ISSN 2277-5846
The International Journal Of Management
ISSN 2277 – 5846I
THE INTERNATIONAL JOURNAL OF MANAGEMENT
ISSN 2277 - 5846
2277 - 5846
Banking And Bank-Ombudsman; Requirement, Changes
Complaint Analysis And The Way Forward
Dr. Lalat K Pani
Former Reader, Dept. Of Commerce, Bhadrak Autonomous College, Bhadrak, India
Sukhamaya Swain
Circle Business Banking Head, Orissa Circle, Axis Bank, Mallick Commercial Complex
Kharavela Nagar, Bhubaneswar, Odisha, India
Abstract:
Banking in India has come a long way from traditional banking; it has criss-crossed nationalization, seen entry of private &
foreign banks and is now all poised to set new frontiers by addition of new services and aspects harnessing technology and
best global practices. With the advent of competition, the customer has become demanding and his demands have become
challenging. Technology has made the customer dependent on third-party interfaces that are at equal distance from the
bank-employees too. RBI’s efforts of penetrating to the rural and unbanked areas have brought banks to the doorstep of
many who would have otherwise read about banks only in newspapers. The diversity in the population of the bank
customers in terms of education, financial soundness and knowledge of financial products is increasing with each passing
day; RBI is monitoring the inclusion initiatives of each bank. Against this backdrop, we have the monitoring role of RBI
becoming very important. It is with this motive that we have Banking Ombudsman whose role is statutory and with punitive
powers.
In this paper, we discuss about this authority, the genesis, the complaint analysis and the complicacies involved over time.
Key words: banking performance; banking ombudsman; customer relations; consumer or customer; complaints; grievances
1.Genesis Of Banking Ombudsman In India
In the banking sector, so far consumer or customer are concerned, their grievances are many and varied. Reserve Bank of India
(RBI) has been flooded with complaints. They received complaint and forwarded the complaint to concerned bank and banks were
required to submit their comments. Banking sector was constantly under criticism by press, public and estimate committees.
Various committees, commissions and working group were formed to go into the issue since 1972. Banking Commission was
headed by Sri R. G. Saraiya followed by Sri. R. K. Talwar and lastly report of the Goiporia Committee was a step further as to the
sustained anxiety of RBI towards improvement of customer services in banks. The „Narasimhan‟ Committee on “Banking and
Financial Sector Reforms” examined this complaint redressal aspect in full detail and recommended introduction of the “Banking
Ombudsman Scheme 1995” as a part of Financial Sector Policy and Systems Reforms 1991-92 to 1995-96.
In this background RBI accepted the recommendation and as a part of banking policy, Dr. C. Rangarajan; Governor, announced
the “The Banking Ombudsman Scheme” on June 14, 1995. The scheme was issued under the provision of Banking Regulation
Act, 1949, covering all Scheduled Commercial Banks and the Scheduled Primary Co-operative Banks having business in India.
The Scheme became operative from June 1995. Initially Ombudsman was appointed on full time basis in three centers i.e.
Mumbai, New Delhi, and Bhopal but subsequently more centres were added.
The aim and objective mechanism of ombudsman is to deliver quick and inexpensive facility to resolve grievances of customers
arising out of deficient services rendered by the banks. Hence, banking ombudsman is in place to cater to public complaints
against deficiency in banking services concerning operation of deposit accounts and loans and advances. Paradigm Shift of
Banking Ombudsman Scheme 1995 to Banking Ombudsman Scheme of 2006; the attempt over years has been to extend the scope
and jurisdiction of the Banking ombudsman to hitherto uncovered areas.
Over time, RBI has expanded the scope of the banking ombudsman to include customer complaints relating to credit cards,
deficiencies on the part of sales agents of banks to provide promised services, levying service charges without prior notice to the
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customer and non-adherence to the fair practices code as adopted by individual banks. In order to make the scheme more
effective, the RBI has decided to take the onus of recruitment and funding of the scheme. It has also allowed complainants to file
their complaints online and appeal to it against the judgments given by the banking ombudsman.
The Banking Ombudsman Scheme, 1995 was notified by RBI on June 14, 1995 in terms of the powers conferred on the Bank by
Section 35A of the Banking Regulation Act, 1949 (10 of 1949) to provide for a system of redressal of grievances against banks.
The Scheme sought to establish a system of expeditious and inexpensive resolution of customer complaints. The Scheme which is
in operation since 1995 has been revised during the year 2002 and 2006. The Scheme is being executed and administered by
Banking Ombudsmen appointed by RBI at 15 centers covering the entire country.
2.Areas of handling Complaints
The important areas are
 Non-payment or inordinate delay in the payment or collection of cheques, drafts, bills, etc.;
 Non-acceptance, without sufficient cause, of small denomination notes tendered for any purpose, and for charging of
commission for this service;
 Non-acceptance, without sufficient cause, of coins tendered and for charging of commission for this service;
 Non-payment or delay in payment of inward remittances;
 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;
 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;
 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;
 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;
 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.
3.Analysis Of Customer Complaints Received By Banking Ombudsman In India
3.1.Profile Of Customer Complaints Handled By The Obos Over The Years
The analysis has been done in Table 1. One would observe that RBI is very serious with regards to meticulous observation of each
and every complaint. It is mad it mandatory for all scheduled commercial banks to maintain records of each and every complaint
and do the reporting in the annual reports. The point of segregating each complaint on a vintage basis probably indicates the
graveness of some complaints; RBI understands that certain complaints might entail substantial time by the member banks to
solve or come up with a reason or logic. In the recent years, 2009-10 saw the largest number of complaints being filed along with
the largest number of disposals also.
3.2.OBO-Wise Receipt Of Complaints
The 15 OBOs handle the complaints on deficiency of banking services received from the bank customers within their jurisdiction.
The details for the last 4 Financial Years are mentioned in Table 2 (i). Bhubaneswar saw the highest % wise increase in number of
complaints i.e. 62% between 2010-11 to 2011-12. The number of complaints was low for Bhubaneswar, Trivandrum, Guwahati &
Patna had low number of complaints but they saw the highest % wise increase. Chennai, New Delhi and Ahmedabad saw decrease
in the number of complaints substantially. Bhopal, Guwahati and Kanpur are seeing increase in their complaints every year.
3.3.Average No. Of Complaints Received
There has been no specific trend in the last four years. However the increment of 2009-10 vs that of 2008-09 has been the highest.
The figure is arrived at by taking into account the total number of complaints and the number of OBOs across the country. The
numbers of offices have not changed over the past 4 years. May be with the increase in number of complaints, RBI might think of
increasing. Table 3 reflects the exact figures.
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3.4.Population Group-Wise Distribution Of Complaints Received
There has been continuous increase in complaints from Semi-Urban and Urban areas over the years. The only areas from where
there has been depletion recently are in the Metro areas. A point to be noted out here is that the classification of an area may vary
any year. Since the classification is based on population, any increase in population in an area might attract change in
classification. Infact banks do have specific offerings across different categories and thus some complaints might emanate due to
change in charge structure and facilities. RBI issues a notification when such changes happen through its respective ZAOs.
3.5.Mode-Wise Complaints Received
Even with the advent of technology and internet connectivity, the complaints are being handled through the old modes i.e.
physical letters and fax. It seems individuals or corporates typically prefer to send it through the physical mode to keep a written
record and also expecting that the reply would come in the same mode which can be easily recorded for the present or for any
future references. Table 5 (i) clearly shows the trend across each of the modes over the years.
3.6.Complainant Group-Wise Classification
Any individual or corporate who has a grievance against any of his / its bank may pursue the complaint with the Ombudsman.
There is no such trend across any of the segments like individuals, proprietorship firms, limited company, trust, association or
govt. entities. There is however a sharp decline in complaints filed by Proprietorship firms over the past 3 years. It is good to see
that govt. departments and PSU organisations also are conscious about their banking transactions and probably they have been
filing complaints against any service or charges related issue. The data provided by RBI however does not classify the PSUs as
state or Central govt.‟s. Individual complaints are the highest across every year for the past 4 years.
3.7.Bank Group-Wise Classification
One thing clearly comes out as per Table 7 is that there is a regular and substantial increase of complaints over the past 4 years in
nationalised banks; similar is the case of RRBs/UCBs for the past 3 years. For private sector banks, the number is however
declining continuously for the past 4 years and it declined 3 years for Foreign Banks. Despite having large branch networks, the
number of complaints for SBI & its associates and the nationalised banks is much lower in comparison to private sector banks.
A particular reason may be affixed for this trend namely; customers of private sector banks are more educated and conscious
about their rights as customers. Foreign banks however would score very high in number of complaints per branch as the numbers
are very high but the number of branches is very low.
3.8.Complaints Per Branch
As mentioned previously, the number of complaints per branch is highest for foreign banks followed by new generation private
sector banks. This can surely be attributed to low number of branches and large number of complaints. It is the lowest for the old
generation private sector banks. Table 8 has all the details for the past 4 years.
3.9.Nature Of Complaints Handled
There was a sudden surge of complaints in the deposit accounts category in 2011-12. There has been continuous decline in
complaints related to remittances for the past 3 years. Charges levy without information cases seem to be declining as this
category has a declining trend for the past 4 years. Probably banks are going the extra mile to inform the customers; with the
increasing modes of communications like smses, emails, display on websites and letters, the decline is predictably going to
continue further. Card related complaints have been reducing for the past 3 years at a stretch. Table 9 provides all the details.
3.10.Comparative Position Of Disposal Of Complaints By OBOs
The number of cases being carried forward every year has been reducing for the past 3 years. The percentage of cases being
disposed off every year is surprisingly fixed at 94% for the past 3 years. It speaks strongly about the efforts being taken by the
officers in the various OBOs in solving the cases. A substantial number of cases however continue to be carried forward to next
year. Table 10 has all the details.
3.11.Mode Of Disposal Of Maintainable Complaints
The governing principle of the OBOs is promoting settlement by mutual agreement between the customer and his bank. Only in
cases where both the parties do not come to an agreement on mutually acceptable terms, BO proceeds to pass an Award or give a
decision. Table 11 has all the break-ups of the cases settled.
3.12.Reasons For Rejection Of Complaints
The Banking Ombudsman Act 2006 empowers the BO to reject the complaint at any stage of the proceedings if it appears to him
that the complaint made to him satisfies any of the conditions as laid down in the designated clause i.e. Clause 13. As per details
enlisted in Table 12, a substantial number of complaints made are incomplete and probably have been made without a serious
motive of arriving at a result, award or punitive action. Until and unless the OBOs are furnished with sufficient evidence of breach
of contract between the parties (read the ban and its customer), the said complaint can be is rejected.
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4.Limitation of the data provided and the interpretations Done
4.1.Lack Of Clarity On Cases
In today‟s context, the complaints of customers are getting complex. Earlier for a simple savings account, the customer could have
a financial complaint relating to his interest, its calculation or may be any charge levied in his account but now a financial
complaint could also relate to mobile banking charges, debit card charges, bancassurance premium being debited without consent,
phishing attack happening in his account et al. It becomes difficult to segregate beyond a particular limit (categories of complaints
cannot be infinite).
4.2.Correlation Between Various Aspects Of Complaints
Any of the statistics mentioned above cannot be used for making any strong inferences until clubbed with some other factor. For
eg: average complaints per branch are not complete until one segregates the bank‟s branches into rural, semi-urban or urban
categories.
5.Important Changes In The Provisions Of Banking Ombudsman Scheme 2006
Reserve Bank of India in 2007 modified the Banking Ombudsman Scheme allowing bank customers to appeal against an
ombudsman's decision to reject a complaint. It allowed bank customers to appeal against the decision of the Banking Ombudsman
where he had rejected the customer's complaint relating to matters falling within the grounds of complaints specified under the
scheme. The appellate authority under the scheme has been fixed as the designated deputy governor of RBI. Earlier, bank
customers were allowed to appeal against the order or award given by the Banking Ombudsman but they were not allowed if the
application was rejected.
6.Conclusion
The total number of banking transactions is growing because of inclusion, new modes of payments & settlements coming up and
banks increasingly bringing in newer products, offerings & services. This leaves a high scope for increasing complaints. The
resolution and more important the pace of resolution becomes very important because if the complaints rise and lie unsettled, the
customers would just move from banks to banks thus churning business from one bank to another.
More licenses are in the anvil; this will further aggravate the situation of maintaining the pace of complaint resolution. The
number of OBOs has not increased over the years; with the increasing complaints, RBI should give a thought towards increasing
the number of Ombudsmen. One thing is for sure, exciting times are ahead of the office of the OBOs.
2008-09
2009-10
2010-11
2011-12
Complaints brought forward from the previous year
5892
9433
5364
4618
Complaints received at the OBOs during the year
69117
79266
71274
72889
Total No. of complaints handled by the OBOs during the year
75009
88699
76638
77507
Complaints disposed during the year
65576
83335
72020
72885
Complaints pending at the close of the year at the OBOs
9433
5364
4618
4622
Complaints pending for less than 1 month
5041
2787
2888
2681
Complaints pending for one to 2 months
2751
1526
1397
1655
Complaints pending for two to 3 months
956
808
297
277
Complaints pending for more than 3 months
685
242
35
9
Appeals brought forward from the previous year
32
121
34
0
Appeals received by the Appellate Authority during the year
269
308
133
351
Total No. of Appeals handled during the year by the Appellate Authority
301
429
167
351
Appeals disposed of by the Appellate Authority
180
395
167
338
Appeals pending at the close of the year
121
34
0
13
Table 1: Profile Of Customer Complaints Handled By The Obos Over The Years
Source: Annual Reports On Banking Ombudsman Scheme 2010-11 & 2011-12, RBI
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OBO
No. of complaints received during
2008-09
2009-10
2010-11
2011-12
% change in
2011-12 over
2010-11
% to total
complaints
(2011-12)
Ahmedabad
3732
4149
5190
4590
-11
6
Bangalore
3255
3854
3470
3486
1
5
Bhopal
3375
3873
5210
5953
14
8
Bhubaneswar
1159
1219
1124
1826
62
3
Chandigarh
2634
3234
3559
3521
-1
5
Chennai
10381
12727
7668
6614
-13
9
Guwahati
455
528
584
708
21
1
Hyderabad
3961
5622
5012
5167
3
7
Jaipur
3688
4560
3512
4209
20
6
Kanpur
7776
7832
8319
9633
16
13
Kolkata
3671
5326
5192
4838
-7
7
Mumbai
9631
10058
7566
7905
4
11
New Delhi
10473
12045
10508
9180
-13
13
Patna
2110
1707
2283
2718
19
4
Trivandrum
2816
2532
2077
2541
22
3
TOTAL
69117
79266
71274
72889
2
100
Table 2: OBO-Wise Receipt Of Complaints
Source: Annual Reports On Banking Ombudsman Scheme 2010-11 & 2011-12, RBI
Figure 1: OBO-Wise Receipt Of Complaints
Source: Annual Reports On Banking Ombudsman Scheme 2010-11 & 2011-12, RBI
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No. of complaints received
80000
70000
60000
No. of complaints
received
No. of complaints received
Figure 2: Average No. Of Complaints Received
Source: Annual Reports On Banking Ombudsman Scheme 2010-11 & 2011-12, RBI
2008-09
2009-10
2010-11
2011-12
No. of OBOs
15
15
15
15
No. of complaints received
69117
79266
71274
72889
Avg.no. of complaints per OBO
4608
5284
4752
4859
Table 3: Average No. Of Complaints Received
Source: Annual Reports On Banking Ombudsman Scheme 2010-11 & 2011-12, RBI
Population
Group
No. of complaints received
%
Increase
Rural
2008-09
13915
2009-10
25055
2010-11
7816
2011-12
8190
Semi-Urban
9817
10741
10816
11982
11
Urban
15723
16423
21218
24565
16
Metro
29662
27047
31424
28152
-10
TOTAL
69117
79266
71274
72889
5
Table 4: Population Group-Wise Complaints Received
Source: Annual Reports On Banking Ombudsman Scheme 2010-11 & 2011-12, RBI
35000
30000
25000
20000
Rural
15000
Semi-Urban
10000
Urban
5000
Metro
0
2008-09
2009-10
2010-11
2011-12
No. of complaints received
Figure 3: Schematic Representation Of The Above Data
Source: Annual Reports On Banking Ombudsman Scheme 2010-11 & 2011-12, RBI
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Mode
No. of complaints received
e-mail
2008-09
15927
2009-10
9221
2010-11
9736
2011-12
9499
Online
9352
11400
9265
10026
Post/Fax
43838
58645
52273
53364
TOTAL
69117
79266
71274
72889
Table 5: Mode-Wise Bifurcation Of Complaints.
Source: Annual Reports On Banking Ombudsman Scheme 2010-11 & 2011-12, RBI
70000
60000
50000
40000
e-mail
30000
Online
20000
Post/Fax
10000
0
2008-09
2009-10
2010-11
2011-12
No. of complaints received
Figure 4: Graphical Representation Of Mode-Wise Bifurcation Of Complaints.
Source: Annual Reports On Banking Ombudsman Scheme 2010-11 & 2011-12, RBI
Complainant Group
No. of complaints received
2008-09
2009-10
2010-11
2011-12
Individual
62327
71341
63064
66279
Individual-Business
1446
2742
2739
2635
Proprietorship / Partnership
329
367
306
253
Limited Company
930
1099
901
690
Trust
87
191
224
150
Association
222
519
667
461
Govt. Departments
262
477
523
521
PSU
429
115
120
80
Others
3085
2415
2730
1820
TOTAL
69117
79266
71274
72889
Table 6: Group-Wise Bifurcation Of Complaints
Source: Annual Reports On Banking Ombudsman Scheme 2010-11 & 2011-12, RBI
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Bank Group
No. of complaints received
2008-09
2009-10
2010-11
2011-12
Nationalised Banks
14974
19092
20417
22326
SBI & Associates
18167
22832
22307
25854
Private Sector Banks
21982
22553
17122
15084
Foreign Banks
11700
11450
7081
5068
RRBs/Scheduled Primary
Urban Coop. Banks
Others
1148
968
1130
1439
1146
2371
3217
3118
TOTAL
69117
79266
71274
72889
Table 7: Bank-Wise Bifurcation Of Complaints
Source: Annual Reports On Banking Ombudsman Scheme 2010-11 & 2011-12, RBI
Bank Group
Complaints per branch
2009-10
2010-11
2011-12
Nationalised Banks
0.46
0.45
0.44
SBI & Associates
1.33
1.25
1.33
Old Private Sector Banks
0.28
0.25
0.28
New Private Sector Banks
4.17
2.35
1.72
Foreign banks
37.79
22.34
18.43
Table 8: Bankwise Complaints Per Branch
Source: Annual Reports On Banking Ombudsman Scheme 2010-11 & 2011-12, RBI
Ground of Complaint
concerning
No. of Complaints
2008-09
2009-10
2010-11
2011-12
Deposit Accounts
6706
3681
1727
8713
Remittances
5335
5708
4216
3928
Card Related (ATM / Debit /
Credit)
Loans & Advances
17648
18810
17116
14492
8174
6612
4564
6016
Levy of charges without prior
notice
Pension Payments
4794
4764
4149
3806
2916
4831
5927
5944
Failure to meet commitments /
BCSBI Codes / Non observance of
fair practices of code
11824
11569
16302
18365
DSAs and recovery
3018
1609
1722
459
Notes & Coins
113
158
146
165
Others
8589
18840
7201
7327
Out of subject
0
2684
8204
3674
TOTAL
69117
79266
71274
72889
Table 9: Types Of Complaints
Source: Annual Reports On Banking Ombudsman Scheme 2010-11 & 2011-12, RBI
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No. of complaints
2008-09
2009-10
2010-11
2011-12
Received during the year
69117
79266
71274
72889
Brought forward from previous year
5892
9433
5364
4618
Handled during the year
75009
88699
76638
77507
Disposed of during the year
65576
83335
72020
72885
Rate of disposal (%)
87%
94%
94%
94%
Carried forward to next year
9433
5364
4618
4622
Table 10: Break-Up Of The Disposal Of Cases Over The Years
Source: Annual Reports On Banking Ombudsman Scheme 2010-11 & 2011-12, RBI
Disposable of Maintainable Complaints
2008-09
2009-10
2010-11
2011-12
By mutual settlement
22315
31278
21269
20092
Disposal of Award
73
211
278
327
Maintainable Complaints rejected
6000
15066
13952
17036
Total Maintainable complaints disposed
28388
46555
35499
37455
Table 11: Segregation Of Disposition Of Maintainable Complains
Source: Annual Reports On Banking Ombudsman Scheme 2010-11 & 2011-12, RBI
Reasons
2009-10
2010-11
2011-12
Not on the grounds of complaint referred to the
concerned clauses of the Act
10920
9525
12216
Requiring consideration of elaborate documentary
and oral evidence and the proceedings before
Ombudsman are not appropriate for adjudication of
such complaint
2499
2867
4323
Beyond the pecuniary jurisdiction of the OBO
243
335
317
Without sufficient cause
278
751
76
Not pursued by the complainant with reasonable
diligence
622
219
62
In the opinion of the OBO, there is no loss or
damage to the complainant
504
255
42
TOTAL
15066
13952
17036
Table 12: Reasons Of Rejection
Source: Annual Reports On Banking Ombudsman Scheme 2010-11 & 2011-12, RBI
7. References
1. Annual Report on Banking Ombudsman Scheme, 2011-12, source Reserve Bank of India.
2. Annual Report on Banking Ombudsman Scheme, 2010-11, source Reserve Bank of India.
3. “Action through Banking Ombudsman” from International Consumer Rights Protection Council.
4. Banking Ombudsman Scheme, 2006, source Reserve Bank of India.
5. Banking Ombudsman-A pragmatic step in the banking sector by Anoop Kumar.
6. Success of banking ombudsmen scheme: Myth or reality by Malyadri, Pacha and Sirisha, S; International Journal of
Research Studies in Management 2012 April, Volume 1 Number 1, 17-24
7. Customer complaints in banks: Nature, extent and strategies to mitigation by R K Uppal.
8. A Comprehensive Guide to approaching Banking Ombudsman in India by
9. Banking Ombudsman: Redressal for customer complaints against banks; a Financial Literacy Agenda for Mass
Empowerment (FLAME) initiative of IIFL.
10. “Customer complaints rise in 2011-12, led by public sector banks” – Live Mint on Thu, Nov 08 2012.
11. “Wanna appeal against Ombudsman‟s decision?” – Economic Times dated 24 May 2007.
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