speaking at the Annual Conference of Banking Ombudsmen Dr Chakrabarty, had said, "...though the fact that the offices of the banking ombudsman receive more than 70,000 complaints a year bears a testimony to the credibility of the banking ombudsman scheme, it also reflects on the poor redress system of banks as it shows that the customers repose greater faith in the banking ombudsman."
He exhorted banks to make efforts to strengthen their grievance redressal mechanism by proactively reviewing their processes, improving efficiency, and delivering promised services in a fair, non-discriminatory, and transparent manner. He stressed that banks needed to address issues of safety and security in electronic banking to increase customer confidence and to bring in uniformity in the service charges levied.
Looks like with the passing of a stalwart like Dr Chakrabarty, who was famous for his pro-consumer rights approach, the BOs have erected iron curtains around themselves to block customers from seeking justice from their ivory tower.
Our emails sent to senior officials from RBI remained unanswered till writing the story. We will update this article as and when we receive any reply from them.