RBI's Banking Ombudsman: ''Operation Successful, but the Patient Is Dead''
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.
Even today, Axis Bank's own website says, "proof of income in the form of latest payslip / Form 16 / IT return copy". (https://www.axisbank.com/retail/cards/credit-card/flipkart-axisbank-credit-card/eligibility-and-documentation#menuTab).  There is no mention of I-T computation sheet anywhere on the Bank portal..
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.
In fact, it took them six months even to share the application number with me, contrary to Axis Bank's own disclaimer of communicating a decision regarding a credit card application within 21 days as mentioned on the bank's website https://www.axisbank.com/retail/cards/credit-card/flipkart-axisbank-credit-card/eligibility-and-documentation#menuTab    
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. 
3 years ago
Agreed: Yes White elephant living in an ivory tower and more interested in protecting banks at the cost of customers. This is across all the banks PubSec & Especially private banks of all size.
3 years ago
HI, I am writing here on this wall as a comment because despite my best efforts i could not find anything on the web with regards to RBI guidelines or internal banking guidelines for home loan customers whose under construction properties are now under insolvency proceedings . To avoid bad credit history,we are paying back monthly on a homeloan that is accounted only towards Interest component while the principal remains the same since according to the home loan institution till full disbursal has happened, EMI cannot start. The EMI cannot start since there is no property to speak of..Additonally, the loan agreement mentions the loan payable as EMI and not Pre EMI and sets a clause of a maximum period of 18 months for which the pre emi will be charged and the switched to EMI. However the bank has not followed this..for reasons best known to them. Repeated attempts to get their attention has failed and so have attempts to reach out to the banking ombudsman. I as an individual homeloan consumer don't know what to do. I have tried going through the loan agreement which only mentions insolvency of the borrower and not the if- when scenario incase the builder defaults. , the rbi website if it mentions how should loans for underconstruction properties under such cases be treated...the bank grievance redressal is pathetic, they dont even read the mails and just forward to their ops/call centre team who never ever respond. The IBC code and its multiple revisions seem to favour the builder by not letting any legal proceedings be initiated against him...what can people like us do?? any thoughts.
3 years ago
Very rightly said. I too had same experience. BO closed my complaint without giving an opportunity to appeal. They give 30 days deadline for banks to revert on our complaints but BO themselves take up more than 2-3 months to revert. Justice delayed is denied. In my case too, they closed the complainant saying mediation done. But in actual there was no communication with me at all about my complaint. Suddenly after 2-3 months my complaint is marked as Closed without any communication or knowledge to me. And no further opportunity to appeal. My Complaint No was: 202021013008551
3 years ago
Well in my case ,i had applied for Rights Issue of INDIGRID INVIT, via online ASBA mode of Indian Bank. The amount was blocked in two of my accounts, however when i didn't got allotment, on approaching registrar KFINTECH, came to know that they didn't got payment from my bank,hence it was termed that i didn't applied . On taking up the matter with bank, i got reply on telephone that the person in their back office at Nandanam Branch at Chennai didn't upload the file. Now since last one month i am writing several mails to all possible department's of Indian Bank( Including their Nodal Officer) but no reply from anyone. Only Chennai branch manager call & said sorry, but he has no answer about how to pay me my losses as rights were at 110 & price in market is 134. I had taken up the matter with RBI Ombudsman on 10th May but still no reply from anyone.
3 years ago
calculation sheet is a part of ITR. It is understand that every time bank is asking for ITR, its inclusive of computation sheet.
Dilip Modi
3 years ago
ML may like to note that one particular very large private bank in Mumbai actually has a policy that practices:

1 Customer is not allowed to approach the Internal BO directly. Only the Bank official is allowed to present the complaint and responses given by the bank to the BO.

2 The IBO contact details are not allowed to be shared with the complainant. No complaint number or references are given. No details are given of when the BO hearing took place.

3 Neither the BO nor the bank official who represents you to the BO is allowed to say what was discussed, what arguments/documents were put forward on your behalf.

4 The actual BO order/ text of the verdict is not allowed to be shared with the complainant. The bank merely writes back saying :

" We have referred the case details to our Internal Ombudsman of the Bank (Appointed on the directive of Reserve Bank of India to look into the complaints), who has examined the case and expressed that the reply being given by the Bank's internal grievance mechanism is in order."

Please note that this is the standard reply/equivalent received on 3 occasions in the last 12 - 18 months on 3 different complaints. In some cases, the time period between escalating the complaint to BO by the Bank and a reply from Bank to me conveying the above verdict was less than 24 hours!! It just goes to show the degree of diligence that the BO would have applied to arrive at a fair judgement. How can such a process be allowed to exist?

It is time a concerted effort is made to bury the IBO and establish a fair and equitable system in its place.

Happy to share all the correspondence to bring home the unfairness of the RBI diktat.

Replied to Dilip Modi comment 3 years ago
Dilip bhai... unfortunately this is as per RBI policy. We had taken it up with the Governor who introduced 'internal ombudsman' and a toothless Customer Charter which is a meaningless piece of paper. We got to know that this is as per RBI policy. It only shows you the unfairness and one-sided (pro bank) customer policies. The Governor was Raghuram Rajan. It is yet another fight that has to be taken to the bitter end. Most depositors dont even know about it or care until they are in trouble!
Replied to sucheta comment 3 years ago
Well said ! I have taken up several instances to BO which had been dismissed . Let me in brief state about SBI credit card experience. I have always been regular and paid the full usage amounts , without waiting
for last date. When I changed my residence , I sent the change of address proof . One morning there was a person who came to ' verify my credentials " from SBI . At first I gave him my proof of address and all that was " kYC " relevant . He then started asking me irrelevant question " is this your own house ... etc. At this point I asked him the question " Can you show me your identity card " . He did. It was some local company and did not have SBI name. He also did not have proof that he was sent by SBI cards. I wrote to SBI cards and told categorically that any third party coming "to verify me" without authorisation is not proper. Furthermore there was no communication from SBIcards scheduling the visit nor asking for a prior appointment. SBICARDS was not wanting to take my suggestions. I made a case to BO . When the card was given, there was an inspection and visit again an unscheduled visit by third party for change of address without intimidation or prior appointment is dangerous to customers and hence asked them to advise SBICARDS to have a proper mechanism in place so that fraudsters do not take advantage of such loopholes.
I wanted my information and documents of proof of address was not misused elsewhere. The BO " closed " the case!

Wonder if the office of BO is needed when
BO isnt proactive,
When BO doesnot forsee possible misuse in the system that SBICARDS was following which had loopholes are set right.
Is the office of BO needed when they cannot even understand ground reality in a KYC related complaint!
Dilip Modi
Replied to sucheta comment 3 years ago
Yes Mam, I put up my comments here to make others also aware of this situation and hoping that more will come forward to seek changes, that are long over due.
3 years ago
I would like to tell you one small thing.. computation is an integral part of ITR and its understood that ITR means saral with computation.. If you are applying for any financial product,a institution is free to check your eligibility and give you the product if you fits in. Only by seeing your ITR one can judge your declared taxable income but the income could come from many ways interest income, rental income, salary income, business income, commission, gift, etc. So to have clarity on profile of applicant same is needed. Credit card is product where banks hesitate to give to ppl from rental income or interest income because these income are not
continuous in nature. Also institution cannot share internal policy with anyone outside because it could get into the market and ppl will start making there profile as per policy just to loot the Institution
3 years ago
Most consumer redress forum are show pieces and eye wash . Institution headed by superannuated persons pro-establishment and protect the interest of the establishment . Electricity sector is another example where many fora have been establishment but if u analyse the who are helming them no prize for guessing what would they deliver
3 years ago
Banking OMBUDSMAN is closing the complaints on filmsy grounds. I had lodged more than 10 complaints against YES Bank for cheating me by Rs.20 lacks with verifiable evidences. Subsequently SEBI investigated this matter and found YES Bank guilty on the grounds narrated by me to BO. I also requested BO to lodge my complaint under chapter 8 w but so far nothing has been done. The BO is not responding to my question/complaint. This irresponsible organization can not be challenged under the circumstances. The RBI Governor should take a note about the functioning of BO.
3 years ago
They can show this kind smartness with common man but when it comes to corporate loan they forgot everything. Thanks for sharing.

When anybody says it's their internal policy then chances are very bright that they fooling you.

No worries brother other credit card companies are also there. But we should boycott this shit bank.
3 years ago
3 years ago
@Yogesh Sapkale - I have similar issues around KYC Proofs with Banks & NBFCs. I usually take very light print outs of KYC Proofs and watermark them around critical areas of the KYC Proofs. Sometimes I get a push back stating I Cannot submit watermark proofs, for which my response has been show me the RBI notification and circular which states that KYC Proofs cannot be watermarked, with this response most Banks / NBFCs dumb down.

I recently sent a RTI to RBI seeking info if they have issues directive to Banks / NBFCs around accepting KYC proofs with watermark for which the RBI response was "it was not in their policy and they need not respond". I re-phrased the RTI and sent to RBI asking if they have sent any directive to Banks / NBFCs around NOT accepting KYC proofs with watermark. RBI had to respond and their round about answer was NO.

Following this I have this week sent an RTI again to RBI asking them based on the 2016 KYC circular around what guidelines (I am aware that RBI has issued no such guidelines) have RBI issued around ensuring privacy and safety of citizens KYC proofs and I have also asked them in case they have not issued privacy related framework for citizens KYC data "Why and what are the reasons why RBI has not issued such guidelines"

Simultaneously I have also sent another RTI to CERSAI that operates the CKYC Portal asking them why "Why Department of Financial Services has not made it mandatory for Reserve Bank of India to access customers and citizens KYC records from CKYC Portal" and in case "RBI still wants to duplicate the efforts of collection of KYC proofs already available with CERSAI CKYC Portal by asking Banks to collect it, why should the CKYC Portal not be dismantled as it is an unnecessary expenditure of taxpayers money"

I am happy to share the RTI responses from RBI and CERSAI with MoneyLife as I receive them as well as the RTI response I received from RBI which states that " RBI has not sent sent any directive to Banks / NBFCs around NOT accepting KYC proofs with watermark"
Replied to krish.queries comment 3 years ago
They do not accept watermark kyc as all the docs are nowdays scanned and stored in system for record for a small period of time. Watermark make it difficult to scan and thus in future if any issue arises there will be high chances that the print won't come clear to respond.. Despite of watermarking you can just cross the kyc marking the purpose and date for security... Hassle free for both sides.. Still if you want to have watermarked printout every time you have to fight with the bank/nbfc. Or you can carry the rbi circular always with you
Replied to Gaur.manisha comment 3 years ago
@Gaur.manisha I have always gotten away with watermarked proofs, I have always pushed back and challenged Banks / NBFCs. It is our personal & financial data and the onus is for us to keep it as safe as possible and make it as difficult for Banks / NBFCs that have their own set of opaque and arbitrary norms. There is no transparency from Banks / NBFCs and no accountability from them for the safety / privacy of our information, it should be hassle free from our end. I try and make it as difficult as possible for the Banks / NBFCs
3 years ago
When all the Government waivers announcement are actually funded by the bank, what moral right does the Government has to show whips to the banks. They have to show the favours.
RBI had the reputation of being non corrupt institution, now a government puppet
3 years ago
This is the same story and humiliation shared by thousands of banking customers. There is very little that any bank's grievance cell does except acting like a post office, without examining the merits of the complaint. It requires extraordinary patience and time to complain to the BO and take it to a favourable conclusion.
3 years ago
You probably did a silly mistake of claiming more compensation than the loss suffered by you. That's why that closure clause.

It's evident from the nature of your complaint that you are a rabble router who has no patience to read the rules for themselves but want everything presented to them.

And considering the length of this article, I can only surmise that you like hearing yourself talk.
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