Moneylife: Pune: Friday, September 15, 2017.
In an
astonishing disclosure, the Reserve Bank of India (RBI) has said that its
much-touted Internal Ombudsman (IO) or his details do not need to be disclosed
to the consumer. The IO can only be approached by the bank, which will make a
representation without any obligation to inform the consumer. The scheme
details, which were obtained by Moneylife
under the Right to Information (RTI) Act is fully of contradictions,
lacks transparency and disclosure and seems like yet another hurdle to quick
grievance redress for the consumer.
Unfortunately, this is sanctioned by the regulator. It is no wonder
then, that even the new regulations by the RBI to protect against digital fraud
get better results from consumer courts than from the RBI.
Here is what
the RBI actually says: "Arrangement of Internal Ombudsman is internal to
the bank and there is no requirement for the complainant to access IO. RBI has
advised banks to internally escalate all cases to IO for final decision where
either the complaint is rejected or only a partial relief is provided to the
complainant".
In response
to our RTI query, the RBI has informed that
34 banks including, 26 public sector banks (PSBs), five private banks
and three foreign banks have appointed IO. It has provided a list of names,
which is attached below.
The operating
procedure of the Internal Ombudsman is spelt out in a “communication”, but its
official sanctity is not clear. The RBI is emphatic at the IO “is internal to
the bank and there is no requirement for the complainant to access the IO. RBI has advised banks to internal escalate
all cases to the IP for final decision where either the complaint is rejected
or only a partial relief is provided to the complainant”.
The RBI
further says that the “final communication to the complainant shall mention
that the complaint has been examined by the IO and still if he is not
satisfied, he can approach the BO i.e. level VI”. So far, we have not come across any
complaints where there is such a communication about reference to the IO. In fact, most complainants are in the dark
about action taken. What is worse, the very sanctity of this ‘advise’ is
unclear, since the RBI’s communication to banks’ does not seem a part of the
master circular of the RBI, which has strict implications.
Point 4.1 of
the IO scheme, says that the “IO shall facilitate
resolution/settlement/agreement of such grievances through conciliation and
mediation between the Bank and the aggrieved part or by passing an Advisory in
accordance with the scheme”. However, if the RBI itself has allowed banks not
to communicate with the consumer, nor spelt out a process for this mediation
and conciliation, it is unclear how a consumer will be approached at all.
Again, we have no record of any consumer having had the benefit of action or
mediation by an IO. On the contrary, they have had more success with the
consumer courts.
The scheme
further says that the IO should ‘take into account the evidence placed before
him by the parties'. However, the consumer seems to have no say in ensuring
that all evidence is actually submitted to the IO. In fact, one senior citizen
bank customer is running from pillar to post for his complaint of money
fraudulently transferred from his savings account with a prominent bank. His
communication, seen by Moneylife, nowhere shows if this is being escalated to
the IO level. This senior citizen
managed to lodge a complaint with the Police, and has virtually been shut out
by the bank, despite going through Moneylife Foundation, an NGO. The plight of
other consumers is likely to be worse.
The RBI with
regard to the IO Scheme, says that if the customer" is not satisfied with
level 5 or the IO level, then she can approach the BO at next level (level
VI)”. This communication itself is proof of the extraordinary harassment that a
consumer is subjected to through official sanction by the RBI. Why should a consumer have to wade through
six levels of filing complaints, with endless delays at each level? Since the
RBI has flatly refused to impose punishment on banks for such harassment, it is
no wonder that banking related disputes either get resolved in consumer courts
or simply languish.
In 1995, the
Reserve Bank had introduced the Banking Ombudsman Scheme to provide an
expeditious and inexpensive forum to bank customers for resolution of their
complaints relating to deficiency in banking services provided by commercial
banks, regional rural banks and scheduled primary co-operative banks.
The
communication issued on 18 August 2016 , when Dr Raghuram Rajan was the
Governor, changed nomenclature of existing Chief Customer Service Officer
(CCSO) to IO. The escalation mechanism stated in the communication kept IO at
level 5, preceded by Branch Manager at level 1, Circle Office at level 2, Zonal
Head at level 3 and Principal Nodal Officer at level 4. If the customer is not
satisfied with the IO decision, she is required to approach the Banking
Ombudsman at level 6, appointed by the RBI.
While the
communication states that customer is not required to approach the IO directly,
it allows the IO to facilitate resolution between bank and the customer. It
says, "The IO shall facilitate resolution/ settlement/ agreement of such
grievance through conciliation and mediation between the Bank and the aggrieved
party or by passing an advisory in accordance with the Scheme."
In its press
release issued on 11 May 2015, the Reserve Bank had stated, "The bank’s
internal ombudsman will be a forum available to bank customers for grievance
redressal before they can even approach the Banking Ombudsman."
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