Birds of a feather adjudicate together! If your complaint to your bank does not elicit a satisfactory response in a month, you can approach the Banking Ombudsman, not later than one year. But who exactly is this exalted authority? Under clause 4(1) of the Banking Ombudsman Scheme, 2006, emanating from Section 35A of the Banking Regulation Act, 1949, he is an official of the Reserve Bank of India in the rank of Chief General Manager or General Manager. How fair is it to allow bank officials to be judges in their own cause? It would be naive to expect them to not lean in favour of their industry.
The Supreme Court in Durga Hotel Complex Vs Reserve Bank of India had observed that “conceptually, an Ombudsman is only a non-adversarial adjudicator of disputes. He is an independent and non-partisan officer who deals with specific complaints from the public against administrative injustice and maladministration.” However, realistically, how does the ombudsman work on the ground?
Hold your breath. The Reserve Bank of India’s Annual Report on the Banking Ombudsman Scheme, 2016-17, reveals that awards were passed by ombudsmen in 0.05% of complaints filed by bank customers. That's a measly 65 awards out of the 1.3 lakh complaints received by the Ombudsman in 2016-17. There's more. More than half the maintainable complaints, a staggering 57%, were rejected. This is probably indicative of procedural challenges. Strangely, under clause 9(1) a complaint can be made to the ombudsman by a customer or his authorised representative “other than an advocate”. The bar on lawyers appearing before ombudsmen places customers at a disadvantage, resulting in a proliferation of cases before consumer fora.
In keeping with the maxim that ‘justice must also be seen to be done’, why should ombudsmen be only bank officials? Why can’t they be drawn from relevant fields - law, finance, media, judiciary or NGOs? If an RBI Governor can be a generalist, why can’t ombudsmen be from other professions?
In 2014, the RBI came up with a Charter of Customer Rights. It enshrined broad overarching principles for the protection of bank customers through five basic rights - Right to Fair Treatment, Right to Transparency, Fair and Honest Dealing, Right to Suitability, Right to Privacy and Right to Grievance Redressal and Compensation.
The RBI amended the Banking Ombudsman Scheme in 2017. With effect from the July, 2017, the scope has been enlarged to bring within its ambit, deficiencies arising out of the sale of insurance, mutual funds and other third party investment products by banks. Customers can now lodge complaints against banks for non-adherence to RBI instructions on Mobile Banking/ Electronic Banking services in India. The pecuniary jurisdiction of the Banking Ombudsman to pass an Award has been doubled to Rs 20 lakh. Compensation not exceeding Rs 2 lakh can also be awarded by the Ombudsman to complainants for loss of time, expenses incurred, harassment and mental angony.
Even after the 2017 amendments, it appears that banks still stick to technicalities. The Chattisgarh State Consumer Disputes Redressal Commission in Shakti Bricks Vs Branch Manager, Central Bank of India pointed out that the Consumer Protection Act provides an additional remedy and under Section 3, it clearly stipulates that it is not in derogation of any other law. So not exhausting the ombudsman route is no bar to a consumer complaint.
Have ombudsmen become less rigid? The Uttarakhand State Commission in Pulak Raj Mullick Vs Punjab National Bank noted that the “Banking Ombudsman without granting any personal hearing summarily dismissed the complaint with a finding that since the complaint requires detailed investigations and oral evidences, the complainant can approach any other appropriate forum or Court for redressal of his grievance.”
There are about 30 grounds to file a complaint before the ombudsman in the amended scheme. But the list is not comprehensive enough and the omissions are glaring. There is nothing specifically on loss of mortgaged property documents by banks, delays in handing over original documents after full repayment of loans, loss or damage of items in bank lockers. There is a mention of double debits at Points of Sale (PoS) but not a squeak on debit at the customer's end but no credit to the merchant necessitating another swipe or cash payment and no time frame for reconciliation and refund from the bank?
Unsolicited calls for add-on cards or insurance for cards finds a mention but it is silent on tele-marketing by banks for credit cards and loans. What about charging for sms alerts but not sending them regularly? The Code of Banks Commitments to Customers lists more grounds under 10 heads. And there is the Fair Practices Code. Why should the grounds in the Ombudsman Scheme read like wheels within wheels? It is designed to empower or confuse customers?
(The writer is an advocate at the Madras high court, columnist & author)
