(This is a continuation of part 1)
Dr Chakravarti continued his speech in Vancouver making some significant observations on the need for Ombudsman in financial industry. These have significant impact on the Indian system of Banking Ombudsman also.
Speaking on the role of an Ombudsman, Dr Chakravarty said
“The role of the Ombudsmen adjudicating financial consumer disputes is onerous and the recent upheavals in the market place have only heightened the consumers’ expectations. The Ombudsmen, by definition, deal with individual grievances about which the common person is agitated. “
He also stated that
“The existence of a legal framework is a must for consumer protection. They (Ombudsman) cannot substitute effective legal and regulatory systems.”
Speaking about the Indian system, Mr Chakravarty said
“The Banking Ombudsman Scheme has been in existence for over fifteen years and is cost free for access by the common person. The Banking Ombudsman Scheme (BOS) is fully funded and managed by India’s central bank i.e. the Reserve Bank of India. As of now, bank customers can lodge a complaint with any of the fifteen Offices of the Banking Ombudsman situated across the country, on twenty seven different grounds of deficiency in banking services. These grounds of complaint cover all the delivery channels as also customer touch points. “
In conclusion he stated
“There are sections of financial consumers who always have the highest sense of protection and there are the vulnerable sections of the society who feel left out. We, therefore, have to move to an order where the market forces, competition, effective regulation and a vibrant Ombudsman scheme all co-exist and handle matters concerning financial consumers’ protection in a harmonized way.”
Having taken note of what Dr Chakravarty has said in this International Conference and the customer friendly reports such as the Damodaran Committee report etc, from RBI, let us now proceed to see from the angle of a Bank Customer the direction in which the Indian Banking Ombudsman Scheme is taking. My observations are based on my personal experience with the Banking Ombudsman in Bangalore and several RTI applications made in this regard besides direct interaction with some RBI officials.
The Indian Banking Ombudsman Scheme came into existence in 1995 but was comprehensively reviewed as “Banking Ombudsman Scheme 2006” It was amended in 2007 and again amended in 2009.
A comparision of amendments passed in 2007 and 2009 in respect of two principal clauses namely, Rejection and Appeal are provided below for quick reference. Let’s analyze the amendments and their impact on the scheme.
Comparison of Different Versions of the BO Scheme
As applicable from January1 2006 | Amended May 24 2007 | Amended Feb 3 2009 |
13. REJECTION OF THE COMPLAINT
(1) The Banking Ombudsman may reject a complaint at any stage if it appears to him that the complaint made is;(a) frivolous, vexatious, malafide; or |
13. REJECTION OF THE COMPLAINT The Banking Ombudsman may reject a complaint at any stage if it appears to him that the complaint made is; (a) not on the grounds of complaint referred to in clause 8 or (g) requiring consideration of elaborate documentary and oral evidence and the proceedings before the Banking Ombudsman are not appropriate for adjudication of such complaint. “ |
13.REJECTION OF THE COMPLAINT
The Banking Ombudsman may reject a complaint at any stage if it appears to him that the complaint made is;(a) not on the grounds of complaint referred to in clause 8 or otherwise not in accordance with sub clause (3) of clause 9; or |
14. APPEAL BEFORE THE APPELLATE AUTHORITY:(1) Any person aggrieved by the Award may, within 45 days of the date of receipt of the Award, prefer an appeal against the Award before the Appellate Authority;.. |
14. APPEAL BEFORE THE APPELLATE AUTHORITY: “(1) Any person aggrieved by an Award under clause 12 or rejection of a complaint for the reasons referred to in sub. clauses (c) to (g) of clause 13, may within 30 days of the date of receipt of communication of Award or rejection of complaint, prefer an appeal before the Appellate Authority; .. |
14. APPEAL BEFORE THE APPELLATE AUTHORITY: Any person aggrieved by an Award under clause 12 or rejection of a complaint for the reasons referred to in sub clauses (d) to (f) of clause 13, may within 30 days of the date of receipt of communication of Award or rejection of complaint, prefer an appeal before the Appellate Authority; |
It may be observed that between 2007 and 2009 a new ground for rejection namely “requiring consideration of elaborate documentary and oral evidence and the proceedings before the Banking Ombudsman are not appropriate for adjudication of such complaint. ” was renumbered from (g) to (c). Normally this should have been of no consequence. However due to the subtle change made in clause 14, the change in clause 13 assumes an important meaning.
In 2006, an appeal could be preferred on any ground of rejection including rejection on the basis of “Requiring consideration of elaborate evidence”. This continued in 2007 also. However in 2009 this was specifically exempted from the eligibility for appeal.
This change has taken away whatever credibility that the Banking Ombudsman Scheme posessed. Now it is reduced to a scheme which can be easily manipulated by Banks against the interest of the ordinary consumer. It is for this reason that I am unable to agree with Dr K.C.Chakravarty that RBI is doing enough in the interest of the Customers and reiterate that RBI talks in terms of directions but does not ensure that its directions are actually followed by the Banks.
While one can agree that the Banking Ombudsman is not capable of considering “Elaborate Evidence”, it is reasonable to expect that he should consider “Reasonable Evidence”.
The BO scheme of 2009 has now made it convenient for Ombudsmen to reject any application and assign it the reason of “Elaborate Evidence” and also shut off the complainant from making an appeal. The complaint will therefore die at the first stage itself.
This situation enables Banks to wield an unfair influence with the local Ombudsman and ensure that no complaint is heard reasonably. There are only a few Banks in each location but millions of customers. It is easy for Bank’s nodal officers to befriend the Ombudsman and obtain unfair decisions in their favour.
I am sure that some would jump up at my statement and say that we need to trust the appointed Ombudsman to do justice and not pass unsubstantiated comments that he can be anti-customer. It is in this context that Dr Chakravarty’s admission that many question his pro-customer attitude. While there is Dr Chakravarty and more like him in the RBI who are honestly pro-customer, there are many who are not.
Amongst the Banking Ombudsmen themselves there is no uniformity of decisions. There are a few instances of Phishing and many instances of ATM frauds which have been decided in favour of the customers. But there are an equal or more number of cases where the decisions have been in favour of the Banks.
I would like to quote the facts of one actual case in Bangalore to substantiate my point of why the BO Scheme of 2009 can be easily misused by some Banking Ombudsmen to deny justice to victims of Bank’s negligence.
The facts of the case are as follows:
One Mr S Nagaraja, a senior citizen and customer of Bank of India of one of the Bangalore branches suddenly found in his passbook one day that Rs 40700/- had been withdrawn through ATM from his SB account through an ATM belonging to Canara Bank in Bangalore. He told the branch manager that he has not lost his ATM card and has not used the card for the withdrawals. He also filed a Police complaint. When there was no response from the Bank, a complaint was made to the Zonal Manager of the Bank as the nodal officer under the Banking Ombudsman scheme. The Bank did not bother to send any reply and the Customer filed his complaint under the BO Scheme at Bangalore. The BO took his time and subsequently rejected the complaint under the clause “Elaborate Evidence Required” and also confirmed in his reply that “No Appeal is Possible”.
The reply which was signed by one of the junior officers on behalf of the Ombudsman and not by Mr Palanisamy himself.
During the process of consideration of the application, despite specific requests the Ombudsman at Bangalore (Mr S Palanisamy) did not provide an opportunity for the complainant to either present his case personally to the Ombudsman or he organized a joint meeting with the Bank. Instead, he relied on an e-mail from Bank of India that “Transaction was successful” and another e-mail from Canara Bank that “There was no CCTV at the particular ATM and hence CCTV footage cannot be provided”. The copy of the application made to the Ombudsman is available here. The Ombudsman sent a reply stating that “Elaborate Evidence needs to be considered” and also went on to state that no appeal was possible since he was rejecting the complaint under this ground.
Thus the BO failed to consider the simple evidence that the Customer was in posession of the ATM cards and the Bank was not in possession of the CCTV footage which they were expected to have and relied on some unsigned pieces of paper presented by the Bank as transaction records and rejected the complaint.
This is a classic case of how the Ombudsman becomes unreliable since he has disposed off the case almost finally.
The complainant has however raised an objection that the decision was malafied and submitted an appeal , The appeal was filed on August 13th and response is still awaited.
Now it is the turn of Dr Chakravarty to let the public know what is the remedy for the customers in such a situation.
The Bangalore Ombudsman was arbitrary in his decision since several other instances of similar nature in which the Ombudsmen at different places had taken a view in favour of the customer had been brought to his notice. Now there is the guidance from the Damodaran Committee report and also the RBI release on the Omudsman conference which which clearly state that Customer should have Zero Liability for such frauds and the onus of presenting any evidence is also on the Bank.
If the decision of Mr Palanisamy in the case of S.Nagaraja Vs Bank of India/Canara Bank is not corrected, it will be very clear that Banks can collude with the local Ombundsman and take such arbitrary decisions. In almost all cases the defence of “Elaborate Evidence” can be presented and the Central administration of RBI in Mumbai will never be able to know how the system is being administered by the respective Ombudsmen in different locations. This will also lead to corruption in due course.
Though RBI may say that the complaint can be taken to the legal circles, we all know that many of the losses are of small value of say less than Rs 50,000/- and it is extremely inconvenient and uneconomical to proceed legally to recover the money. We also know that Banks would be happy if the dispute is taken up through legal channels so that they can use all their muscle to delay the decision as long as possible.
In fact when the case of Mr Nagaraja is taken to the legal circles, the malicious nature of the Ombudsman’s decision may become a point of discussion as an evidence of the harassment inflicted on the customer by the respective Bank. The Ombudsman may even be summoned as a witness or as a respondent to explain the background of his decision. If this happens, the respectability of the institution will be coming down substantially.
It is therefore clear that the amendment of the Banking Ombudsman Scheme in 2009 limiting the reasons for appeal has struck a fatal blow on the Ombudsman Scheme and it is necessary that the scheme is further amended to make all decisions of the regional ombudsmen appealable irrespective of the reason stated by him for rejection. If this is not done the scheme is likely to be rejected by customers and will fadeout as a failed experiment.
I request Dr Chakravarty as well as the Governor of Reserve Bank of India take up this request and make necessary amendments at the earliest.
Naavi
September 24, 2011
2 users commented in " Banking Ombudsman Scheme Set to Fail (Part 2) "
Follow-up comment rss or Leave a TrackbackYou are indeed an incredibly inept bellicose. What you need to understand is that Banking Ombudsman scheme is brought to hasten up the complaint redressal machinery and to provide cost effective complaint redressal forum for Bank customers and its decisions are based on purely on documentary evidences. BO scheme does not entail the Ombudsman to record oral evidences under oath as he is not a competent to do so. Mere statement that the complainant was in possession of the ATM cards does not amount to any documentary evidence. What ‘reasonable’ documentary evidence was produced by your client which the Ombudsman failed to consider?. You are aware that it is impossible to withdraw cash without possessing PIN also. How can one be sure if your client has not parted with the card and also the PIN and now contesting it? Likewise, RBI has not made it mandatory for all ATMs to have CCTV coverage. The technical nature of the facility makes it extremely difficult for Banks to retrieve footage for all transactions. Again, there is limitation of time for holding such footage. In a similar case, in Bhubaneswar a customer who was contesting withdrawals through ATM, later confessed that his own son had withdrawn the amount and kept the card in its place before the customer got SMS. As such Ombudsman Bangalore has done the right thing in dismissing the case under 13(c) of the Scheme, as such cases require recording of evidence under oath and can ONLY be done in a Court of Law only. Looking at ‘No responses’ to your blogs, it is evident that there are no takers for your opinions. I am posting my comments only because, I want to make you aware that you are a quarrelsome character and it is better for you to divert your energy for some public good instead of directing it to defend cases just because you have a personal agenda against the Ombudsman and now trying to use gullible clients like Mr Nagaraja to grind your axe!!!!
I am a victim of same kind of fraud now and I am not sure how to proceed. I have the same experience from Bank questioning my INTEGRITY. I lost 50,000 INR in a matter of 4 sec on 29th Dec 2011. I am customer of ICICI BANK , Hosur Tamil Nadu from last 10 years and I had high regards on this bank for the customer Service they provide but now I think exactly opposite .
On 29th December 2011 night , I have received 5 SMS’s to my registered mobile stating a debit of 10,000 INR each at night 23.36 HRS to 23.39 HRS .On 30th December 2011 (the dark day of my life) when I woke up morning I saw my messages and immediately called ICICI help desk to inform about the messages .To my surprise they have confirmed that the transactions are done in an ATM in Bangalore and the same is reflected as debit in my account. It took me some time (few secs) to come out of the shock and realize that my ATM transactions are fraudulent .I have asked the help desk person to block my card immediately and morning I walked to the ICICI branch office in Hosur, Tamil Nadu to register an complaint. I have below points for your notice and kind consideration so that customers like me do not loose the hard earned money and also loose faith on the bank.
1. When the ATM card is with me , how can someone else do an transaction in ATM counter , how this is possible ? As a customer I can provide what ever information required to prove that my case is genuine. I came to know because I have received the alerts in my mobile but in vain the money has already moved out of my account .
2. When I have registered the complaint in ICICI BANK , HOSUR and after speaking with the Manager in charge Mr. Madhu he accepted the complaint and told me that he can give the ATM ID of the bank where the transaction happened . I have registered my written complaint on 30th Dec 2011 (Morning 8 AM ) and today 31st Dec 2011 when I have enquired with the bank manager again he gave me the ATM id of CANARA BANK , Bangalore in a piece of paper and have asked me to go and check with CANARA BANK.Below are the ATM details. CANARA BANK ATM ID : 08880042. I took the ID and approached the CANARA BANK to get the address details and based on the information shared in help desk below is the address of CANARA BANK . CANARA BANK ATM: 08880042 – 27 3, I Main Rd Vasanthnagar Bangalore 560052 Near cantonment area, Bangalore HEAD office phone number: J.C.Road,head ofice,Phone: 08025584040.
3. I took the information of CANARA BANK and apporached the bank for deatils but I did not get any response from CANARA Bank and they said all the ATM transactions are mantiained by third party and they cannot give the details until ICICI bank requests it.
4. With frustration I have realized that a common man cannot have justice and went back to ICICI stating the same and registering an complaint stating the facts in ICICI customer care they have registered the complaint but I realize now that they have not done anything and sat on that for weeks and today replied me merely stating to get police assistance.
Additionally , I have also logged an FIR . I have registered an complaint with HIGH GROUNDS POLICE STATION, BANGALORE as the CANARA BANK ATM -08880042 is under the purview of High grounds police station.
I do not know how to proceed with next steps and seek your assistance as an employee my hard earned money is lost due to these fraudulent transactions and ICICI and CANARA bank are just washing the hands pointing to police .I understand that these type of cases needs to vetted by evidences but my concern is genuine customers like me suffer a lot because of each bank point to another.
As a customer at least I should be previewed to steps what ICICI taken to help the customer so that I have confidence on bank. When I have visited the police station , to my surprise police officer confirmed me that these type of cases happen and ATM frauds are at rise and also he has registered my case for investigation .
FIR no : 0007/2012
HIGH GROUNDS POLICE STATION, BANGALORE
But I am really upset with the BANK official response stating that without pin an ATM transaction cannot happen and it questions my INTEGRITY .As I stated earlier the ATM card and pin number are with me only and because I have received the SMS in my registered mobile I came to know about this transactions. Please help on next steps. I would like to get your assistance in seeking the details of ICICI bank investigation and also ATM footage of CANARA BANK were the transaction happened. Please help me on steps to act so that I can recover my money. Looking for ward for your response.
Regards,
Kiran
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