CONTENTS
1. INTRODUCTION: 1.1
The Banking Ombudsman Scheme, 1995 was notified by RBI on June 14, 1995 in terms
of the powers conferred on the Bank by Section 35A of the Banking Regulation Act,
1949 (10 of 1949) to provide for a system of redressal of grievances against banks.
The Scheme sought to establish a system of expeditious and inexpensive resolution
of customer complaints. The Scheme is in operation since 1995 and has been revised
during the years 2002 and 2006. The Scheme is being executed by Banking Ombudsmen
appointed by Reserve Bank at 15 centres covering the entire country. 1.2.
As mandated by the Banking Ombudsman Scheme, the Banking Ombudsmen submit an Annual
Report on the functioning of their offices every year. Based on such reports,
an Annual Report for the Banking Ombudsman Scheme in a whole is prepared at Reserve
Bank of India, Central Office. As is being the practice, the Annual Report covers
the last five-year period with focus on the current year. Further, as a result
of computerization of the functioning of Banking Ombudsman Offices through the
Complaint Tracking Software, detailed analysis was possible on the information
pertaining to year 2006-07. 1.3. With the decision to merge
the Banking Ombudsman Offices with that of RBI offices, the accounting period
for the Banking Ombudsman Offices was changed from April 1-March 31 to July 1-June
30 to be in congruent with that of RBI offices. Accordingly, the information analysed
for the year 2006-07 pertains to the period July 1, 2006 to June 30, 2007. 2.
GENERAL PARTICULARS ON THE SCHEME 2.1 The
word ‘Ombudsman’ in general means a ‘grievance man’, a public official who is
appointed to investigate complaints against the administration. He is to intervene
for the ordinary citizen in his dealings with the complex machinery of the establishment. 2.2
In India, any person whose grievance against a bank is not resolved to his satisfaction
by that bank within a period of one month can approach the Banking Ombudsman if
his complaint pertains to any of the matters specified in the Scheme. Banking
Ombudsmen have been authorized to look into complaints concerning (a) deficiency
in banking service (b) sanction of loans and advances in so far as they relate
to non-observance of the Reserve Bank directives on interest rates, delay in sanction
or non-observance of prescribed time schedule for disposal of loan applications
or non-observance of any other directions or instructions of the Reserve Bank
as may be specified for this purpose, from time to time, and (c) such other matters
as may be specified by the Reserve Bank. 2.3 The Scheme
envisages expeditious and satisfactory disposal of customer complaints in a time
bound manner. The Banking Ombudsman on receipt of any complaint endeavours to
promote a settlement of the complaint by agreement between the complainant and
the bank named in the complaint through conciliation or mediation. For the purpose
of promoting a settlement of the complaint, the Banking Ombudsman has been allowed
to follow such procedures as he may consider appropriate and he is not bound by
any legal rule of evidence. If a complaint is not settled by agreement within
a period of one month from the date of receipt of the complaint or such further
period as the Banking Ombudsman may consider necessary, he may pass an Award after
affording the parties reasonable opportunity to present their case. He shall be
guided by the evidence placed before him by the parties, the principles of banking
law and practice, directions, instructions and guidelines issued by the Reserve
Bank from time to time and such other factors, which in his opinion are necessary
in the interest of justice. The Banking Ombudsman Scheme,
2002 2.4. The Banking Ombudsman Scheme (BOS) 2002 came
into effect on 14th June 2002. The BOS 2002 additionally provided for
the institution of a 'Review Authority' to review the Banking Ombudsman’s Award,
when warranted. A bank against whom an Award was passed, could with the approval
of its Chief Executive, file an application to the Review Authority (Deputy Governor,
Reserve Bank of India) to seek a review of the Award. The bank could request for
such a review only when the Award appeared to be patently in conflict with Reserve
Bank’s instructions and/or the law and practice relating to banking. The Banking
Ombudsmen was also authorized to function as an Arbitrator on reference to him
of disputes either between banks and their customers or between banks. The value
of the subject matter of individual disputes under arbitration should not exceed
Rupees Ten Lakhs. The Banking Ombudsman Scheme, 2006 2.5.
The Banking Ombudsman Scheme, 2002 was reviewed during the year 2005-06 and was
modified to reflect the changing needs of the bank customers. The modified scheme,
the Banking Ombudsman Scheme, 2006, came into effect from January 1, 2006 with
the following major changes: (i) New grounds of complaints
such as credit card issues, failure in providing the promised facilities, non-adherence
to fair practices code and levying of excessive charges without prior notice were
included. (ii) In order to facilitate complaint submission,
the application format prescribed was made not mandatory for filing the complaint.
Further, complaints can be filed online as well as by sending an email. (iii)
In order to have more control over the functioning of the Scheme, Reserve Bank
would fully fund and staff the Banking Ombudsman Scheme. (iv)
The banks are required to appoint Nodal Officers in their Zonal Offices/Regional
Offices for the Scheme. (v) The complainants may also
appeal against the Award of Banking Ombudsman. (vi)
In order to enable the Banking Ombudsmen concentrate on the complaints, rather
than on arbitration of inter-bank disputes, the arbitration option rested with
the Banking Ombudsman was removed. Amendment to the
Banking Ombudsman Scheme, 2006 2.6. The revised Banking
Ombudsman Scheme had witnessed a surge in the inflow of complaints. Along with
the complaints, there was increase in the complaint disposals by the Banking Ombudsman
Offices as well. However, many appeals against the decisions of the Banking Ombudsman
were also received from the complainants. The Banking Ombudsman Scheme, 2006 had
allowed appeals from complainants only in the complaints wherein Awards had been
issued. Observing the spate of appeals from complainants against decisions, rather
than against Awards, an amendment to the Scheme was notified on May 24, 2007 to
facilitate appeals from complaints that are relating to matters falling within
the grounds of complaint specified under the Scheme. 2.7.
Detailed information as regards the complaints dealt is given in the subsequent
paragraphs. Some of the important cases dealt by Banking Ombudsmen are given in
Annex 7. 3.
SCOPE OF THE SCHEME 3.1
The Banking Ombudsman Scheme, 2002 covered all the Regional Rural Banks in addition
to all Commercial Banks and Scheduled Primary Co-operative Banks, which were already
covered by earlier Banking Ombudsman Scheme, 1995. There is no change in this
regard in the Banking Ombudsman Scheme, 2006. 3.2. As indicated
in paragraph 2.5 above, various new grounds of complaints were added within the
scope of the Banking Ombudsman Scheme, 2006. The important new grounds of complaints
added include credit card issues, failure in providing the promised facilities,
non-adherence to fair practices code, levying of excessive charges without prior
notice and issues pertaining to accepting payment towards taxes and issuing/servicing
of Government securities. The grounds of complaints have been enumerated in Clause
8 of the Banking Ombudsman Scheme, 2006. 4.
OPERATIONALISATION 4.1. Reserve Bank of India operationalised
the Banking Ombudsman Scheme by establishing Banking Ombudsman Offices at 15 centres
all over the country. The names, addresses and area of operation of the Banking
Ombudsmen have been given as an annex (Annex 1) to the
Report. Reserve Bank frames the guidelines for operationalising the Scheme and
supervises the running of the Scheme. 5. PERFORMANCE
OF THE OFFICES OF BANKING OMBUDSMAN 5.1. The performance
of the Offices of the Banking Ombudsman was analyzed on the aspects such as the
quantum of complaints handled by them, the timeliness in handling the issues,
and appropriateness of the decisions given against the complaints. Number
of complaints received 5.2. The number of complaints
received by the Banking Ombudsman Offices had constantly increased in the last
five years. There was more than threefold increase in the number of complaints
received in the year 2005-06 from the previous year after the Banking Ombudsman
Scheme, 2006 was notified. The increasing receipt was also observed in the year
2006-07 with a 22% increase from the year 2005-06. 5.3.
The average number of complaints received per Banking Ombudsman Office has also
increased from 360 in 2002-03 to 2576 in 2006-07. (Details are as given in Fig.
1 and Table 1 below). Fig.1:
Number of complaints received by the Banking Ombudsman Offices*
Table. 1:
Number of complaints received by the Banking Ombudsman Offices*
Period |
No. of Offices
of Banking Ombudsman |
Complaints received
during the year |
Average No.
of complaints per office |
No. |
Change from previous year |
2002-03 |
15 |
5399 |
- |
360 |
2003-04 |
15 |
8246 |
+53% |
550 |
2004-05 |
15 |
10560 |
+28% |
704 |
2005-06 |
15 |
31732 |
+200% |
2115 |
2006-07 |
15 |
38638 |
+22% |
2576 |
(*
Includes only the complaints received during the year and excludes the number
of pending complaints). |
5.4.
The increase in the number of complaints received during the years 2005-06 and
2006-07 can be attributed to new areas such as credit card complaints included
and to facilitation of complaint submission by allowing complaint submission in
any form including by online and by email allowed in the Banking Ombudsman Scheme,
2006. Per month receipt in the number of complaints received under the BO Scheme
2006 was more than thrice the number of complaints received under the BO Scheme,
2002. The increase in the number of complaints received under the Banking
Ombudsman Scheme 2006 as compared to the previous scheme clearly indicates the
extent to which the scheme has benefited larger sections of the banking customers.
The comparative effects of the Banking Ombudsman Schemes 2002 and 2006 in complaint
receipt are given in Table.2. Table
2: Number of complaints received in 2005-06 and 2006-07
Period |
Scheme running |
No. of complaints received |
From |
To |
Total |
Total |
Per month |
01.04.2005
| 31.12.2005 |
9 months |
BO Scheme, 2002 |
9723 |
1080 |
01.01.2006
| 30.06.2007 |
18 months |
BO Scheme, 2006 |
60647 |
3370 |
5.5.
An analysis of the complaints received in the year 2006-07, Banking Ombudsman
Office-wise is given in Fig. 2. Mumbai, New Delhi and Kanpur
had topped the list in the number of complaints received. The average complaints
received in other offices were around 2000. Despite various efforts such as conducting
awareness campaigns on the Banking Ombudsman Scheme, Guwahati Office, which serves
all the seven North-Eastern States, had received only 170 complaints due to its
inherent problems related to connectivity and low penetration of banking activity. Fig.
2: Banking Ombudsman Office wise complaints received in 2006-07 Disposal
of Complaints 5.6. During the year 2006-07, the Banking
Ombudsman Offices disposed of 37661 complaints (including from the complaints
pending at the beginning of the year and those received during the year). Of these,
21747 complaints (49%) were settled to the satisfaction of the complainants, 15914
complaints (36%) could not be considered under the scheme owing to several reasons
like being outside the purview of the scheme, time-barred, without sufficient
cause, frivolous, pending in other fora, etc. A sample analysis of 756 complaints
that could not be considered under the scheme disclosed that 42% of such complaints
fell outside the purview of the scheme and 23% were first resort complaints and
could not be taken up by the Banking Ombudsmen. In 11% of the complaints, deficiency
of service could not be established and the remaining 24% complaints could not
be considered for reasons like they were pending in other fora or the complaints
required consideration of elaborate documentary and oral evidence etc. as shown
in the Fig. 3 below. As at the end of the year, 7105 (16%)
complaints were under process, of which 1964 (4.4%) complaints were more than
3 months old. Fig. 3: The complaints that
could not be dealt under the Banking Ombudsman Scheme, 2006- reasons (Sample
Analysis done in February 2007) 5.7.
Details of disposal of complaints over the last five years are furnished in Table
3. Some feedback from the satisfied complainants on the efforts made by the
Banking Ombudsman offices in resolving their complaints is in Annex
5. Table 3:
Disposal of Complaints by Banking Ombudsman Offices
Particulars |
2002-03 |
2003-04 |
2004-05 |
2005-06 |
2006-07 |
Total complaints
dealt with during the year |
6506 |
9483 |
12034 |
33363 |
44766 |
Complaints
settled to the satisfaction of complainants (a) |
3137 (48%) |
3998 (42%) |
5440 (45%) |
14931 (45%) |
21747 (49%) |
Complaints
that could not be considered under the scheme* (b) |
2132 (33%) |
4011 (42%) |
4963 (41%) |
12304 (37%) |
15914 (36%) |
Total
number of complaints disposed of (a+b) |
5269 (81%) |
8009 (84%) |
10403 (86%) |
27235@ (82%) |
37661 (84%) |
Complaints
under process | 1237 (19%)
| 1474 (16%) |
1631 (14%)
|
6128 (18%) |
7105 (16%) |
Of
which more than 3 months |
1964 (4.4%) |
Figures
in brackets indicate percentage to the total number of complaints dealt during
the year. @ Revised. * Includes complaints outside the
purview of the scheme / requiring consideration of elaborate documentary and oral
evidence / time-barred / without sufficient cause / frivolous / pending in other
fora, etc. Mode
of disposal of complaints 5.8. The Banking Ombudsmen
disposed of complaints, other than the complaints that could not be considered,
either by mutual settlement or by issuing an Award. During the period reviewed,
the ratio of complaints disposed by settlement to the complaints disposed by award
was around 99:1 clearly indicating the effectiveness of the Banking Ombudsmen
in arriving at mutually agreed consensus between bankers and complainants. During
the period above, only 563 awards were issued which formed less than 2% of the
total 49,253 complaints disposed of. From the year 2005-06, the number of awards
issued and the percentage of disposal through award issuance have come down despite
huge increase in the complaints received. Details are as given below in Table
4. The fact that the Banking Ombudsmen could dispose of more than 98%
of the complaints by mutual settlement between the complainant and the concerned
banks to their satisfaction indicates that they took appropriate decisions taking
into consideration all the relevant and extant legal and banking instructions
and practice. Table
4: Mode of disposal of complaints (other than complaints that could not be considered)
Sr.
No. | Year |
No. of complaints disposed
of | Disposal
by Award |
Disposal by settlement |
No. |
% |
No. |
% |
1 |
2002-2003 |
3137 |
47 |
1.07 |
3090 |
98.93 |
2 |
2003-2004 |
3998 |
121 |
2.21 |
3877 |
97.78 |
3 |
2004-2005 |
5440 |
165 |
3.03 |
5275 |
96.97 |
4 |
2005-06 |
14931 |
146 |
0.98 |
14785 |
99.02 |
5 |
2006-07 |
21747 |
84 |
0.39 |
21662 |
99.61 |
Total |
49253 |
563 |
1.14 |
48689 |
98.86 |
6.
ANALYSIS OF COMPLAINTS 6.1.
The analysis of complaints received at the Banking Ombudsman offices includes
analysis of subject category of complaints and the bank-groups against which the
complaints were made. Computerization of the functioning of Banking Ombudsman
Offices through the Complaint Tracking Software, has enabled detailed analysis
in this regard. Category-wise of complaints received 6.2.
The maximum number of complaints dealt with during the last five-year period pertained
to complaints regarding deposit accounts, deficiency in servicing of loans and
advances and delay in collection of cheques/bills, etc, besides the miscellaneous
complaints. The details are given in Table 5.
Table 5: Analysis of
complaints dealt with - category-wise
Category |
2002-03 |
2003-04 |
2004-05 |
2005-06 |
2006-07 |
Deposit
Accounts | 1789 (27) |
2500 (26) |
3239 (27) |
6733 (20) |
5803 (15) |
Loans
and Advances | 1651 (25) |
1226 (13) |
2291 (19) |
5215 (16) |
5151 (13) |
Collection
of cheques/bills |
908 (14) |
1001 (11) |
1245 (10) |
3058 (9) |
4058 (11) |
Others |
2158 (34) |
4756 (50) |
5259 (44) |
18357 (55) |
23626 (61) |
Total* |
6506
| 9483
|
12034 |
33363 |
38638** |
(Figures in bracket
indicate percentage to the total). (*No. of complaints includes previous year’s
pending complaints). (** Includes only the complaints received during the year.
Detailed analysis of the same is in subsequent paragraphs).
6.3.
However, during the year 2006-07, the maximum number of complaints received pertained
to credit cards at 20%. (An analysis of credit card complaints is given separately
in the report). Complaints pertaining to deposit accounts, loans and advances
(general) and remittances occupied the next three places in the number of complaints
received. The details are in Fig. 4 and Table
6 below. The Banking Ombudsman office-wise and category wise complaint receipt
is given separately in Annex
2. Fig. 4: Complaints received
in 2006-07: Category-wise Table
6: Complaints received in 2006-07: Category-wise
Sr.No. |
Nature of complaint |
No. of complaints |
No. |
% |
1 |
Deposit accounts |
5803 |
15 |
2 |
Remittances |
4058 |
11 |
3 |
Credit cards |
7688 |
20 |
4 |
Loans and advances
- General | 4442 |
11 |
5 |
Loans and advances
- Housing | 709 |
2 |
6 |
Charges without
notice | 2594 |
7 |
7 |
Pension |
1070 |
3 |
8 |
Failure on commitments
made | 1469 |
4 |
9 |
DSAs and recovery
agents | 1039 |
3 |
10 |
Notes and coins |
130 |
0 |
11 |
Others |
9636 |
25 | |
Total |
38638 |
100 |
Credit
card complaints 6.4. The complaints relating to credit
cards formed the major share of the complaints received at the Banking Ombudsman
Offices. The types of complaints received in this regard are enumerated below:
- Non-issue of credit cards.
- Issue of unsolicited
cards.
- Non-despatch of account statements in time.
- Levy of excessive
service charges.
- Unauthorised debits.
- Late appropriation of payments
made through cheques even though deposited in time/at drop boxes outside bank
premises and levy of late fee in such cases.
- Excessive late fee and penal
charges.
- Sanction of loan against credit cards on the basis of offers
over telephone without written consent of customer.
- Refusal to cancel
credit card.
- Refusal to settle insurance claims.
- Not adhering
to settlement terms for settling credit card dues.
- Wrong reporting of
status of cardholder's dues to credit information companies.
- Failure to
note caution / instructions in lost cards.
- Freezing of cards without informing
the cardholder.
- Harassment by recovery officer.
An
analysis based on the above feedback has been forwarded to the Department of Banking
Operations and Development for considering appropriate policy interventions. The
gist of the recommendations is given in Annex 3.
Analysis of complaints: Banks complained against 6.5.
Group-wise, the majority of the complaints pertain to the Nationalized Banks followed
by the State Bank Group. However, over the years, the percentage of complaints
against public sector banks, including the SBI Group, showed a decline vis-à-vis
the number of complaints received against private sector banks and foreign banks.
The details are in Table 7 and Table 8
below: Table 7: Break-up
of complaints dealt with - Bank-group-wise
Bank
group |
2002-03 |
2003-04 |
2004-05 |
2005-06 |
2006-07 |
Total |
No. |
% |
Nationalized Banks |
3145 |
4049 |
5124 |
10137 |
10543 |
32998 |
33 |
SBI Group |
1914 |
2779 |
3359 |
9892 |
11117 |
29061 |
29 |
Private Sector Banks |
718 |
1325 |
1863 |
6754 |
9036 |
19696 |
20 |
Foreign Banks |
313 |
406 |
577 |
2997 |
3803 |
8096 |
8 |
Scheduled Primary Co-op. Banks |
112 |
166 |
256 |
198 |
313 |
1045 |
1 |
RRBs* |
33 |
232 |
359 |
794 |
536 |
1954 |
2 |
Others** |
271 |
526 |
496 |
2591 |
3290 |
7174 |
7 |
Total |
6506 |
9483 |
12034 |
33363 |
38638 |
100024 |
100 |
(* Brought under the Scheme purview through
the Banking Ombudsman Scheme, 2002) (** Complaints received against institutions
such as non-scheduled co-operative banks, co-operative societies, NBFCs etc which
are not included within the purview of the Scheme). Table
8: Bank Group-wise complaints in the year 2006-07 (Only scheduled commercial
banks)
Bank
group | Business
Size (Rs. 000' Cr.)1 |
No. of accounts (in lakhs)2 |
No. of complaints |
As
on March 2006 |
Nationalized Banks | 1740 (48) |
2925 (52) |
10543 (30) |
SBI Group |
838 (23) |
1279 (22) |
11117 (32) |
Foreign Banks |
210 (6) |
130 (2) |
3803 (11) |
RRBs |
107 (3) |
732 (13) |
536 (2) |
Other Scheduled
Commercial Banks | 709 (20) |
640 (11) |
9036 (25) |
Total |
3604 (100) |
5706 (100) |
35035 (100) |
Figures in brackets indicate
percentages. 1. Aggregation of amounts in
deposit accounts and credit accounts. 2. Aggregation of number of deposit and
credit accounts.6.5. The above paragraph indicates that share
in complaint receipt is more than the share in the business size and number of
accounts for SBI Group and Foreign Banks. The break-up of bankwise (scheduled
commercial banks) complaints received in the year 2006-07 is given in Annex
4. 7. REVIEW / APPEAL OF BANKING
OMBUDSMAN'S AWARDS 7.1 The Banking Ombudsman Scheme,
2002 additionally provided for the institution of a 'Review Authority' to review
the Banking Ombudsman’s Award, when warranted. The 'review' option was to be exercised
by the banks on grounds that the Award appears to be patently in conflict with
the Bank’s instructions and/or the law and practice relating to banking. The same
was changed into 'appeal' process in the Banking ombudsman Scheme, 2006. 7.2.
During the year 2006-07, 15 review applications or appeals were received and of
which, in 13 cases have been disposed and 2 cases are being processed (information
updated to the date of this report). 8.
COST DETAILS OF RUNNING THE SCHEME 8.1. The total
expenditure in operationalising the Banking Ombudsman Scheme was shared by the
banks, in the proportion of their working funds, upto December 2005. From January
1, 2006, the expenditure is fully borne by Reserve Bank in terms of the Banking
Ombudsman Scheme, 2006. 8.2. The costs of the Scheme include
the revenue expenditure and capital expenditure incurred in running the Banking
Ombudsman offices. The revenue expenditure includes the establishment items like
salary and allowances of the staff attached to Banking Ombudsman offices and non-establishment
items such as rent, taxes, insurance, law charges, postage and telegram charges,
printing and stationery expenses, publicity expenses, depreciation and other miscellaneous
items. The capital expenditure items include the furniture, electrical installations,
computers/related equipments, telecommunication equipments and motor vehicle.
8.3. The annual cost of running the fifteen Banking Ombudsman
offices was increasing steadily. However, with the increase in the number of complaints
dealt, the cost per complaint dealt has been steadily decreasing with the amount
at Rs. 2,538 for the year 2006-07. The details are given below. Table
9: Cost details of Banking Ombudsman Offices
Period |
Total Cost (Rs.
Cr) | No.
of Complaints dealt |
Cost per complaint (Rs) |
2002-03 |
6.36 |
6,506 |
9,776 |
2003-04 |
7.03 |
9,483 |
7,413 |
2004-05 |
7.60 |
12,034 |
6,315 |
2005-06 |
10.16* |
33,363 |
3,045 |
2006-07 |
9.81 |
38,638 |
2,538 |
(*
Approximate amount for the 15-month period from April 1, 2005 to June 30, 2006.
The figures have been arrived by simulating the amount pertaining to April-December
2005. With the merging of the Banking Ombudsman Offices with RBI offices from
1.1.2006, separate exact information on cost of running the Banking Ombudsman
Offices is not available. Arrangements are being made to capture exact information
on the cost of running the Banking Ombudsman Offices). 9.
OTHER INFORMATION Scheme Awareness exercises 9.1.
Creating awareness about the Scheme has become a regular exercise for the offices
of the Banking Ombudsman. The Banking Ombudsmen also convened seminars on the
issue, held meeting with nodal officers/nominee directors on the board of RRBs
and delivered lectures at training programmes of banks. Further, the Banking Ombudsmen
conduct district level awareness meetings with the bankers, social organizations,
like Rotary clubs, and public, with press, television and radio coverage for such
meetings. The Banking Ombudsmen also used such occasions to convene conciliation
meetings for the complaints emanated from that area, if any. Nodal
Officers in banks for grievance redressal 9.2. The Banking
Ombudsman Scheme 2006 mandates that every bank nominate a Nodal Officer in every
region/zone for facilitating the functioning of the Banking Ombudsman Offices.
Besides taking up individual complaints, the Banking Ombudsman offices also periodically
review the outstanding complaints with the nodal officers. Many Banking Ombudsman
Offices have indicated that such a mechanism has yielded good results in resolving
the complaints expeditiously. 9.3. It was also clarified
during the year that the responsibility of a bank's nodal offices includes the
credit card operations of the bank's subsidiaries. 9.4.
The Customer Service Department has started the exercise of inviting the in-charges
of customer service departments (grievance redressal officers) of commercial banks
for an interaction and for briefing them about the expectations of Reserve Bank.
During the meetings, they are advised to play an effective role in handling customer
complaints with care and sensitivity in a timely manner. The requirement for publicizing
their service charges and the names and addresses of their nodal officers prominently
in the website and notice boards is also reiterated. Complaint
Tracking Software 9.5. To monitor the performance of
the Banking Ombudsman Offices as well as to facilitate their functioning, the
Complaint Tracking Software was introduced in September 2005. The software facilitates
viewing of the data relating to the complaints dealt, by the Top Management of
the bank as well as Ministry of Finance. After introduction of the Banking Ombudsman
Scheme 2006, in January 2006, the scope of the Scheme got widely enlarged and
to that extent the number of complaints received by the offices also became multifold
and, therefore, a need was felt to revamp the existing package to cater to these
changes and also to overcome certain other limitations that were observed after
usage. Accordingly changes have been made in the package. The important changes
include: (i) search option for complaints, (ii) report generation on bank-wise,
subject-wise and period-wise complaints etc, (iii) multi-user environment, (iv)
desk officer-wise tracking and (v) flexible data analysis by exporting data to
MS-Excel mode. 9.6. The software has been further upgraded
(in October 2006) with online complaint submission facility, wherein the complaints
filed online are directly added to the database of the software. The software
upgradation is done on a periodical basis as another modification was carried
in August 2007. Quarterly DO letter 9.7.
A system of quarterly DO letters from the Banking Ombudsmen to the Deputy Governor
was introduced from March 2006. The letter, which covers issues such complaints
dealt, systemic issues observed and awareness campaigns undertaken, serves as
an important tool for the Top Management and Customer Service Department for obtaining
feedback from Banking Ombudsmen. The feedback thus received is forwarded to the
Department of Banking Operations and Development, Indian Banks' Association and
the Banking Codes and Standards Board of India for appropriate regulatory/corrective
steps. 9.8. The feedback received from the Banking Ombudsman
offices has helped the Reserve Bank in framing appropriate policies and issuance
of directives to banks in the customer service area. The same is also forwarded
to Department of Banking Supervision for updating its inspection guidelines. The
important developments relating to Customer Service and Banking Ombudsman Scheme
in 2006-07 (July 2006 to June 2007) are given in Annex
6. 'It starts with respect.
If you respect the customer as a human being, and truly honour their right
to be treated fairly and honestly, everything else is much easier.' -
Doug Smith
Annex I Address
and Area of Operation of Banking Ombudsmen
Centre |
Address of the Office of Banking
Ombudsman | Area
of Operation |
Ahmedabad |
C/o Reserve Bank of India La Gajjar Chambers,
Ashram Road, Ahmedabad-380 009
Tel.No.26582357/26586718 Fax
No.079-26583325 | Gujarat,
Union Territories of Dadra and Nagar Haveli, Daman and Diu |
Bangalore
|
C/o Reserve Bank of India 10/3/8, Nrupathunga Road Bangalore-560 001
Tel.No.22210771/22275629 Fax
No.080-22244047 | Karnataka |
Bhopal
|
C/o Reserve Bank of India Hoshangabad Road, Post Box No.32, Bhopal-462
011
Tel.No.2573772/2573776 Fax No.0755-2573779 |
Madhya Pradesh and Chattisgarh |
Bhubanes-war |
C/o Reserve Bank of India Pt. Jawaharlal Nehru
Marg Bhubaneswar-751 001
Tel.No.2396207/2396008 Fax No.0674-2393906 |
Orissa |
Chandigarh |
C/o Reserve Bank of India New Office Building Sector-17,
Central Vista Chandigarh-160 017
Tel.No.2721109/2721011 Fax No.0172-2721880 |
Himachal Pradesh, Punjab and Union Territory of
Chandigarh |
Chennai |
C/o Reserve Bank of India Fort Glacis, Chennai 600 001
Tel No.25399170/25395963/ 25399159 Fax
No.044-25395488 | Tamil
Nadu, Union Territories of Pondicherry and Andaman and Nicobar Islands |
Guwahati |
C/o Reserve Bank of India Station Road, Pan
Bazar Guwahati-781 001
Tel.No.2542556/2540445 Fax No.0361-2540445 |
Assam, Arunachal Pradesh, Manipur, Meghalaya,
Mizoram, Nagaland and Tripura |
Hyderabad |
C/o Reserve Bank of India 6-1-56, Secretariat
Road Saifabad, Hyderabad-500 004
Tel.No.23210013/23243970 Fax
No.040-23210014 | Andhra
Pradesh |
Jaipur |
C/o Reserve Bank of India, Ram Bagh Circle, Tonk Road, Post Box No.12, Jaipur-302
004
Tel.No.2570357/2570392 Fax No.0141-2562220 |
Rajasthan |
Kanpur |
C/o Reserve Bank of India M.G. Road, Post Box
No.82 Kanpur-208 001
Tel.No.2306278/2303004 Fax No.0512-2305938 |
Uttar Pradesh (excluding District of Ghaziabad)
and Uttaranchal |
Kolkata |
C/o Reserve Bank of India 15, Nethaji Subhas
Road Kolkata-700 001
Tel.No.22306222/22305580 Fax No.033-22305899 |
West Bengal and Sikkim |
Mumbai |
C/o Reserve Bank of India Garment House, Ground
Floor, Dr. Annie Besant Road, Worli, Mumbai-400 018
Tel.No.24924607/24960893 Fax
No.022-24960912 | Maharashtra
and Goa |
New Delhi |
C/o Reserve Bank of India, Sansad Marg, New Delhi
Tel.No.23725445/23710882 Fax
No.011-23725218 | Delhi,
Haryana, Jammu and Kashmir and Ghaziabad district of Uttar Pradesh |
Patna |
C/o Reserve Bank of India, Patna-800 001
Tel.No.2322569/2323734 Fax
No.0612-2320407 | Bihar
and Jharkhand |
Thiruvanan-thapuram |
C/o Reserve Bank of India Bakery Junction Thiruvananthapuram-695
033
Tel.No.2332723/2323959 Fax No.0471-2321625 |
Kerala and Union Territory of Lakshadweep |
Annex
3 Gist of Recommendations based on the Findings
of the Study done on credit card operations of banks Card
issuance: - The banks need to ensure prudence
while issuing credit cards.
- The banks are required
to inform the reason for rejection of credit card applications as per the extant
RBI guidelines.
- The consent for the cards issued
or the other products offered along with the card has to be explicit and should
not be implied.
- Any mis-use of an unsolicited
card or any other product associated with the issue of such an unsolicited card
is the responsibility of the card issuing bank only and cannot be laid at the
door of the customer.
- In order to reduce misuse
of lost cards, banks may consider issuance of:
-
Photo-cards.
- Cards with a PIN.
-
Signature laminated on the cards.
- The banks should explicitly state and explain to the customer
the full meaning of their disclosure clause. While reporting to Credit Information
Companies / CIBIL is mandatory, all the other clauses added making the customer
giving consent to parting with his personal information and credit history to
a host of agencies has to purely voluntary and should not have any bearing on
the issue of the card.
Card Statements:
- The banks should have a mechanism to ensure that customer's
acknowledgement for receipt of the monthly statement is taken.
-
Banks should be advised against sending statements after a gap of a few years
and demanding payments and the same has to be seen as a grossly unfair act on
the part of the bank. Specifying a time limit for rectifying any errors or making
a claim on the cardholder need to be considered.
- The
banks should step up their education efforts on the impact of paying only the
'Minimum Amount Due'. An average credit card customer is not sure of how the interest/finance
charges are calculated. This should be clearly explained. The MITC should specifically
explain that 'free credit period' is lost if any balance of previous month's bill
is outstanding.
Charges/Interest charges
- The complaints on charges indicate that customers consider
the charges to be on the higher side. While there could be an issue of customer
education here, the banks are required to note that the charges on credit cards
fall within the purview of RBI circular on excessive interest rates issued on
May 7, 2007.
- Some of the banks indicated that
the interest charges varied based on the payment/default history of the cardholder.
The issue needs to be handled transparently.
- As
regards the amount, the entire amount is taken into account for finance charge
calculation if only partial amount is paid thereby losing the advantage of grace
period given for payment.
- In issuing cards that
are free for first year only, the issue needs to be handled transparently and
without any hidden charges.
Cheque collection
- The due date should be independent of payment method and
banks should not insist on advance payment if cheques are dropped in the drop
boxes.
- The banks generally do not provide acknowledgements
to the cheques dropped in the boxes. Some system of acknowledgement like time
stamping needs to be in place.
DSAs/DMAs
- It is desirable that the DSAs provide to the customer only
the documents/papers properly authorised by the banks. It is desirable that the
banks design the modes in such a way that there are no disputes arise later between
the customer and the bank. Most of the complaints of mis-selling are attributed
to DSAs/DMAs.
Grievance redressal
- The banks should take efforts to properly train their call
centre staff who are equipped to handle only routine complaints
- The
banks should have a mechanism to escalate unresolved complaints automatically
from a call centre to higher authorities if a higher level intervention is required.
CIBIL
issues: - It is desirable that the banks are
made to follow a uniform method of reporting to CIBIL/MasterCard International
Negative List.
- The customer should have the
right to obtain his credit record from a CIC/CIBIL and to correct it if the same
is wrong. CIBIL should inform the reporting bank’s name to an aggrieved customer
and should correct its record where the reporting bank has confirmed the wrong
reporting.
Recovery issues:
- On the issue of collection of credit card debts, the
principles enshrined in the recovery code, the Code of Banks' Commitment to Individual
Customers and in the Master Circular for Credit Cards need to be scrupulously
adhered to.
- Certain 'exemplary punishments'
can be given so that the same can act as a deterrent from adopting illegal methods
of recovery of dues.
- Banks or their recovery
agents should not trouble/disturb the family members of the cardholders who have
no direct relationship with the bank for any payment.
- Given
the lack of transparency in the issue, it is desirable that information relating
to all the recovery agencies employed by a bank are displayed publicly (in website),
indicating their addresses and telephone numbers.
- All
the recovery agents or agencies, and all those employed by such agencies should
have their antecedents verified by police and cleared for the role. Persons with
criminal background, if any, should not be enrolled.
- All
calls made by the agents should only be from the registered offices of the agency,
whose phone numbers are available in the bank's website. In case mobile phones
are used, the name of mobile user, addresses and designation of the user in the
agency should also be available in the website.
- The
banks should not set stiff targets or very high incentives to promote the agents
to recover the dues by any method.
Others:
- The banks to register all their telemarketers with
Department of Telecommunications within TRAI deadlines and scrupulously follow
RBI instructions on the National Do Not Call Registry of TRAI.
- The
banks may be advised to cover all the ATM sites by CCTVs so that the identity
of the withdrawing person can be established.
- A
request for closure of a card has to be honoured immediately by the bank.
- A
lost card should be immediately blocked on being informed by the customer and
formalities if any, including lodging of FIR can follow within a reasonable period.
- Banks may consider introducing a cover for
the lost card liability or limiting such liability at the option of the customers.
Annex
7 SOME
OF THE IMPORTANT AND EXEMPLARY CASES DEALT BY THE BANKING OMBUDSMAN OFFICES Case
1: Charging usurious
and unsustainable interest rates on unsecured personal loans Two
complainants preferred two separate complaints against the exorbitant interest
rates being charged by a bank, without transparency, on unsecured small ticket
personal loans. The first complainant stated that the bank had charged 48% p.a.
for the personal loan of Rs.30,000.00 as against the initial intimation of interest
at 18% p.a. and the bank had also not disbursed the loan amount in full. The second
complainant had availed a personal loan of Rs.35,000. The bank had not specified
the interest rate, despite repeated enquiries and had only informed that it would
be slightly high. Later, it was observed that the bank had been charging interest
at 52% p.a., and along with the various other charges levied, it worked out to
about 60% p.a., on the disbursed amount. On taking up the matter with the bank,
the bank provided a copy of the terms and conditions of the loan duly acknowledged
by the borrowers, which left room for doubt relating to transparency in charging
of rates. The bank explained that they had charged processing fee as per their
norms and disbursed the loan amount after deducting the processing charges and
hence there was difference in the loan amount disbursed to the complainants. The
bank insisted that they charged interest at 48% p.a. and 52% p.a., respectively
as per the terms and conditions of the bank, duly accepted by the complainants
and took refuge under the extant RBI guidelines, according to which banks could
charge an interest rate as deemed appropriate based on the risk profile associated
with each segment, their operating costs and other charges as determined by the
bank. The Banking Ombudsman observed that the effective cost of the loan was 60%
p.a. taking into consideration the impact of charging the processing fees upfront
and the actual amount disbursed. On detailed enquiry and intervention by the Banking
Ombudsman, the bank contacted the complainants and agreed to reduce the interest
rate to 18% p.a. diminishing, upon which the first complainant withdrew the complaint
and the same was closed. In the case of the second complaint, since the complainant
had not paid any amount in the loan account, the bank informed the complainant
that the re-schedulement would be effected on upfront payment of the overdue interest
at 18% p.a., diminishing, from the date of the loan till the date of settlement.
The complainant, while acknowledging the reduction in interest rate, refused to
pay the overdue interest demanded upfront and sought further intervention of Banking
Ombudsman, which was denied and the case was closed. Subsequently, the matter
relating to excessive interest rates was addressed in the Annual Policy 2007-2008
and the Boards of banks were advised to lay down internal principles and procedures,
so that usurious interest, including processing and other charges are not charged. Case
2: Insurance premium debited to credit card account
without cardholder’s consent The complainant represented
to the Banking Ombudsman that although he had surrendered the credit card of XYZ
Bank in May 2006 after repaying card dues, the bank had been harassing him by
demanding payment of the dues. However, the bank had not provided to him the details
of the payments demanded from him. After protracted correspondence, the bank informed
him that they had reversed the finance charges and late fees charged to the credit
card account totaling Rs. 4,676/- as a good service gesture and after the reversal
there was an outstanding amount of Rs. 6,236/- which he was asked to pay to avoid
levy of further charges. In the conciliation meeting convened
by the Office of the Banking Ombudsman to facilitate an amicable settlement of
the complaint, the bank reported that the outstanding amount in the card account
was on account of insurance premium and consent for insurance policy had been
obtained from the cardholder at the time of submitting the application for the
credit card. The bank further informed that the insurance product for which the
premium was levied was not an add-on feature on the card but a ‘sold product’,
which was offered to the customer. The bank agreed to produce documentary evidence
within a week to prove that cardholder’s consent had been obtained for the insurance
product. However, the bank could not produce the documentary evidence within the
time frame agreed to at the meeting and reversed premium charged to the customer. Case
3: Wrongly
classifying a card holder as a defaulter The
complainant, a Credit Card holder, was paying the dues regularly as per the statements.
He received a letter from the card issuers informing him that he was a defaulter
and that legal action will be taken if the overdues were not cleared. Immediately
after a week, the Card Issuer had advised that the earlier letter was sent inadvertently
to him and had also apologized for the mistake. Meanwhile, as per the data reported
to CIBIL, the complainant was implicated as a defaulter. Though an apology letter
was issued immediately thereafter, no steps were taken to rectify the wrong information
reported. When the complainant approached another bank for a credit facility,
they refused to grant the loan for the above reason. In spite of written representation
by the complainant, the card issuer did not take steps to do the rectification
required. On taking up the complaint with the card issuers, they submitted that
data of all card holders are reported to CIBIL and the Card Holder's name was
reported under Standard Category. In response to the detailed enquiries of the
Banking Ombudsman, they conceded that their service providers would have entered
the data erroneously in one of the fields. The same was rectified subsequently
as directed by the Banking Ombudsman. The conciliatory efforts of the Banking
Ombudsman to settle the complaint did not elicit the desired response from the
card issuers. The details furnished by the card issuer revealed that the list
of mandatory fields in the CIBIL datasheet submitted by the card issuer included
inter alia the amount overdue, asset classification and suit-filed willful
default status. As stated by CIBIL, members use the CIBIL data for credit decisions
and wrong reporting in any of the fields such as amount overdue or under suit-filed
willful default status could have a direct bearing on the credit decision and
could also result directly in an unfavourable decision for no fault of the individual
customer. It was observed that the complainant's name was
not reported as a defaulter and had been shown under standard category. At the
same time, his liability under cards was reported as 'overdue'. The terms Due
and Overdue had different connotations. The first
term denotes only the liability outstanding which is payable, whereas the
second term denotes the amount in default. Though, the cardholder was not reported
as a defaulter, the fact that there was wrong reporting in one of the fields in
the CIBIL database resulted in his being considered as a defaulter, thereby denying
him access to credit from institutional sources. It was clearly established that
there had been deficiencies on the part of the card issuer in classifying the
complainant's liability under the card as overdue and measures were taken only
belatedly in rearranging the data correctly. The mental agony experienced
by the complainant and the reputational loss could not be quantified in monetary
terms. After taking into account all the facts of the case,
the Banking Ombudsman issued an Award directing the Credit Card Issuer to pay
Rs.25,000.00 as compensation for the inconvenience, mental agony and loss of prestige
caused by their error in reporting. Case 4: Ambiguous
clause in Loan Agreement for levy of pre-closure charges The
complainant wanted to close his loan account with the respondent bank prematurely.
The bank, on enquiry informed him the amount payable by him would include the
pre-closure charges. The complainant paid the amount and the account was closed.
The bank provided the complainant the statement of the closed account wherein
the pre-closure charge mentioned was lower than the amount actually paid by him.
The complainant claimed refund of the excess amount recovered from him towards
pre-closure charges. The bank, in response, claimed that
in terms the loan agreement, it can recover the pre-closure charges at a rate
which can range between 0 to 5% of the outstanding amount of the loan. As regards
the higher amount of the above charge advised to the complainant, the bank contented
that it advised only the approximate amount as a pre-term quote. Since the bank
can recover the charge in the range of 0 to 5%, the bank's act of recovering an
amount, which is different from the amount advised earlier, is justified. The
efforts of conciliation made by the Banking Ombudsman did not yield results. Perusal
of the records relating to the case revealed that the bank had advised different
amounts towards pre-closure charges in its various correspondences. The complainant
relied on the information given to him by the bank and paid accordingly. The bank's
act of recovering the higher amount from the complainant and appropriating the
lesser amount towards the pre-closure charges, which it subsequently increased,
cannot be considered justified. Further, though the banks enjoy freedom to decide
charges for various services, they are required to intimate the charges to the
customers, in advance, in an unambiguous manner. The clause of the agreement referred
to by the bank provides for the charge in the range of 0 to 5%. The above clause
may be considered as ambiguous as it does not intimate the exact charge recoverable
in case of pre-closure of the loan account. Based on the
above consideration the bank was directed to restore the amount recovered by it
in excess of what was originally intimated to the complainant for closure of the
loan account. The bank has since implemented the order. Case
5: Deposit
Schemes Y, a CRPF constable,
had deposited around Rs. 1,920 in February, 1993 with the bank under a special
scheme devised by the bank for police personnel. The deposit payable after 40
years had a maturity value of Rs.2,17,416/-. The depositor died at Delhi while
on duty on 10.6.2005. His mother approached the bank for payment of the proceeds
of her deceased son’s account and produced a legal heir certificate to substantiate
her claim. The bank did not take any action despite her regular follow up. Her
two other sons also wrote to the bank to expedite the process of settlement of
the account. Finally, a petition was made to the Ministry of Finance, New Delhi
seeking their intervention in the matter. The complaint
was forwarded to the Banking Ombudsman office by the Ministry of Finance on 6.6.2007
for resolution of the case. The case was referred to the bank on 11.6.2007 advising
them for expeditious settlement of the account in favour of the mother of the
deceased as she was the sole legal heir. The bank explained the delay on account
of destruction of some of the records by flood water during the cyclone of 1999.
However, pursuant to our intervention, the bank processed the claimant’s application
on the basis of the available documents and remitted Rs.7,820/- to her by means
of a demand draft on June 21, 2007. Case 6: Charges
on a credit card The complainant lodged the complaint
alleging that that the credit card issuing bank has not credited the payment of
Rs.5,600/- made in October 2005 despite the complainant’s bank account being debited
to that effect. The bank levied several charges for non accounting of the same
including the over limit charges. The complainant informed the bank several times
over phone and made written representation with three reminders for rectification
of the above error by providing the documentary evidence of his bank pass book
entry wherein the disputed cheque amount debited to his bank account was reflected.
But no response was received from the respondent bank. The complainant approached
the Banking Ombudsman and sought relief of Rs.5,600/- along with interest @ 2%
for the delayed period, reversal of over limit fee charged as the credit limit
exceeded because of non-crediting of the payment made and compensation of Rs.10,000/-
for wasting his valuable time and for the harassment meted out on him. The bank
credited only Rs.5,600/- and other charges levied thereon. Despite giving the
bank sufficient opportunity it had not addressed the issue completely and satisfactorily.
Therefore, a hearing of the complaint with the bank and the complainant was conducted
on 14.06.2007 for conciliation and settlement as provided under Clause 11 of the
Banking Ombudsman Scheme, 2006. An amicable settlement was arrived in the conciliation
meeting. The bank agreed to reverse over limit fee levied Rs.330/60, pay interest
of Rs.1,232/- and Rs.7,500/- as compensation for loss of time and harassment.
Case 7: Wrong Delivery and Misuse
of Credit Card The complainant
was transferred by his employer from Visakhapatnam to Alwaye in Kerala. The Card
Issuer had intimated on January 8, 2005 that the Credit Card could not be delivered.
Immediately, he had contacted Card Issuer and furnished his Alwaye address. Though
he had not received the Credit Card, he continued to receive the monthly statements
demanding payment. On taking up the complaint with the Card Issuers, they had
informed that when they had tried to deliver the Credit Card to the complainant’s
mailing address as per their records, the same was returned undelivered to them.
The customer had intimated the personnel at the Customer Care Centre telephonically,
only about the change in his official address but had not requested for change
in residential address. The Card Issuers admitted that the card was re-despatched
to his previous residential address and it was delivered to another person
on February 5, 2005. Evidently, the card was misused and fraudulent
transactions were booked in the account. There was delay on the part of the cardholder
in informing the Card Issuers regarding non-receipt of the card. As per the terms
and conditions mentioned at Article 7 of the Card Issuer's Guide, the cardholder
is fully liable for loss, cost, expenses or damages which arise due to loss or
misuse (civil or criminal) before the card is reported lost. The
Banking Ombudsman observed that the Card Issuers should have despatched the card
to the complainant at his official address, as he had already informed the change
in address. Instead the card was re-despatched to the customer's previous residential
address and delivered to another person. This went against the Card Issuers'
own guidelines which stipulated that the Credit Card would be delivered against
proof of identity of the cardholder. The Banking Ombudsman ordered that the Card
Issuers should absolve the complainant of the Credit Card liabilities amounting
to Rs. 58,555.00, as he was in no way responsible for the negligence of the Card
Issuers. The Card Issuers were also advised to pay Rs.100.00 towards postage and
telephone charges as demanded by the complainant. Case
8: Non-compliance of stop payment instructions The
complainant instructed the bank, in writing, to stop payment of a blank cheque
which was lost. The bank acknowledged the instruction and recovered the service
charges for recording the above instruction. The complainant on receipt of the
statement of account noticed that the bank has paid the said cheque by debit to
his Cash Credit account. He demanded restoration of the amount debited to his
Cash Credit account against the said cheque and also the interest charged by the
bank on the cash credit account on the amount debited thereon. The
bank in its submission admitted that the complainant's signature on the request
letter for recording stop payment is genuine. The bank explained that it paid
the said cheque, through clearing to the collecting bank for credit to their customer's
account. The collecting bank had opened their customer's account without complying
with the KYC norms. The bank also claimed protection under section 20 of N.I.Act
1881. While considering the case, the Banking Ombudsman observed that the bank
is under an obligation to honour the cheques drawn by its customer on his account
as per the mandate given by him. The complainant, in the
instant case had cancelled his mandate for the said cheque by instructing the
bank not to pay the cheque. The bank acknowledged the above instruction of the
complainant and recovered charges therefor. There is no dispute regarding the
fact that the bank had received proper instruction from the complainant and noted
the same for compliance. The bank thus, had no right to debit the complainant's
account against the said cheque. The provisions of section 20 of N.I.Act 1881
are not relevant to the case as the complainant did not deliver the cheque to
a person on whose behalf the collecting bank collected it The
Banking Ombudsman passed an Award directing the bank to restore the amount debited
to the complainant's account together with interest at the rate applicable to
cash credit account, from the date of debit till restoration. Case 9: Payment
of interest on overdue deposits The complainant got
a Fixed Deposit Receipt issued from the bank in favour of a Government Department
as earnest money. The beneficiary encashed the said FDRs two years after the date
of maturity. The complainant being the depositor of the money, claimed interest
on the deposits for the overdue period on the ground that the deposit remained
with the bank till encashment. The bank, in response explained
that the said deposits were made in favour of the Govt. Authority. The beneficiary,
after maturity of the deposits demanded payment from the bank and the bank complying
with the orders of the beneficiary paid the amount to them. The bank contented
that since the deposits were not renewed after the date of maturity, it could
not pay the interest for the overdue period. The case was analysed in light with
the instructions of RBI governing payment of interest on overdue deposits. In
terms of the RBI instructions on payment of interest on overdue deposits, banks
enjoy discretion to allow interest on an overdue term deposit or a portion of
the said overdue deposit from the date of maturity of the deposit provided that
the total amount of overdue deposit or part thereof was being renewed from the
date of its maturity for a period extending up to 15 days beyond the date of renewal.
In the instant case, the said fixed deposit was not renewed after the date of
maturity. The deposit was payable to a Govt. Department, who after maturity of
the same presented the receipts, duly discharged to the bank and demanded payment.
Although the money remained with the bank after the date of maturity till encashment,
the same was not renewed by the beneficiary. Therefore, the bank's action of not
allowing interest on the overdue deposit was in conformity with RBI instructions.
The complaint was adjudged as made without sufficient cause
and rejected under clause 13 (d) of the Banking Ombudsman Scheme, 2006. Case
10: Cheque collection The complainant
company has issued a cheque of Rs. 0.66 lakh in favour of one investor 'XZ' as
redemption proceeds of her investment. The cheque was payable to her SB A/c with
a public sector bank’s branch at Baroda. The cheque was, however, collected for
one X (Y) Z by one of the branch of the defendant bank at Mumbai. On follow up
by actual payee with the complainant, she was paid Rs.0.70 lakh (proceeds plus
interest). The Banking Ombudsman decided that bank has not followed KYC guidelines
of RBI and was negligent in collection of the instrument. As such the bank was
ordered to pay the complainant Rs.0.66 lakh plus interest from 8.4.2004 till date
of payment @ 2% above the FD rate prevailing on 8.4.2004.
“Disclaimer: The Reserve Bank of India does not vouch the correctness, propriety or legality of orders and awards passed by Banking Ombudsmen. The object of placing this compendium is merely for the purpose of dissemination of information on the working of the Banking Ombudsman Scheme and the same shall not be treated as an authoritative report on the orders and awards passed by Banking Ombudsmen and the Reserve Bank of India shall not be responsible or liable to any person for any error in its preparation. “
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