The Reserve Bank of India has released the annual report of the banking ombudsman for 2017-18 (running from July 1st, 2017 to June 30th, 2018). The report shows a marked rise in mutual settlement of ‘maintainable’ complaints compared to the previous two years and a corresponding decline in complaint rejections. Maintainable complaints are those that fall within the specified grounds for a complaint under the Ombudsman Scheme, 2006 and where due process is followed.
Out of the total number of maintainable complaints, 65.82% of banking complaints were disposed off by mutual settlement, up from 42.43% in 2016-17 and 35.93% in 2015-16. The rejection rate of ‘maintainable’ complaints fell correspondingly over the same period from 63.65% in 2015-16 to 33.82% in 2017-18. However continuing the trend of the previous year, the Ombudsman rejected nearly half the complaints it received as non maintainable. The Ombudsman passed awards in a mere 0.159% of cases.
The Reserve Bank of India set up the Banking Ombudsman Scheme in 2006 to hear complaints by banking customers. Complaints can be made to the Ombudsman with regard to banking areas such as savings accounts, loans and credit cards. In 2017-18 the scheme was amended to enable customers to complain against mis-selling of financial products and also to permit complaints in relation to mobile and internet banking. The maximum ceiling of ₹10 lakh on the award the Ombudsman can pass was also removed. Following this change, the Ombudsman has passed some key awards in these areas. In one case, a customer who had received money from the sale of property and wanted to invest that money in a fixed deposit was instead sold an insurance policy by the bank concerned. The Banking Ombudsman observed that the bank had not examined suitability and feasibility of the product while selling it to the complainant as it had ignored the fact that the complainant was unemployed without any regular income. Further, the application form wrongly mentioned that the complainant was employed. The Ombudsman therefore advised the bank to refund the premium paid by the complainant along with interest as applicable for deposits of more than one year from the date of selling insurance policy till the date of refund and ₹10,000/- as compensation towards loss of time, harassment and expenditures incurred.
Coming back to the annual report, in aggregate, the Banking Ombudsman received 1,63,590 complaints in 2017-18, up by 24.9% over the previous year. The major grounds of complaints received during the year were non-observance of fair practices code (22.1%), ATM and debit card issues (15.1%), credit card complaints (7.7%), failure to meet commitments (6.8%) and mobile and electronic banking (5.2%). The highest number of complaints were received against State Bank of India (46,994) followed by HDFC Bank at 12,044 and ICICI Bank at 10,465. The Ombudsman disposed of a 96.5% of all complaints compared to 92% in the previous year indicating relatively speedy justice delivery. 64% of all complaints were through the Ombudsman’s online portal or through email and the rest through post/fax/hand delivery. Only 12% of the Ombudsman’s complaints emanated from rural areas with the remaining 88% coming from metropolitan, urban and semi-urban areas.
Points to note:
A complaint can be made to the Banking Ombudsman only after first making a complaint to the bank concerned. If an unsatisfactory response is received or no response is received for a month, the customer can approach the Banking Ombudsman.
Complaints can be made in relation to bank accounts, loans, credit cards and mis-selling of financial products among other matters.
An appeal can be filed before the Appellate Authority if a party to the complaint is dissatisfied by the Ombudsman’s decision within 30 days of the decision.
