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Banking Ombudsman Scheme 2006 - Structure

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Banking Ombudsman Scheme 2006 - Structure & Functioning 31st January 2009 Stages of settlement The Banking Ombudsman first endeavours to promote a settlement between ... – PowerPoint PPT presentation

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Title: Banking Ombudsman Scheme 2006 - Structure


1
Banking Ombudsman Scheme 2006 - Structure
Functioning
  • 31st January 2009

2
Road map
  • A historical perspective
  • Legal basis and scope of the Banking Ombudsman
    Scheme
  • Vision Goals
  • Structure and processes
  • Sharing of experiences
  • The way ahead

3
Backdrop
  • Growing Public Policy concern
  • Customer dissatisfaction - a topic of discussion
    in various fora including the floor of Parliament
  • Growing customer expectations with increasing
    Awareness of rights.
  • The satisfaction levels of customers is the touch
    stone on which the quality of service is toned.
  • Market discipline issues and need for policy
    intervention

4
Customer Service Policy Evolution
  • Formulated the Banking Ombudsman Scheme 1995 and
    revised in 2002 to enhance the scope of complaint
    redressal.
  • Set up the Committee on Procedures and
    Performance Audit of Public Services in 2003 to
    look into the issues relating to banking services
    rendered to the common man.
  • Banks were advised in December 2003 to constitute
    an Adhoc Committee to undertake Procedures and
    Performance Audit on public services rendered by
    them.

5
Customer Service Policy evolution contd..
  • Banks were advised in August 2004 to constitute
    Customers' Service Committee of the Board to
    bring about ongoing improvement in the quality of
    customer service rendered.
  • Banks were asked in April 2005 to convert the
    Adhoc Committees into Standing Committee on
    Customer Service to serve as a focal point for
    customer service in banks with powers to evaluate
    the functioning in various departments of the
    banks.

6
Customer Service Policy Evolution contd..
  • RBI facilitated the formulation of Fair Practices
    Code for Lenders and Codes of Conduct in respect
    of credit card operations, direct sales agencies
    and calculation of dues and repossession of
    security.
  • RBI prescribed proper disclosures by banks
    relating to aspects such as maintenance of
    minimum balances in accounts, issue of cheque
    books, entry in pass books, statement of
    accounts, formulation of transparent cheque
    collection policy by banks, etc.

7
Customer Service Policy Evolution contd
  • RBI introduced in June 2005 simplified procedures
    to facilitate expeditious and hassle free
    settlement of claims of deceased depositors.
  • RBI issued in November 2005, comprehensive
    guidelines on credit card operations to protect
    the interest of credit card holders.
  • A clean note policy was formulated and
    implemented to improve quality of currency in
    circulation and ensure sufficient availability of
    fresh currency and coins.

8
Customer Service - Policy Evolution contd
  • Banks were also advised to formulate a
    transparent and comprehensive deposit policy
    setting out the rights of the depositors in
    general and small depositors in particular.
  • RBI has facilitated the setting up of the Banking
    Code and Standards Board of India.
  • For the first time, RBI in its report on Trend
    and Progress of Banking in India 2004-05 listed
    the complaints received against Scheduled
    Commercial Banks under the caption "Customer
    Services in Commercial Banks" to highlight the
    issue of customer service in banks.

9
Customer Service - Policy Evolution contd
  • RBI advised banks, in April 2005 to place all the
    awards passed by the Banking Ombudsman before the
    Customer Service Committee to enable them to
    address issues of systemic deficiencies existing
    in banks, if any, brought out by the awards.
  • RBI also advised banks to place all the awards
    remaining unimplemented for more than three
    months with the reasons therefore before the
    Customer Service Committee to enable the
    Committee to report to the Board such delays in
    implementation without valid reasons and for
    initiating necessary remedial action

10
Customer Service - Policy Evolution contd
  • In December 2005, the Banking Ombudsman Scheme
    was revised (termed as the Banking Ombudsman
    Scheme, 2006) to widen its scope and improve its
    effectiveness and accessibility to the public.
  •  

11
GENERAL PARTICULARS OF THE SCHEME
  • Legal Basis Notified in terms of Sec 35A of
    Banking Regulation Act 1949
  • Purpose of the Scheme Expeditious and
    inexpensive redressal of customer complaints.
  • Areas covered
  • Deficiency in banking services
  • deficiency in sanctioning of loans and advances
  • Other specified matters

12
Banking Ombudsman Scheme
1995 2002 2006
Institutions covered Commercial banks Scheduled primary cooperative banks Commercial banks Scheduled primary cooperative banks RRBs Commercial banks Scheduled primary cooperative banks RRBs
Stages of Redressal Settlement Recommendation Award Agreement Award Review Agreement Award Appeal
Staffing BO -By a Selection Committee- Retired personnel Secretary- RBI Deputy Secretary Staff- SLBC Bank BO -By a Selection Committee- Retired personnel Secretary- RBI Deputy Secretary Staff- SLBC Bank Serving Chief General Manager/ General Manager Secretary- RBI Deputy Secretary Staff- RBI
13
Banking Ombudsman Scheme
1995 2002 2006
Funding Participating Banks Participating Banks RBI
Procedure Complaint Receipt Prescribed application in writing Prescribed application in writing Online/email/by post Prescribed application not insisted www.bankingombudsman.rbi.org.in
Nature of Complaints Not specified Specifically prescribed clause 12 Specifically prescribed clause 8
Cases of fraud cannot be handled Cases of fraud can be handled Focus on resolution of grievances
14
VISION
  • To provide an inexpensive, transparent and
    credible mechanism ensuring fair treatment of the
    common person utilizing Banking services

15
Goals
  • To ensure customer facilitation and protection
    through redressal of grievances of users of
    banking services in an inexpensive, expeditious,
    fair, reasonable and hassle free manner that will
    provide impetus for improved customer service on
    a continuous basis
  • Provide feedback for framing appropriate and
    timely guidelines
  • Enhance awareness of the scheme itself

16
Enhancements provided by the 2006 Scheme
  • Wider Scope
  • Simpler procedures
  • Better focus
  • Greater involvement of RBI

17
Organizational Chart
18
Redressal Process
Receipt of complaint
Review by BO
Reject Non Maintainable
Maintainable
19
Maintainable Complaints
Referred to Bank
Resolved by mutual settlement (Clause 11)
20
Unresolved Complaints
Award (Clause 12)
Reject (Clause 13)
Complainant to accept Bank to implement
Bank Complainant can File an Appeal
Complainants right to Appeal
21
Appellate Authority
Banking Ombudsman
Legal Department
CSD, CO
Regulatory Departments
Customer
Bank to Implement
Set aside the award Remand the matter to
BO Modify the award Pass any other order
22
Procedure for lodging complaints
  • Essential grievance to be taken up with bank
    first
  • Aggrieved persons not satisfied by a banks
    service and its resolution of complaint can apply
    to the Banking Ombudsman within one year
  • Complaint in prescribed format or in any other
    but incorporating all the required information.
  • Complaints can be submitted online/ email/in hard
    copy
  • Complaints from individuals/ their
    representatives( except advocates)/GOI/RBI

23
Complaints Redressal Procedure
  • Maintainability of Complaint
  • Prescribed time rejection of complaint/non
    receipt of reply within one month of his
    representation / non satisfaction of reply
  • not later than one year after the cause of
    action
  • not time barred as per the Indian Limitation
    Act 1963
  • Not a subject matter on which BO decision has
    already been taken
  • Not a subject matter which is before court/
    tribunal/ arbitrator/ other forum

24
Grounds of complaint . . . Banking Services
  • non-payment or  inordinate delay in payment or
    collection of
  • cheques, drafts, bills etc.
  • inward remittances
  • non-acceptance of
  • small denomination notes
  • coins
  • or charging commission for acceptance

25
Grounds of complaint . . . Banking Services
  • failure to issue or delay in issue, of drafts,
    pay orders or bankers cheques
  • non-adherence to prescribed working hours
  • failure to honour guarantee or letter of credit
    commitments
  • failure to provide or delay in providing a
    banking facility (other than loans and advances)
    promised in writing by a bank or its direct
    selling agents

26
Grounds of complaint . . . Banking Services
  • delays, non-credit of proceeds to parties'
    accounts, non-payment of deposit or
    non-observance of the Reserve Bank directives, if
    any, applicable to rate of interest on deposits
    in any savings, current or other account
    maintained with a bank
  • delays in receipt of export proceeds, handling of
    export bills, collection of bills etc., for
    exporters provided the said complaints pertain to
    the bank's operations in India

27
Grounds of complaint . . . Banking Services
  • complaints from Non-Resident Indians having
    accounts in India in relation to their
    remittances from abroad, deposits and other
    bank-related matters
  • refusal to open deposit accounts without any
    valid reason for refusal
  • levying of charges without adequate prior notice
    to the customer
  • non-adherence by the bank or its subsidiaries to
    the instructions of Reserve Bank on ATM/Debit
    card operations or credit card operations

28
Grounds of complaint . . . Banking Services
  • non-disbursement or delay in disbursement of
    pension (to the extent the grievance can be
    attributed to the action on the part of the bank
    concerned), but not with regard to its employees
  • refusal to accept or delay in accepting
    payment towards taxes, as required by
    Reserve Bank/Government
  • refusal to issue or delay in issuing, or failure
    to service or delay in servicing or redemption of
    Government securities

29
Grounds of complaint . . . Banking Services
  • forced closure of deposit accounts without
    due notice or without sufficient reason
  • refusal to close or delay in closing the
    accounts
  • non-adherence to the fair practices code as
    adopted by the bank and
  • any other matter relating to the violation of the
    directives issued by the Reserve Bank in relation
    to banking or other services.

30
Complaints - Loans and Advances
  • non-observance of RBI directives on interest
    rates
  • delays in sanction, disbursement or
    non-observance of prescribed time schedule for
    disposal of loan applications
  • non-acceptance of application for loans without
    furnishing valid reasons to the applicant and
  • non-observance of any other directions or
    instructions of the RBI from time to time.

31
Excluded
  • Complaints arising out of frauds and forgery and
    subjudice cases (Supreme Courts observation that
    it would not be appropriate for BOs to give a
    finding on forgery or to form an opinion on cases
    already referred to courts)

32
Charges for application . . .
  • There are no charges to be paid by the applicant
    to the Banking Ombudsman

33
Processes
  • Proceedings are summary in nature
  • Procedure discretionary as the Banking Ombudsman
    may consider just and proper
  • Not bound by any rules of evidence
  • Each case is dealt on a stand alone basis and
    cannot be cited as precedent
  • Disposals take into account evidence, the
    principles of Banking Law Practice,
    instructions, guidelines and directions of RBI
  • Right of the complainant to approach any court or
    forum at any time during or after the proceedings
    is not affected

34
Stages of settlement
  • The Banking Ombudsman
  • first endeavours to promote a settlement between
    the parties through mediation/ conciliation,
  • or else
  • proceeds to make an Award on merits of the case.

35
Compliance with the Award
  • Customer to give acceptance within 30 days
  • Within one month of receipt of complainants
    confirmation

36
Appeal against the Award
  • Both the bank and the complainant can appeal
  • Time limit 30 days

37
Appellation Process
  • Banks to get the sanction of the Chairman/ CEO
  • Appellate Authority can
  • Dismiss the appeal
  • Allow the appeal and set aside the award
  • Remand the matter for fresh disposal
  • Modify the award
  • Pass any other order as it may deem fit

38
Dealings with the bank
  • Nodal Officers appointed by banks at
    Zonal/Regional Office levels
  • BO to deal through the Nodal Officers.
  • All bank branches to display the name of the
    Banking Ombudsman and contact particulars

39
Banking Ombudsmen Complaint Monitoring
Application on RBIs Secured Internet Website
  • Finance Ministry instructions vide letter dated
    August 11, 2005 for computerization and online
    complaint monitoring system for Banking Ombudsman
    Scheme by September 30, 2005.
  • Complaint Monitoring Application was successfully
    tested and hosted on the RBIs Secured Internet
    Website. It is in operation since September 30,
    2005 .

40
Features of the Monitoring Mechanism
  • It is common to all Banking Ombudsmen offices.
  • Each Banking Ombudsmen office will feed in the
    complaint details on the application.
  • The application generates a unique complaint id,
    which can be used by Banking Ombudsmen, RBI and
    Finance ministry to monitor/track the status of a
    particular complaint.
  • Automatic acknowledgement generated on tracking
    of complaints
  • RBI and Finance Ministry can monitor the overall
    status of complaints at all the Banking Ombudsmen
    offices.

41
Right to Information Act and Banking Ombudsman
Scheme
  • The following are in the public domain
  • The BO Scheme
  • FAQs
  • Complaint Application form
  • BO addresses email ids
  • Annual Review of the Scheme

42
Right to Information Act and Banking Ombudsman
Scheme
  • The Complainant can get the status of his
    complaint till disposal
  • At disposal the Award gives reasons for decision
    taken
  • Each decision of the Appellate Authority is a
    speaking order

43
BENEFITS OF THE BO SCHEME
  • Prompt and impartial resolution of complaints
  • No cost to the customer
  • Assessment based on overall fairness, good
    business practices, accepted banking law and
    practice

44
Road Ahead
  • Focus on customer education and financial
    literacy
  • Customer Awareness and Empowerment
  • Understanding rights and responsibilities
  • Percolation of the spirit of the Banking Code and
    Standards as adopted by the bank down the rank
    and file to the level of the service delivery
    interface

45
Thank You
46
Average cost per complaint
Year Amount (Rs)
2003-04 7413
2004-05 6315
2005-06 3045
2006-07 2538
2007-08 2611
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