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EXECUTIVE SUMMARY The aim of this project is to introduce the reader to the topic of THE BANKING OMBUDSMAN.

The project also deals with the policy adopted by the RBI and the some cases.The ability of the banking industry to achieve the socioeconomic objectives and in the process bringing more and more customers into its fold will ultimately depend on the satisfaction of the customers. Banks have a strong belief that a satisfied customer is the foremost factor in developing our business. This project is focused in understanding the essentiality of the Banking Ombudsman in regards to the public interest and the interest of the banking policies to enable resolution of complaints related to deficiency in banking services. Sensing the need for easy, expeditious and inexpensive mechanism for redressal of unresolved grievances of customers, the RBI initially formulated the Scheme of Ombudsman, 1995, which became operational in June 1995, providing an institutional and legal framework to bank customers to resolve all their complaint The scheme is applicable to all scheduled commercial banks having business in India and scheduled primary co-operative banks except Regional Rural Banks. Banking Ombudsman at important centres was set up to cover the entire country. The Banking Ombudsman offers customers the opportunity to resolve disputes with their banks without needing to resort to the Courts.

PREFACE OBJECTIVES

To present Banking Ombudsman Scheme & how it does works. To present the services of the Banking Ombudsman offered to the customer. To show how the Banking Ombudsman deals with customer complaints. To explain the duties, functions & powers of the Ombudsman. METHODLOGY The methodology includes the information of the features of the Ombudsman in the form of primary data that had been received from the Branch Managers of the banks. It also includes the informations from the related books & the related websites.

CHAPTER- 01 INTRODUCTION TO BANKING

INTRODUCTION The basic services a bank provides are checking accounts, which can be used like money to make payments and purchase goods and services; savings accounts and time deposits that can be used to save money for future use; loans that consumers and businesses can use to purchase goods and services; and basic cash management services such as check cashing and foreign currency exchange. Four types of banks specialize in offering these basic banking services: commercial banks, savings and loan associations, savings banks, and credit unions. A broader definition of a bank is any financial institution that receives, collects, transfers, pays, exchanges, lends, invests, or safeguards money for its customers. This broader definition includes many other financial institutions that are not usually thought of as banks but which nevertheless provide one or more of these broadly defined banking services. These institutions include finance companies, investment companies, investment banks, insurance companies, pension funds, security brokers and dealers, mortgage companies, and real estate investment trusts. Banking services are extremely important in a free market economy such as that found in Canada and the United States. Banking services serve two primary purposes. First, by supplying customers with the basic mediums-ofexchange (cash, checking accounts, and credit cards), banks play a key role in the way goods and services are purchased. Without these familiar methods of payment, goods could only be exchanged by barter (trading one good for
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another), which is extremely time-consuming and inefficient. Second, by accepting money deposits from savers and then lending the money to borrowers, banks encourage the flow of money to productive use and investments. This in turn allows the economy to grow. Without this flow, savings would sit idle in someones safe or pocket, money would not be available to borrow, people would not be able to purchase cars or houses, and businesses would not be able to build the new factories the economy needs to produce more goods and grow. Enabling the flow of money from savers to investors is called financial intermediation, and it is extremely important to a free market economy. Banking institutions include commercial banks, savings and loan associations (SLAs), savings banks, and credit unions. The major differences between these types of banks involve how they are owned and how they manage their assets and liabilities. Assets of banks are typically cash, loans, securities (bonds, but not stocks), and property in which the bank has invested. Liabilities are primarily the deposits received from the banks customers. They are known as liabilities because they are still owned by, and can be withdrawn by, the depositors of the financial institution.

TYPES OF BANKS There are various types of banks which operate in our country to meet the financial requirements of different categories of people engaged in agriculture, business, profession, etc. On the basis of functions, the banking institutions in India may be divided into the following types:

TYPES OF BANK

CENTRAL BANKS

DEVELOPMENT BANKS

SPECIALIZED BANKS

COMMERCIAL BANK

CO-OPERATIVE BANKS

Primary Public Sector Bank Private sector bank Foreign bank Societies Central Banks State Banks

Credit Co-operative Co-operative

1. Central Banks A bank which is entrusted with the functions of guiding and regulating the banking system of a country is known as its Central bank. Such a bank does not deal with the general public. It acts essentially as Governments banker; maintain deposit accounts of all other banks and advances money to other banks, when needed.
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The Central Bank provides guidance to other banks whenever they face any problem. It is therefore known as the bankers bank. It advises the Government on monetary and credit policies and decides on the interest rates for bank deposits and bank loans. Another important function of the Central Bank is the issuance of currency notes, regulating their circulation in the country by different methods. No other bank than the Central Bank can issue currency. 2. Commercial Banks Commercial Banks are banking institutions that accept deposits and grant shortterm loans and advances to their customers. In addition to giving short-term loans, commercial banks also give medium-term and long-term loan to business enterprises. Commercial banks are of three types: Public Sector Banks

These are banks where majority stake is held by the Government of India or Reserve Bank of India. Examples of public sector banks are: State Bank of India, Corporation Bank, Bank of Baroda and Dena Bank, etc Private Sectors Banks

In case of private sector banks majority of share capital of the bank is held by private individuals. These banks are registered as companies with limited liability. For example: The Jammu and Kashmir Bank Ltd., Bank of Rajasthan Ltd., Development Credit Bank Ltd, Lord Krishna Bank Ltd., Bharat Overseas Bank Ltd., Global Trust Bank, Vysya Bank, etc.

Foreign Banks

These banks are registered and have their headquarters in a foreign country but operate their branches in our country. Some of the foreign banks operating in our country are Hong Kong and Shanghai Banking Corporation (HSBC), Citibank, American Express Bank, Standard & Chartered Bank, Grindlays Bank, etc. The number of foreign banks operating in our country has increased since the financial sector reforms of 1991. 3. Development Banks Business often requires medium and long-term capital for purchase of machinery and equipment, for using latest technology, or for expansion and modernization. Such financial assistance is provided by Development Banks. They also undertake other development measures like Public Sector Banks comprise 19 nationalized banks and State Bank of India and its 7 associate banks. Industrial Finance Corporation of India (IFCI) and State Financial Corporations (SFCs) are examples of development banks in India. 4. Co-Operative Banks People who come together to jointly serve their common interest often form a cooperative society under the Co-operative Societies Act. When a co-operative society engages itself in banking business it is called a Co-operative Bank. The society has to obtain a license from the Reserve Bank of India before starting banking business. Any co-operative bank as a society is to function under the overall supervision of the Registrar, Co-operative Societies of the State. As regards banking business, the society must follow the guidelines set and issued by the Reserve Bank of India. There are three types of co-operative banks operating in our country:

Primary Credit Societies


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These are formed at the village or town level with borrower and non-borrower members residing in one locality. The operations of each society are restricted to a small area so that the members know each other and are able to watch over the activities of all members to prevent frauds. Central Co-operative Banks

These banks operate at the district level having some of the primary credit societies belonging to the same district as their members. These banks provide loans to their members (i.e., primary credit societies) and function as a link between the primary credit societies and state co-operative banks. State Co-operative Banks

These are the apex (highest level) co-operative banks in all the states of the country. They mobilize funds and help in its proper channelization among various sectors. The money reaches the individual borrowers from the state co-operative banks through the central co-operative banks and the primary credit societies. 5. Specialized Banks There are some banks, which cater to the requirements and provide overall support for setting up business in specific areas of activity. EXIM Bank, SIDBI and NABARD are examples of such banks. They engage themselves in some specific area or activity and thus, are called specialized banks. Export Import Bank of India (EXIM Bank)

If you want to set up a business for exporting products abroad or importing products from foreign countries for sale in our country, EXIM bank can provide you the required support and assistance. The bank grants loans to exporters and importers and also provides information about the international market.
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Small Industries Development Bank of India (SIDBI)

If you want to establish a small-scale business unit or industry, loan on easy terms can be available through SIDBI. It also finances modernization of smallscale industrial units, use of new technology and market activities. The aim and focus of SIDBI is to promote, finance and develop small-scale industries. National Bank for Agricultural and Rural Development (NABARD) It is a central institution for financing agricultural and rural sectors. If a person is engaged in agriculture or other activities like handloom weaving, fishing, etc. NABARD can provide credit, both short-term and long-term, through regional rural banks. It provides financial assistance, especially, to co-operative credit, in the field of agriculture, small scale industries, cottages and village industries in rural areas.

RIGHTS OF CONSUMERS

Right to Safety The right to be protected against the marketing of goods and services which are hazardous to life and property Consumer right to safety applies to all possible consumption patterns and to all goods and services. In the context of the new market economy and rapid technological advances affecting the market, the right to safety has become a pre-requisite quality in all products and services. For e.g. some Indian products carry the ISI mark, which is a NB symbol of satisfactory quality of a product? Similarly, the FPO and AGMARK symbolize standard quality of food products.
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Right to Information Right to information means the right to be given the facts needed to make an informed choice or decision about factors like quality, quantity, potency, purity standards and price of product or service. The right to information now goes beyond avoiding deception and protection against misleading advertising, improper labeling and other practices. For e.g. when you buy a product or utilize a service, you should be informed about; a) How to consume a product. b) The adverse health effects of its consumption. c) Whether the ingredients used are environment- friendly or not etc. Right to Redress The right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulous exploitation of consumers. It is to protect consumer interests that consumers have been given the right to obtain redress. In India, we have a redress machinery called Consumer Courts constituted under the Consumer Protection Act (1986), functioning at national state and district levels. But it has not been made complete use of under due to lack of awareness of basic consumer rights among consumers themselves. While in the developed world, right to redress is perhaps the most commonly exercised consumer right, in developing countries, consumers are still wary of getting involved in legal redress system. There are consumer courts in India where any consumer can lodge a case if s/he thinks he or she has been cheated. Right to Consumer Education Consumer education empowers consumers to exercise their consumer rights. It means the right to acquire the knowledge and skill to be informed consumer
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throughout life. The right to consumer education incorporates the right to the knowledge and skills needed for linking action and influences factors which affect consumer decisions. It is the single most powerful tool that can take consumers from their present disadvantageous position to one of strength in the marketplace. Consumer education is dynamic, participatory and is mostly acquired by hands-on and practical experience. Right to Basic Needs This right is the right to basic goods and services which guarantee dignified living. It includes adequate food, clothing, health care, drinking water and sanitation, shelter, education, energy and transportation. Access to food, water and shelter are the basis of any consumer's life. Without these fundamental amenities, life cannot exist. The right to basic needs means that availability of articles which are the basic need of every consumer must be ensured. Right to be heard This means the right to be represented so that consumers interests receive full and sympathetic consideration in the formulation and execution of economic policy. This right is being broadened to include the right to be heard and represented in the development of products and services before they are produced or set up; it also implies a representation, not only in government policies, but also in those of other economic powers.

POLICY FOR THE GRIEVANCES REDRESSAL OF THE CUSTOMER COMPLAINTS In the present scenario of competitive banking, excellence in customer service is the most important tool for sustained business growth. Customer
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complaints are part of the business life of any corporate entity. This is more so for banks because banks are service organizations. As a service organization, customer service and customer satisfaction should be the prime concern of any bank. The bank believes that providing prompt and efficient service is essential not only to attract new customers, but also to retain existing ones. This policy document aims at minimizing instances of customer complaints and grievances through proper service delivery and review mechanism and to ensure prompt redressal of customer complaints and grievances. The review mechanism should help in identifying shortcomings in product features and service delivery. Customer dissatisfaction would spoil banks name and image. The Banks policy on grievance redressal follows the under noted principles: Customers be treated fairly at all times Complaints raised by customers are dealt with courtesy and on time Customers are fully informed of avenues to escalate their

Complaints/grievances within the organization and their rights to alternative remedy, if they are not fully satisfied with the response of the bank to their complaints Bank will treat all complaints efficiently and fairly as they can damage the banks reputation and business if handled otherwise The Bank employees must work in good faith and without prejudice to the interests of the customer. In order to make banks redressal mechanism more meaningful and effective, a structured system needs to be built up towards such end. Such system would ensure that the redressal sought is just and fair and is within the given framework of rules and regulation. The policy document would be made available at all
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branches. All employees of the Bank should be made aware about the Complaint handling process

The customer complaint arises due to: The attitudinal aspects in dealing with customers.

Insurance Ombudsman
Inadequacy of the functions/arrangements made available to the customers or gaps in standards of services expected and actual services rendered.

the Electricity Act, 2003, issues guidelines for establishment of forum and Ombudsman for

redressal of complaint grievancesifof The customer is having full right to register his he is not
satisfied with the services provided by the bank. He can give his Electricity consumers. The Delhi complaint in writing, orally or over telephone. If Commission customers complaint Regulatory (DERC) is not resolved within given time or if he is not satisfied with the vide its Notification dated solution provided by the bank, Ombudsman with his complaint or other legal avenues available for grievance redressal.

11thMarch, 2006 has issued DERC (Guidelines for establishment of Forum of

he

can

approach

Banking

redressal of grievance of the consumer and Ombudsman) Regulations, 2003. It may be


CHAPTER 2

noted that the Ombudsman is the APPELLATE Authority under

INTRODUCTIONS TO BANKING OMBUDSMAN the Electricity Act 2003, and the

DERC Regulations, 2003 and


Banking Ombudsman is a quasi judicial authority functioning under Indias Banking Ombudsman Scheme 2006, and the authority was created pursuant to the a decision by the Government of India to enable resolution of complaints of customers of banks relating to certain services rendered by the banks. The

therefore an electricity consumer has to first approach the Consumer Grievance Redressal Forum established under the DERC Regulations, 2003.

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Telecom Ombudsman

The Telecom Regulatory Authority of India Act, 1997, empowers the Telecom Regulatory Authority of India
Banking Ombudsman Scheme was first introduced in India in 1995, and was revised in 2002 and 20061. In the wake of the failure in the efficient services of the banks, the RBI brought a scheme for the prompt, efficient and courteous services and also to protect the rights of the customers.

Act 1997, empowers the

Telecom Regulatory Authority of India (TRAI) to make the recommendations on laying

down the standards ofto quality of An ombudsman is a person who has been appointed look into services to be by the to complaints about an organization. Using an ombudsman is provided a way of trying
resolve a complaint without going to court. Banking a quasi services Ombudsman providers and is conduct judicial authority functioning under Indias Banking Ombudsman Scheme, and the interest of the periodical the authority was created pursuant to the a decision by of the Government of India surveys Telecom services so to enable resolution of complaints of customers of banks relating to certain services rendered by the banks.

as to protect the interest of the consumers. The telecom

operators frequently threaten to The Banking Ombudsman is an official authority to investigate the
complaint from the customers and address the disconnects complaint and therebyand bring the the phones with solution among the aggrieved parties. So the Banking Ombudsman plays the role draw the numbers given to of a mediator and serves the purpose of reconciliation. The Banking Ombudsman subscribers if the deadline for has been defined under clause 4 of the Banking Ombudsman Scheme, 20062.

payment is missed by a day or there is miscalculation of the tiniest amount. The TRAI is,

Clause 4 lays down that::

however, neither empowered to look into the grievances of


APPOINTMENT & TENURE

individual customers nor take action against the operators who

(1) The Reserve Bank may appoint one or more of its officers in the rank of Chief

do not meet quality of standardsto General Manager or General Manager to be known as Banking Ombudsmen As there is no specialized body to carry out the functions entrusted to them by or under the Scheme. redress the grievance of telecom
(2) The appointment of Banking Ombudsman under the above Clause may be made for a period not exceeding three years at a time

customers, they have to approach consumer forum setup under THE Consumer Protection Act, 1986, or civil courts for Resolutions adjudication of disputes.

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Income Tax Ombudsman

The government is considering creating an office of Income Tax Ombudsman to protect individual
CHARACTERISTICS OF THE BANKING OMBUDSMAN . right. The taxpayers 1. The Banking Ombudsman is a quasi judicial authority. It has power to summon

Ombudsman will identify issues burden or create problems for taxpayers and bring those issues

increase the compliance both the parties - bank and its customer, to that facilitate resolution of complaint
through mediation.

2. All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary

to the attention of the ministry of Finance. The Ombudsman will make appropriate legislative

Co-operative Banks are covered under the Scheme.

3.The Banking Ombudsman has power to consider proposal where complaints necessary from and NonResident Indians having accounts in India in relation to their reports remittances send periodical to the from abroad, deposits and other bank-related matters. Department of Revenue, 4. The Banking Ombudsman does not charge any fee for resolving customers complaints.

suggesting appropriate action. It is proposed to initially setup offices of Ombudsman at Delhi,

5. No complaint can be made before a Banking Ombudsman on the same subject Mumbai, Kolkata and Chennai. matter for which any proceedings before any court, tribunal or arbitrator or any Insurance Ombudsman other forum is pending or a decree or award or a final order, has already been passed by any such competent court, tribunal, arbitrator or forum.

The Government of India, Minister of Finance, Department of Economics Affairs, Insurance

TYPES OF OMBUDSMAN

Division under section 114 (1) of Insurance Act, 1938, has framed the Redressal of Public Grievance Rules, 1998, for appointment of Insurance Ombudsman, which comes into force with effect from 11thNovember 1998. The Insurance Ombudsman has started functioning from 1999, to
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effective and impartial settlement of claims and grievance of any person against a Life r General Insurance in Public and private expression any other person is wider than consumer and therefore, even third party having S.E.B.I. Ombudsman grievance with respect to an Insurance contract can approach the Ombudsman. Telecom Ombudsman

TYPES OF sector. The meaning of OMBUDSMAN

Banking Ombudsman

Electricity Ombudsman

Income Tax Ombudsman

The Banking Ombudsman


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public authorities banks example The Reserve Bank of India (RBI) first introduced the ombudsman Banking Ombudsman ombudsman banking Scheme In1995, which has been revised in 2002 and 2005. The latest revised essay Scheme has come into force from 1stJan 2006. states redressal S.E.B.I. Ombudsman rates introduction The Securities Exchange Board of India (SEBI)(more under tags) section 30 read with subsection (1) of section 11 of the SEBI Act,frediz79 1992, has framed the SEBI
(Ombudsman) Regulations, 2003, which were notified Shareon & 21stAugust Embed 2003. The Regulations provided for the establishment of the office of Ombudsman to redress the Grievance of investors in securities and connected matters. The Banking Ombudsman

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DUTIES & FUNCTIONS OF OMBUDSMAN

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The Ombudsman shall enquire into and investigate in accordance with the provisions of the Act, and take action or steps as may be prescribed Act and concerning Practices and actions by persons, enterprises and other private rights and freedoms have taken place.

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Institutions where complaints allege that violations of fundamental

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All instance or matters of alleges or suspected corruption and the misappropriation of public moneys or other public property by Officials.

Add a Comment
Top of Form

Bottom of Form Without derogating from the provisions, any request or complaint in

respect of instances or matters referred to in that provisions, may include any instance or matter in respect of which the Ombudsman has reason to suspect That the provisions of any law or under the authority of the State or by any person in its employment, or that any practice is so followed, in a manner which is not in the public interest That the powers, duties or functions which vest in the State or, body or institution, or any person in its employment are exercised or perform in irregular manner That moneys forming part of the funds of the State or body or institution, or received or held by or on behalf of the State or body or institution being or have been dealt with an irregular manner

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Any person wishing to lay any instance or matter referred to in provisions before the Ombudsman shall do so in such manner as the Ombudsman may determine or allow The Ombudsman shall not be required to investigate any instance or matter referred to in the provisions which has been laid before him or her is under the provisions when the grounds on account of which the inquiry is desired in the opinion

The provisions shall not apply in respect of any decision taken in or in connect with any civil or criminal case by a court of law. GROUNDS OF CUSTOMERS COMPLAINTS CONSIDERED BY BANKING OMBUDSMAN The Banking Ombudsman can receive and consider any complaint relating to the following deficiency in banking services (including internet banking): 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 in respect there of; non-acceptance, without sufficient cause, of coins tendered and for charging of commission in respect there of; non-payment or delay payment of inward remittances failure to issue or delay in issue of drafts, pay orders or bankers cheques
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non-adherence to prescribed working hours 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; complaints from Non-Resident Indians having accounts in India in relation to their remittances from abroad, deposits and other bank-related matters; 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; 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-observance of Reserve Bank guidelines on engagement of recovery agents by banks; and

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non-observance of Reserve Bank 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;

GROUNDS OF CUSTOMERS COMPLAINTS NOT CONSIDERED BY BANKING OMBUDSMAN Ones complaint will not be considered if One has not approached his bank for redressal of his grievance first. One has not made the complaint within one year from the date one has received the reply of the bank or if no reply is received if it is more than one year and one month from the date of representation to the bank subject matter of the complaint is pending for disposal / has already been dealt with at any other forum like court of law, consumer court etc. The Frivolous or vexation. The institution complained against is not covered under the scheme. The subject matter of the complaint is not within the ambit of the Banking Ombudsman If the complaint is for the same subject matter that was settled through the Office of the Banking Ombudsman in any previous proceedings.

PROCEDURE FOR FILING COMPLAINT Any person who has a grievance against a bank on any one or more of the
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grounds mentioned above, may, himself or through his authorized representative (other than), make a complaint to the Banking Ombudsman within whose jurisdiction the branch or an advocate Office of the bank complained against is located. Complaints arising out of the operations of credit cards, shall be filed before the Banking Ombudsman within whose territorial jurisdiction the billing address of the card holder is located and not the place where the bank concerned or the credit card processing unit is located. The complaint shall be made in writing duly signed by the complainant or his authorized representative and shall as far as possible be in the form and shall contain such particulars as specified in the Scheme The complainant shall file along with the complaint, copies of the documents, if any, which he proposes to rely upon and also a declaration that the complaint is maintainable as per clause 9(3) of the Scheme A complaint can also be made through electronic means. The complainant shall before making a complaint to the Banking Ombudsman, make a written representation to the bank The complaint can be filed if the bank has rejected the complaint or the complainant had not received any reply within a period of one month after the bank received his representation or if the complainant is not satisfied with the reply given to him by the bank The complaint to the Banking Ombudsman is to be made not later than one year after the complainant has received the reply of the bank to his

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representation or, where no reply is received, not later than one year and one month after the date of the representation to the bank.

The complaint should not be in respect of the same subject matter which was settled or dealt with on merits by the Banking Ombudsman in any previous proceedings whether or not received from the same complainant or along with one or more complainants or one or more of the parties concerned with the subject matter.

The complaint should not pertain to the same subject matter, for which any proceedings before any court, tribunal or arbitrator or any other forum is pending or a decree or award or order has been passed by any such court, tribunal, arbitrator or forum. . The complaint should not be frivolous or vexatious in nature. The complaint should be made before the expiry of the period of limitation prescribed under the Indian Limitation Act, 1963 for such claims

Ad dr e s s a nd Ar e a of Ope r a tion of B a nk ing Om buds m a n Sl. No. 1. Ahmedabad Banking Ombudsman Shri. K . Chandrachoodan Gujarat, C/o La Ashram Ahmedabad-380 Reserve Gajjar Bank of Chambers, Nagar Road, and Diu 009
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Centre

Contact details of the Office of Area of Operation

Union Haveli, Daman

India Territories of Dadra and

Tel.No.079-

26582357, 5807

079-26586718/2657 Fax No.079-26583325

2.

Bangalore

Click here to send email Shri. K.R.Ananda Karnataka C/o Reserve Bank of India Road 001 08010/3/8, Nrupathunga

Bangalore-560 Tel.No.080-22210771, 22275629 Fax No.080-22244047

3.

Bhopal

Click here to send email Shri T. Karunakaran Madhya C/o Post Bhopal-462 Tel.No.0755-2573772, 2573776 Fax No.0755-2573779 Click here to send email Shri K C Mahapatra Orissa C/o Pt. Reserve Jawaharlal Bank of India Marg 001 0674Nehru Reserve Bank of Hoshangabad Box Road, No.32, 011 0755-

Pradesh

and

India Chattisgarh

4.

Bhubaneswar

Bhubaneswar-751 Tel.No.0674-2396207, 2396008 Fax No.0674-2393906

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5.

Chandigarh

Click here to send email Shri Lalit Srivastava C/o Reserve Bank of India Vista Chandigarh Fax 160 Tel.No.0172-2721011/2721109 No.0172-2721880

Himachal

Pradesh, and Ambala

Punjab, Union Territory Chandigarh and Panchkula, 017 Nagar Yamuna

4th Floor, Sector 17, Central of

Districts of Haryana

6.

Chennai

Click here to send email Shri S. Ganesh Tamil Fort Chennai 25395963 / 2539 9159 Fax No.044-25395488 Click here to send email Shri B.B.Sangma Assam, C/o Pan Guwahati-781 Tel.No.0361-2542556, 2540445 Fax No.0361-2540445 Click here to send email Shri M. Sebastian C/o Reserve Bank of India Reserve Bank of India Pradesh, Station 600

Nadu,

Union of (except and

C/o Reserve Bank of India, Territories Glacis, Pudducherry 001 Mahe Islands Region)

Tel No. (044) 2539 9170 / Andaman and Nicobar

7.

Guwahati

Arunachal Manipur, Mizoram,

Road, Meghalaya, 001 0361-

Bazar Nagaland and Tripura

8.

Hyderabad

Andhra Pradesh

27

6-1-56, Saifabad,

Secretariat

Road 004 040-

Hyderabad-500 Tel.No.040-23210013, 23243970 Fax No.040-23210014

9.

Jaipur

Click here to send email Shri N.P.Topno Rajasthan C/o Reserve Bank of India, 4th floor Rambagh Circle, Tonk Road Jaipur-302 052 Tel.No.(0141) 2570357/2570392 Fax No.0141-2562220 Click here to send email Smt. Madhavi Sharma Uttar Pradesh (excluding C/o Reserve Bank of India District of Ghaziabad Budh M.G. Road, Post Box No.82 and Kanpur-208 Fax No.0512-2305938 Click here to send email Shri M S C/o 15, Reserve Nethaji Bank of Subhas Tel.No.0512-2306278/2303004 Gautam

10.

Kanpur

001 Nagar) and Uttaranchal

11.

Kolkata

Soy West Bengal and Sikkim India Road 001

Kolkata-700 Tel.No.(O)033-2230-4982 Fax No.033-22305899

28

12.

Mumbai

Click here to send email Shri O.P. Aggarwal Maharashtra and Goa C/o Reserve Bank of India Garment 3rd Dr. Worli, Annie Besant Mumbai-400 House, Floor, Road, 018

Tel.No.02224924607/24960893/2493 3358 Fax No.022-24960912 Click here to send email Shri M Rajeshwara Banking

13.

New Delhi

Rao Delhi,

Jammu (except of Nagar and of

& the and the

Ombudsman Kashmir, Ambala,

Reserve Bank of India Building Haryana 2nd Floor, 6, Sansad marg districts New Delhi 110001 Yamuna districts TelNo.(011) 23710882 Fax No. 011-23725218 Click here to send email Shri A F South Patna-800 Fax No.0612-2320407 Click here to send email Shri F R Joseph Kerala, Gandhi

23730633/ Panchkula),

23736270/23736271/23725445/

Ghaziabad

and Gautam Budh Nagar of Uttar Pradesh

14.

Patna

Naqvi Bihar and Jharkhand Maidan, 001

C/o Reserve Bank of India,

Tel.No.0612-2322569/2323734

15.

Thiruvananthapur

and

Union
29

am

C/o

Reserve

Bank

of

India Territory

of

Bakery Tel.No.0471-2326852 2332723/2323959 Fax

Junction Lakshadweep and Union 033 Territory of Puducherry / ( only Mahe Region)

Thiruvananthapuram-695

No.0471-2321625

Click here to send email

CHAPTER 03 BANKING OMBUDSMAN SCHEME INTRODUCTION 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 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 is in operation since 1995 and has been revised during the years 2002 and 2006. The Scheme is being executed by Banking Ombudsmen appointed by Reserve Bank at 15 centers covering the entire country. As mandated by the Banking Ombudsman Scheme, the Banking Ombudsmen submit an Annual Report on the functioning of their offices every year. Based on such reports, an Annual Report for the Banking Ombudsman Scheme in a whole is prepared at Reserve Bank of India, Central Office. As is being the practice, the Annual Report covers the last five-year period with focus on the current year. Further, as a result of computerization of
30

the functioning of Banking Ombudsman Offices through the Complaint Tracking Software, detailed analysis was possible on the information pertaining to year 2006-07. With the decision to merge the Banking Ombudsman Offices with that of RBI offices, the accounting period for the Banking Ombudsman Offices was changed from April 1-March 31 to July 1-June 30 to be in congruent with that of RBI offices. Accordingly, the information analyses for the year 2006-07 pertains to the period July 1, 2006 to June 30, 2007.

New areas of Complaint. The bank customers can complain about non-payment or any inordinate delay in payments or collection of cheques towards bills or remittances by banks, as also non-acceptance of small denomination notes and coins or charging of commission for acceptance of small denomination notes and coins by banks. Provisions of the Scheme. The Banking Ombudsman Scheme 2006 provides a wide scope and extent to the schemes of 1995 and 2002. Many new changes have been made in the old scheme. The most essential provisions of the scheme are as follows: 1. Appointment and tenure. The Section 4 of the scheme provides for the appointment of one or more of the officers of the Reserve Bank of India in the rank of Chief General Manager or General Manager to be known as Banking Ombudsmen to carry out the functions entrusted to them by or under the Scheme. Their tenure would be not more than a period of five years. 2. Location of the office. Generally, the office of the banking ombudsman is located at the place specified by the Reserve Bank of India. For the expedite disposal of the complaints, a banking ombudsman may hold office at such places, under his jurisdiction which he deems fit for the disposal of the complaints3.
31

3. Powers and Jurisdictions. The scheme lays down the following provisions dealing with powers and functions of the Banking Ombudsman: 4. Authority of each Banking Ombudsman extends to the territorial limits entailed by the Reserve Bank of India.

GENERAL PARTICULARS ON THE SCHEME The word Ombudsman in general means a grievance man, a public official who is appointed to investigate complaints against the administration. He is to intervene for the ordinary citizen in his dealings with the complex machinery of the establishment. In India, any person whose grievance against a bank is not resolved to his satisfaction by that bank within a period of one month can approach the Banking Ombudsman if his complaint pertains to any of the matters specified in the Scheme. Banking Ombudsmen have been authorized to look into complaints concerning deficiency in banking service , sanction of loans and advances in so far as they relate to non-observance of the Reserve Bank directives on interest rates, delay in sanction or non-observance of prescribed time schedule for disposal of loan applications or nonobservance of any other directions or instructions of the Reserve Bank as may be specified for this purpose, from time to time, and such other matters as may be specified by the Reserve Bank. The Scheme envisages expeditious and satisfactory disposal of customer complaints in a time bound manner. The Banking Ombudsman on receipt of any complaint endeavors to promote a settlement of the complaint by agreement between the complainant and the bank named in the complaint through conciliation or mediation. For the purpose of promoting a settlement of the complaint, the Banking Ombudsman
32

has been allowed to follow such procedures as he may consider appropriate and he is not bound by any legal rule of evidence. If a complaint is not settled by agreement within a period of one month from the date of receipt of the complaint or such further period as the Banking Ombudsman may consider necessary, he may pass an Award after affording the parties reasonable opportunity to present their case. He shall be guided by the evidence placed before him by the parties, the principles of banking law and practice, directions, instructions and guidelines issued by the Reserve Bank from time to time and such other factors, which in his opinion are necessary in the interest of justice.

SCOPE OF THE SCHEME The Banking Ombudsman Scheme, 2002 covered all the Regional Rural Banks in addition to all Commercial Banks and Scheduled Primary Co-operative Banks, which were already covered by earlier Banking Ombudsman Scheme, 1995. There is no change in this regard in the Banking Ombudsman Scheme, 2006. In 2006, the Reserve Bank of India announced the revised Banking Ombudsman Scheme with enlarged scope that included customer complaints on certain new areas, such as, credit card complaints, deficiencies in providing the promised services even by banks' sales agents, levying service charges without prior notice to the customer and non adherence to the fair practices code as adopted by individual banks. The important new grounds of complaints added include credit card issues, failure in providing the promised facilities, non-adherence to fair practices code, levying of excessive charges without prior notice and issues pertaining to accepting payment towards taxes and issuing/servicing of Government
33

securities. The grounds of complaints have been enumerated in Clause 8 of the Banking Ombudsman Scheme, 2006.

OPERATIONALISATION Reserve Bank of India operationalised the Banking Ombudsman Scheme by establishing Banking Ombudsman Offices at 15 centers all over the country. The names, addresses and area of operation of the Banking Ombudsmen have been given in to Annexure A. Reserve Bank frames the guidelines for operationalizing the Scheme and supervises the running of the Scheme. It also supervises the running of the Scheme and administrative arrangements, budget and expenditure of the Banking Ombudsman Offices.

PERFORMANCE OF THE OFFICES OF BANKING OMBUDSMAN The performance of the Offices of the Banking Ombudsman was analyzed on the aspects such as the quantum of complaints handled by them, the timeliness in handling the issues, and appropriateness of the decisions given against the complaints. Number of Complaints Received

The number of complaints received by the Banking Ombudsman Offices had constantly increased in the last five years. There was more than threefold increase in the number of complaints received in the year 2006-07 from the previous year after the Banking Ombudsman Scheme, 2006 was notified. The
34

increasing receipt was also observed in the year 2007-08 with a 24% increase from the year 2006-07. The average number of complaints received per Banking Ombudsman Office has also increased from 550 in 2003-04 to 3192 in 2007-08.

35

Disposal of complaints by Banking ombudsman offices

Period

No of Offices of Banking Ombudsman

Complaints received during the year

Average of complaints per office

No.

Change from Previous year

2003-04

15

8246

+53

550

2004-05

15

10560

+28

704

2005-06

15

31732

+200

2115

2006-07

15

38638

+22

2576

2007-08

15

47887

+24

3192

36

The increase in the number of complaints received during the years 2005-06 and2006-07 can be attributed to new areas such as credit card complaints included and to facilitation of complaint submission by allowing complaint submission in any form including by online and by email allowed in the Banking Ombudsman Scheme, 2006. Per month receipt in the number of complaints received under the BO Scheme 2006 was more than thrice the number of complaints received under the Banking Ombudsman Scheme, 2002. The increase in the number of complaints received under the Banking Ombudsman Scheme 2006 as compared to the previous scheme clearly indicates the extent to which the scheme has benefited larger sections of the banking customers. The comparative effects of the Banking Ombudsman Schemes 2002 and 2006 in complaint receipt are given as below:

period

Scheme running

No. complaints

of

From To Total From 01.04.2005 01.01.2006 To Total BO received Total Per Scheme 9723 60647 month 1080 3370

31.12.2005 9 month 31.06.2007 18 month

2002 BO Scheme

Disposal of Complaints During the year 2007-08, the Banking Ombudsman Offices disposed of 49100 complaints (including from the complaints pending at the beginning of the year and those received during the year). Of these, 21747 complaints (49%) were
37

settled to the satisfaction of the complainants, 15914 complaints (36%) could no be considered under the scheme owing to several reasons like being outside the purview of the scheme time-barred, without sufficient cause, frivolous, pending in other for, etc. A such sample analysis of 756 complaints that could not be considered under the Scheme disclosed that 42% of complaints fell outside the purview of the scheme and 23% were first resort complaints and could not be taken of up by the Banking Ombudsman. In 11% of the complaints, deficiency be considered for reasons like they were pending in other for or the complaints required of complaints over the last five years are furnished in the following table: Disposal of Complaints by banking ombudsman Officer

service could not be established and the remaining 24% complaints could not

Particulars dealt With during the year Complaints setteles satisfaction of

2003-04

2004-05 12034

2005-06 33363

2006-07 44766

2007-08 54992

Total complaints 9483

3998 to (42%)

5440 (45%)

14931 (45%)

21747 (49%)

39365 (53%)

complainants(a) Complaites could 4011 not be (42%) considered under the scheme(b) The number of 8009 complaints disposed of(a+b) Complaints under process (84%) 1474 (16%)

4963 (41%)

12304 (37%)

15914 (36%)

19735 (36%)

10403 (86%) 1631 (14%)

27235 (82%) 6128 (18%)

37661 (84%) 7105 (16%)

49100 (89%) 5892 (11%)


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Mode of Disposal of Complaints

The Banking Ombudsman disposed of complaints, other than the complaints that could not be considered, either by mutual settlement or by issuing an Award. During the period reviewed, the ratio of complaints disposed by settlement to the complaints disposed by award was around 99:1 clearly indicating the effectiveness of the Banking Ombudsmen in arriving at mutually agreed consensus between bankers and complainants. During the period above, only 563 awards were issued which formed less than 2% of the total 49,253 complaints disposed of. From the year 2006-07, the number of awards issued and the percentage of disposal through award issuance have come down despite huge increase in the complaints received. Details are as given table below. The fact that the Banking Ombudsmen could dispose of more than 98% of the complaints by mutual settlement between the complainant and the concerned banks to their satisfaction indicates that they took appropriate decisions taking into consideration all the relevant and extant legal and banking instructions and practice.

Mode of disposal of complaints (Other than complaints that could not be considered)
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Sr. No

Year

No. complaints disposed of

of Disposal award

by Disposal by settlement

NO.

No.

1 2 3 4 5

2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

3998 5440 14931 21747 29365

121 165 146 84 70

2.21 3.03 0.98 0.39 0.24

3877 5275 14785 21662 29295

97.78 96.97 99.02 99.61 99.76

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Analysis of Complaints: Analysis of Complaints dealt with - Category-Wise The analysis of complaints received at the Banking Ombudsman

offices includes analysis of subject category of complaints and the bank-groups against which the complaints were made. Computerization of the functioning of Banking Ombudsman Offices through the Complaint Tracking Software has enabled detailed analysis in this regard. The maximum number of complaints dealt with during the last five-year period pertained to complaints regarding deposit accounts, deficiency in servicing of loans and advances and delay in collection of cheques/bills, etc, besides the miscellaneous complaints. The details are given in the following table:

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Analysis of complaints dealt with - category-wise

Category Deposit Accounts Loans and Advances Collection of

2002-03 2500 (27%) 1651

2003-04 250(27%) (26%) 1226

2004-05 3239 (27%) 2291

2005-06 6733 (20%) 5251

2006-07 5803 (15%) 5151

908

1226 (13%) 4756 (50%) 9483

1245 (19%) 5259 (44%) 12034

3058 (16%) 18357 (55%) 33363

4058 (11%) 23626 (61%) 38638

cheques/bills (14%) Others Total 2158 (38%) 6506

However, during the year 2006-07, the maximum number of complaints received pertained to credit cards at 20%. Complaints pertaining to deposit accounts, loans and advances and remittances occupied the next three places in the number of complaints received. The details are shown below.

Complaint received in 2006-07 & 2007-08 category wise

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Sr.No.

Nature of complaint

Received during 2006-07 2007-08 5612 5213 10129 5297 757 3740 1582 6388 3128 141 5900 47887

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Deposit accounts Remittances Credit cards Loans and advances - General Loans and advances-Housing Charges without notice Pension Failure on commitments made DSAs and recovery agents Notes and coins Others Total

5803 4058 7688 4442 709 2594 1070 1469 1039 130 9636 38638

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COST DETAILS OF RUNNING THE SCHEME The costs of the Scheme include the revenue expenditure and capital expenditure incurred in running the Banking Ombudsman offices. The revenue expenditure includes the establishment items like salary and allowances of the staff attached to Banking Ombudsman offices and non-establishment items such as rent, taxes, insurance, law charges, postage and telegram charges, printing and stationery expenses, publicity expenses, depreciation and other miscellaneous items. The capital expenditure items include the furniture,

44

electrical installations, computers/related equipments, telecommunication equipments and motor vehicle.

period

Total cost (Rs.Cr)

No.of complaints dealt

Cost complaint (Rs)

per

2003-04 2004-05 2005-06 2006-07 2007-08

7.03 7.60 10.16 9.81 12.50

9,483 12,034 33,363 38,638 47,887

7,413 6,315 3,045 2,538 2,611

CHAPTER-4 DIFFERENCE BETWEEN BANKING OMBUDSMAN SCHEME 1995, 2002 & 2006 The Ombudsmans task is to provide citizens with a means of redress for maladministration. By performing this role, the Ombudsman helps, first, to relieve the burdens of litigation by promoting friendly settlement and making recommendations to avoid the need for proceedings in courts; and second, to
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promote the effective implementation of citizen's rights. The Ombudsman is impartial and has a conciliatory approach. In India, any person whose grievances against a bank are not resolved to his satisfaction by that bank within a period of two months then he can approach the Banking Ombudsman for redressal. This is however subject to the complaint pertaining to any of the matters specified in the Banking Ombudsman Scheme. Reserve Bank of India (RBI) which assumes the role similar to that of quasi-legal machinery as it is established by a competent authority to provide for an additional but optional legal remedy for effective, expeditious and inexpensive redressal of customer grievances. Towards effective compliance of this optional legal remedy it introduced the Banking Ombudsmen Scheme in 1995 and got it further amended in 2002 and in 2006. The Reserve Bank of India notified the revised Banking Ombudsman Scheme, 2006 which came into effect from January 1, 2006. The new scheme widens its scope thereby to include customer complaints on certain areas like credit card complaints, deficiencies in providing the promised services even by banks sales agents, levying service charges without prior notice to the customer and non- adherence to the fair practices code as adopted by the individual banks. It is made applicable to all commercial banks, regional rural banks and scheduled primary cooperative banks whose principal place of business is in India. The Revised Scheme with well-equipped staff is wholly funded by the Reserve Bank of India. This new scheme allows the complainants to file a complaint in any form, including online and the bank customers are entitled to file an appeal with the Reserve Bank of India. It provides a forum for bank customers for redressal of their common complaints against banks. On the basis of the new Banking Ombudsman Scheme, 2006 the customers are also privileged to complain about non-payment or any inordinate delay in payments or collection of
46

cheques towards bills or remittances by banks, as also non acceptance of small denomination notes and coins or charging of commission for acceptance of small denomination notes and coins by banks. The Banking Ombudsmen currently have their offices in 15 centers covering the entire country.

Is the New Banking Ombudsman Scheme 2006 differs from its previous schemes? The vision behind the emergence of Banking Institution is to evolve into a strong, sound and globally competitive financial system, providing integrated services to customers from all segments, leveraging on technology and human resources, adopting the best accounting and ethical practices and fulfilling corporate and social responsibilities towards all stakeholders. As a part of this vision, the RBI lodged various Ombudsman schemes till today which forms a part of our discussion. Yes, the new scheme 2006 differs from its previous schemes. The extent and scope of the scheme, 2006 is much wider than its earlier schemes of 1995 and 2002. Because the new scheme introduces for the first time; Includes complaints relating to credit cards, deficiencies in providing the without prior notice to the customers and non-compliance of promised services by banks and its marketing agents, levying of service charges

fair practice codes by the banks; Facilitates the submission of complaints through online; Establishes an appellate authority to facilitate appeals against the awards rendered by the Banking Ombudsmen instead of filing with the Review Authority for review of such awards. The extent and scope of the new Scheme is wider than the earlier Scheme of 2002. The new Scheme also provides for online submission of complaints. The
47

new Scheme additionally provides for the institution of an 'appellate authority' for providing scope for appeal against an award passed by the Ombudsman both by the bank as well as the complainant. In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 and in partial modification of its Notification dated December 26, 2005, Reserve Bank of India hereby amends the Banking Ombudsman Scheme 2006 to the extent specified in the Annex hereto. The Reserve Bank hereby directs that all commercial banks, regional rural banks and scheduled primary co-operative banks shall comply with the Banking Ombudsman Scheme, 2006 as amended hereby. The amendments in the Scheme shall come into force from January 1, 2006.

AMENDMENT PASSED BY RBI FOR THE CHANGES IN BANKING OMBUDSMAN SCHEME, 2006: Amendment 1: RBI expands Scope of Banking Ombudsman Scheme; Includes Fair Banking Practices. Date: 26 Dec 2005 The Reserve Bank of India today announced the revised Banking Ombudsman Scheme with enlarged scope to include customer complaints on certain new areas, such as, credit card complaints, deficiencies in providing the promised services even by banks' sales agents, levying service charges without prior notice to the customer and non adherence to the fair practices code as adopted by individual banks. Applicable to all commercial banks, regional rural banks and scheduled primary cooperative banks having business in India, the revised scheme will come into effect from January 1, 2006. In order to increase its effectiveness, the revised Banking Ombudsman Scheme will be fully staffed and funded by the Reserve Bank instead of the
48

banks. Under the revised Banking Ombudsman Scheme, the complainants will be able to file their complaints in any form, including online. The bank customers would also be able to appeal to the Reserve Bank against the awards given by the Banking Ombudsman. The new scheme provides a forum to bank customers to seek redressal of their most common complaints against banks, including those relating to credit cards, service charges, promises given by the sales agents of banks, but not kept by banks, as also, delays in delivery of bank services. The bank customers would now be able to complain about non-payment or any inordinate delay in payments or collection of cheques towards bills or remittances by banks, as also non- acceptance of small denomination notes and coins or charging of commission for acceptance of small denomination notes and coins by banks. The Reserve Bank had first introduced the Banking Ombudsman Scheme in 1995 to provide expeditious and inexpensive forum to bank customers for resolution of their complaints relating to deficiency in banking services. The Scheme was revised in 2002 mainly to cover Regional Rural Banks and to permit review of the Banking Ombudsmens awards against banks by the Reserve Bank. The Banking Ombudsmen currently have their offices in 15 centers. The Reserve Bank is also in an advanced stage of setting up an independent Banking Codes and Standards Board of India to ensure that comprehensive code of conduct for fair treatment to customers are formulated by banks and adhered to. The Reserve Bank of India had announced setting up of the Board in its Annual Policy for 2005-2006 announced by the Governor, Dr Y V Reddy in April 2005.

Amendment 2: Customers can now appeal against the Banking Ombudsman's Decision. Date: 24 May 2007
49

Bank customers can now appeal against the decision of the Banking Ombudsman where he has rejected the customer's complaint relating to matters falling within the grounds of complaints specified under the scheme. The Reserve Bank of India has amended the Banking Ombudsman Scheme, 2006 to enable the customers to appeal against the Banking Ombudsman's decision. The amendments are available on the RBI website. Before the scheme was amended, the bank customers could appeal only against the awards given by the Banking Ombudsman. The appellate authority for the Banking Ombudsman Scheme is the Deputy Governor of Reserve Bank of India. It may be recalled that in the Annual Policy for 2007-2008, the Reserve Bank had announced that based on customer feedback, it would amend the Banking Ombudsman Scheme, 2006 to extend the appeal option also to the decisions of the Banking Ombudsman. Originally introduced in 1995, the Banking Ombudsman Scheme enables speedy and cost effective resolution of complaints of bank customers relating to deficiency in bank services. The Scheme now covers all Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks. The customers can also now complain to the Banking Ombudsman against deficiency in almost any banking services, including credit cards, after exhausting the channel available with the bank concerned for resolving their complaints. The Reserve Bank has appointed 15 Banking Ombudsmen who are located mostly in State Capitals under the Scheme. The Banking Ombudsman tries to resolve the complaint through conciliation or mediation and even passes an award if it is not resolved through such settlement.

50

CHAPTER - 5 A Brief Profile of the Canara Bank Widely known for customer centricity, Canara Bank was founded by Shri Ammembal Subba Rao Pai, a great visionary and philanthropist, in July 1906, at Mangalore, then a small port in Karnataka. The Bank has gone through the
51

various phases of its growth trajectory over hundred years of its existence. Growth of Canara Bank was phenomenal, especially after nationalization in the year 1969, attaining the status of a national level player in terms of geographical reach and clientele segments. Eighties was characterized by business diversification for the Bank. In June 2006, the Bank completed a century of operation in the Indian banking industry. The eventful journey of the Bank has been characterized by several memorable milestones. Today, Canara Bank occupies a premier position in the comity of Indian banks. With an unbroken record of profits since its inception, Canara Bank has several firsts to its credit. These include:

Launching of Inter-City ATM Network Obtaining ISO Certification for a Branch Articulation of Good Banking Banks Citizen Charter Commissioning of Exclusive Mahila Banking Branch Launching of Exclusive Subsidiary for IT Consultancy Issuing credit card for farmers Providing Agricultural Consultancy Services Over the years, the Bank has been scaling up its market position to

emerge as a major 'Financial Conglomerate' with as many as nine subsidiaries/sponsored institutions/joint ventures in India and abroad. As at June 2010, the Bank has further expanded its domestic presence, with 3057 branches spread across all geographical segments. Keeping customer convenience at the forefront, the Bank provides a wide array of alternative delivery channels that include over 2000 ATMs- one of the highest among nationalized banks- covering 732 centres, 2681 branches providing Internet and Mobile Banking (IMB) services and 2091 branches offering 'Anywhere Banking' services. Under advanced payment and settlement system, all branches of the Bank have been enabled to offer Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) facilities.
52

Not just in commercial banking, the Bank has also carved a distinctive mark, in various corporate social responsibilities, namely, serving national priorities, promoting rural development, enhancing rural self-employment through several training institutes and spearheading financial inclusion objective. Promoting an inclusive growth strategy, which has been formed as the basic plank of national policy agenda today, is in fact deeply rooted in the Bank's founding principles. "A good bank is not only the financial heart of the community, but also one with an obligation of helping in every possible manner to improve the economic conditions of the common people". These insightful words of our founder continue to resonate even today in serving the society with a purpose. The growth story of Canara Bank in its first century was due, among others, to the continued patronage of its valued customers, stakeholders, committed staff and uncanny leadership ability demonstrated by its leaders at the helm of affairs. We strongly believe that the next century is going to be equally rewarding and eventful not only in service of the nation but also in helping the Bank emerge as a "Global Bank with Best Practices". This justifiable belief is founded on strong fundamentals, customer centricity, enlightened leadership and a family like work culture.

Canara Bank customers can now post complaints on consumer Web sites: Addressing complaints Our customer service cell will be the monitoring wing of the bank, he said. According to him, most complaints are regarding ATM cards, delay in sanctioning housing loans, delay in transfer of accounts and pension-related issues. There are about three complaints a day now, he pointed out, adding that the bank will try to solve issues with a 72-hour turnaround time. The centralised

53

customer service cell currently has three members, in addition to separate cells in each circle office of the bank. The six sites that we have identified are not exhaustive, and the circle should monitor such other sites for taking further action on matters regarding our bank, said Mr Pai, adding, We are in a services industry, and the attempt is to convince the customer that we are sensitive to their requirements.

Interaction with customer Customer's expectation/requirement/grievances can be better understood through personal interaction with customers by Bank's staff. Structured customer meets will give a message to the customers that the bank cares for them and values their feedback/suggestions for improvement in customer service. Many of the complaints arise on account of lack of awareness among customers about bank services and such interactions will help the customers appreciate the banking services better. The feedback from customers would be a valuable input for revising our product and services to meet customer requirements.

Sensitizing the operating staff on handling complaints Our staff will be properly trained for handling complaints. During all the Training Sessions at our Apex Staff Training College and Regional Staff Training Colleges the importance of handling complaints is explained to all the participants and they are trained to deal with customer complaints. Nodal Officer for the Bank will ensure that internal machinery for handling complaints/grievances operates smoothly and efficiently at all levels and he will be giving feed back on training needs of staff at various levels to the Human Resources Department.
54

Canara Banking scheme : a. We have displayed on our website and in all our Branches a notice explaining that we are covered by the Banking Ombudsman Scheme, 2006 of the Reserve Bank of India . The copy of the scheme is made available at all the branches and will be issued to customers at a nominal charge. b. Within 30 days of lodging a complaint with us, if customer does not get a satisfactory response from us and if customer wishes to pursue other avenues for redressal of grievances, customer may approach Banking Ombudsman appointed by Reserve Bank of India under Banking Ombudsman Scheme, 2006. Salient features of the Banking Ombudsman Scheme, 2006 are displayed in the branch notice boards and the scheme itself is displayed on our Website www.canarabank.com. If customers face any difficulty our Staff will explain the procedure in this regard.

Internal Machinery to handle customer complaints/grievances a. If the customer wants to make a complaint, we will inform : Where to make complaint How a complaint should be made When to expect a reply Whom to approach for redressal What to do if customers are not happy about the outcome

55

b. The Bank will inform customers where to find details of procedures for handling complaints fairly and quickly. c. If the customer complaint is received in writing, we will endeavour to send an acknowledgement/a response within a week. If customer complaint in relayed over phone at our designated telephone helpdesk or customer service number we shall provide a complaint reference number and keep customers informed of the progress within a reasonable period of time. d. After examining the matter, we will send our final response or explain why we need more time to respond and shall endeavour to do so within 30 days of receipt of complaint and will tell customers to take their complaint further if they are still not satisfied.

COMPLAINT REDRESSAL MECHANISM IN CANARA BANK AT BRACH Resolution of graveness Branch Manager will be responsible for the resolution of the complaints/grievances in respect of customer's service by the Branch. He/she would be responsible for ensuring closure of all complaints received at Branches. It is his/her foremost duty to see that the complaint should be resolved completely to the customer's satisfaction and if the customer is not satisfied, then he shall be provided with alternate avenues to escalate * the issue if the same is not resolved within the stipulated period. If the Branch Manager feels that is not possible at his/her level to solve the problem he/she may refer the case to Regional or Circle Office or Head Office for guidance.

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Similarly, if Regional Office/Circle Office finds that they are not able to solve the problem such cases may be referred to the Nodal Officer of the Bank. Suggestion Box and complaint Book are provided in all the branches. Any written complaint is instantly and promptly acknowledged.

All branches other than small branches have " May I help you counters ". Counter staff are provided with training and additional inputs. If counter staff/Supervisor is unable to resolve a grievance, the branch incharge intervenes and tries to resolve the issue.

Customers' Day is observed on 15 th of every month. On this day branch in-charge will make himself available at the branch between 3 p.m. and 5 p.m. to meet customers without any prior appointment.

Customer Service Committee meetings is held every month at all Branches, Circle Offices. The sole task of the

Committee is to find out ways and means to render service to the satisfaction of the Customers. For this purpose

Committee will meet regularly at stipulated intervals to discuss in detail the strengths and deficiencies of the services presently rendered and take steps to improve it.

Special Customers' Meet is conducted on special occasions. Every year, Customer Fortnight is observed to create awareness among Public as well as staff for achieving the objective of Complaint free branch network and also highlight our products and services.

AT REGIONAL OFFICE/CIRCLE OFFICE

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Divisional Manager / Assistant General Manager hold exclusive charge of Customer Service Section at Regional Office/Circle office.

By and large, complaints are redressed within shortest possible time. Whenever it is not possible and more cross checking is required, steps are taken to settle the matter within a reasonable time.

Divisional Managers(O) / Assistant General Manager(O) visit branches periodically and submit a report on Customer Service, as per the detailed checklist

Divisional Manager / Assistant General Manager in-charge of Customer Service Section, Regional office / Circle Office contact the aggrieved customers as and when necessary, meet him personally with the Branch Manager, for

ensuring timely redressal of the complaint. Wherever deficiencies are noticed, accountability is fixed and erring employees punished.

Still there may be some aggrieved customers who write to Head office. AT HEAD OFFICE

A full-fledged Customer Service Section is functioning at M&CRM Wing, Head Office, overseen by General Manager.

An acknowledgement is sent to the customer immediately on receipt of the complaint.

Thorough analysis of the complaints is done and necessary instructions are given to CO/RO/ Branches for speedy redressal and followed up till

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final redressal letter is sent to the complainant duly explaining the decision taken on the complaint.

On 15 th of every month, Customers' Day is observed between 3 p.m. and 5 p.m. during which our overseeing

Executives are available for meeting the public / Customers without prior appointment.

Special Customers' Meets are organised for different segments of the market, viz., Exporters, SSI, NRI, Agriculturists, etc.. Customer Satisfaction Surveys through In-house as well as by External agencies are conducted to assess the level of customer satisfaction.

Grievance Escalation System

Customers can lodge their complaints directly to Branch-in-charge and it will be the responsibility of the Branch-in-charge to resolve the complaint within 7 days from the date of receipt.

The Branch-in-charge will analyse the complaint and if need be he/she will contact the complainant personally and resolve the complaint.

A complaint redressal letter will be sent to complainant, if the complaint is resolved at Branch level. The Branch will also send the details of the grievance received by the at periodical intervals to Regional Office/Circle Office.

If the Branch-in-charge is not able to resolve the complaint within 7 days, the complaint will be referred by the Branches to the concerned Regional Office/Circle along with their comments / replies for further action.

The complaints referred to Regional Office/Circle Office will be analysed by Customer Service Section and based on the explanation received from the Branch, RO/CO will send a suitable reply to complainant.
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If the reply received from the Branch is not satisfactory and if Regional Office/Circle Office cannot resolve the complaint within 7 days from the date of receipt of complaints, the same will be referred to Customer Service Section, Head Office along with their comments/explanations. The Regional Office/Circle Office will also send the details of the complaints received directly by them and not settled within seven days to Customer Service Section, Head Office along with their comments/replies.

Customer Service Section, Head Office will analyse the complaint and the replies received from Branch and Regional Office/Circle Office. On placing the matter before appropriate authorities a decision is taken on the complaint. A complaint redressal letter is sent to the complainant from Head Office and suitable instruction are passed on to Branch, Regional Office, Circle Office for taking action in the deficient areas.

COMPLAINTS/ GRIEVANCES Customer Service Committee of the Board This sub-committee of the Board would be responsible for formulation of a Comprehensive Deposit Policy incorporating the issues such as the treatment of death of a depositor for operations of his account, the product approval process and the annual survey of depositor satisfaction and the tri-enniel audit of such services. The Committee would also examine any other issues having a bearing on the quality of customer service rendered. This Committee would also review the functioning of Standing Committee on Customer Service. The Customer Service Committee of the Board is responsible for the rendering of customer service to the individual, both as a depositor and also as a borrower. The Committee is, therefore, responsible for examining loan policies and service issues for the individual as a borrower also.
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Standing Committee on Customer Service The Standing Committee on Customer Service will be chaired by the Managing Director/ Executive Director of the Bank. Besides two to three senior executives of the bank, the committee would also have two to three eminent non-executives drawn from the public as members. The committee would have the following functions. Evaluate feed-back on quality of customer service received from various quarters. The committee would also review comments/feed-back on customer service and implementation of commitments in the Code of Banks Commitments to Customers received from BCSBI.

The Committee would be responsible to ensure that all regulatory instructions regarding customer service are followed by the bank. Towards this, the committee would obtain necessary feed-back from zonal/regional managers/ functional heads.

The committee also would consider unresolved complaints/grievances referred to it by functional heads responsible for redressal and offer their advice.

The committee would submit report on its performance to the customer service committee of the board at quarterly intervals.

TIME FRAME Complaints received will be seen in right perspective and will be analyzed from all possible angles. Specific time schedule is set up for handling complaints and disposing them at all levels including branches/Regional Offices/Circle Offices
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and Head Office. The Branch Manager will try to resolve the complaint within specified time frames decided by the Bank.

TIME SCHEDULE FOR REDRESSAL OF COMPLAINTS Adopted by bank 21 days 15 days

Stipulated by MOF General Complaints Complaints by 30 days

forwarded 21 days RBI/MOF

MPs/VVIPs Complaints from PMs 15 days office

7 days

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CHPTER 6 CASE STUDY COMPENDIUM OF CASE HANDLED BY THE BANKING OMBUDSMAN OFFICE SUBJECT: Refusal to Close the Account Complaint No. 1 Complaint in brief: X the complainant, had issued cheque dated 20.10.2004 for Rs.5,00,000/- (Rupees Five lakhs only) to their supplier and mentioned the suppliers account No. on the reverse side of the Cheque. The cheque was deposited in the drop box of ABC Bank, on 22.10.04 at about 10.30 a.m. The cheque was taken out of the drop box by a miscreant who opened current account in the name of the supplier with Y Bank on 24.10.04 (Sunday). As per the records of Y Bank, the supplier was a proprietary concern owned by one Mr.Z. The bank contended that the opening of account was supported by proof of addresses submitted by the customer. Thus the account was duly introduced with sufficient proof of address. Y Bank confirmed having observed the KYC norms. Decision by ombudsman The person giving introduction should be of some standing and have an accountwith the bank for at least six months to ensure that the accounts are not opened on the introduction of new account holders or persons having small and marginal balances. In the instant case, the introducers account was less than 6 monthsold. There is no record to show that efforts were made to verify the authenticity of the existence of account opened firm. In the case of Kerala State Co-operative Marketing Federation vs State Bank of India and others, the Supreme Court of India has spelt out the principles
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governing the liability of a collecting banker are: As a general rule the collecting banker shall be exposed to his usual liability under common law for conversion or for money had and received, as against the true owner of a cheque/draft, in the event the customer from whom he collects the cheque or draft has no title or a defective title. The banker, however, may claim protection from such normal liability provided he fulfils strictly the conditions laid down in Section 131 or Section 131A of the Negotiable Instruments Act, 1881, and one of those conditions is that he must have received the payment in good faith and without negligence. It is the banker seeking protection who has on his shoulders the onus of proving that he acted in good faith and without negligence. Negligence is a question of fact and what is relevant in determining the liability ofa collecting banker is not his negligence in opening the account of the customer but negligence in the collection of the relevant cheque unless, of course, the opening of the account and depositing of the cheque in question therein form part and parcel of one scheme as where the account is opened with the cheque in question or deposited therein so soon after the opening of the account as to lead to an inference that depositing the cheque and opening the account were interconnected moves in an integrated plan. Negligence in opening the account such as failure to fulfil the procedure for opening an account which is prescribed by the bank itself or opening an account of an unknown person or non existing persons or with dubious introduction may lead to a cogent, though not conclusive, proof of negligence particularly if the cheque in question has been deposited in the account soon after the opening thereof. It may be noted that Y Bank opened the account in the name of the supplier on 24th October 2004. The cheque for Rs.5,00,000 issued by the complainant was deposited in the account on 25,10.2004. The value of the cheque was credited on 27.10.2004. Rs.3,00,000 was drawn in the morning of 29.10.2004

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and Rs.1,80,000 drawn in the afternoon. The Y Bank was negligent in opening the account in the name of the complainant allowing the depositor to immediately draw Rs.4,80,000/- out of Rs.5,00,000/-. The account was introduced by a person who did not have account with the branch for a minimum period of six months as per guidelines of RBI. The address of the account holder in the driving license was left blank. Y Bank was found to be deficient in opening the current account without proper introduction and verification, thereby enabling the account holder to open the account, deposit the cheque and draw major portion of the cheque proceeds in quick succession. Complaint No. 2 Complaint in brief: The complainant having a savings bank account with the subject bank found thatthere was an unauthorized debit of Rs. 15000 in his account. On enquiry with thebank, they informed that it purported to the ATM transactions made by him. The complainant claimed that he had not withdrawn any amount on that day. The debits were made by the bank after six months without intimation to the complainant. The complainant requested to restore the unauthorized debit made by the bank. Decision by ombudsman The Banking Ombudsman perused the documentary evidence for ATM transactions produced by the bank, which contained the ATM card number and his account number. As nobody other than the card holder can operate the ATM and withdraw money, his argument that he was not aware of the ATM transactions made by him cannot be accepted. The Banking Ombudsman advised the bank to explain the position to the complainant to his satisfaction along with the documentary evidence and the complainant was advised that on the basis of the documentary evidence for ATM transactions provided by the bank, the card holder has undoubtedly made the three ATM cash withdrawals of
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Rs,.5000/- each.

Complaint No. 3 Complaint in brief: The complainant was having a Saving Bank Account. with the opposite party bank. Being an employee of TCS, his salary and other allowances were being directly credited to his account with the bank. He alleged that the bank had issued a cheque-book without his knowledge to someone else and had passed cheques which were not drawn by him. The total amount so fraudulently withdrawn from his account amounted to Rs.977,000/-. A police complaint was also filed. Decision by ombudsman The subsequent developments after filing of the police complaint and the opiniongiven by the GEQD, leads to an irrefutable conclusion that the culprits had made fraudulent withdrawals by forging the signature of the complainant. In the circumstances, prima facie forgery had been established. Legally if the drawers cheque is forged or unauthorised, however clever the forgery is, the banker cannot debit his customers account in case he pays the sum unless he establishes adoption or estoppel. The complainant was out of India during the material time. The bank could not bring out any evidence/proof that the complainant was in any way connected with the fraud or his involvement in the forgery.

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FORM OF COMPLAINT (TO BE LODGED) WITH THE BANKING OMBUDSMAN (TO BE FILLED UP BY THE COMPLAINANT)

To: The Banking Ombudsman Place of BOs office..

Dear Sir, Sub: Complaint against .(Name of the banks branch) of (Name of the Bank)

Details of the complaint are as under: 1. Name of the Complainant ..

2. Full Address of the Complainant Pin Code .. Phone No/ Fax No. . Email .

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3. Complaint against (Name and full address of the branch/bank) .

Pin Code . Phone No. / Fax No. .

4. Particulars of Bank or Credit card Account (If any)

5. (a) Date of representation already made by the complainant to the bank (Please enclose a copy of the representation) .

(b) Whether any reminder was sent by the complainant? YES/NO ( Please enclose a copy of the reminder ) .

6. Subject matter of the complaint (Please refer to Clause 8 of the Scheme)

7. Details of the complaint: (If space is not sufficient, please enclose separate sheet)

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8. Whether any reply (Within a period of one month after the bank concerned received the representation) has been received from the bank? Yes/ No ( if yes, please enclose a copy of the reply )

9. Nature of Relief sought from the Banking Ombudsman ( Please enclose a copy of documentary proof, if any, in support of your claim )

10. Nature and extent of monetary loss, if any, claimed by the complainant by way of compensation (please refer to clauses 12 (5) & 12 (6) of the Scheme) Rs. .

11. List of documents enclosed: (Please enclose a copy of all the documents ) 12. Declaration: (i) I/ We, the complainant/s herein declare that: a) the information furnished herein above is true and correct; and b) I/We have not concealed or misrepresented any fact stated in the above columns and in the documents submitted herewith. (ii) The complaint is filed before expiry of period of one year reckoned in accordance with the provisions of Clause 9(3)(a) and (b) of the Scheme. (iii) The subject matter of the present complaint has never been brought before
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the Office of the Banking Ombudsman by me/ us or by any of the parties concerned with the subject matter to the best of my/ our knowledge. (iv) The subject matter of the present complaint has not been decided by/pending with any forum/court/arbitrator. (v) I/We authorise the bank to disclose any such information/ documents furnished by us to the Banking Ombudsman and disclosure whereof in the opinion of the Banking Ombudsman is necessary and is required for redressal of our complaint. (vi) I/We have noted the contents of the Banking Ombudsman Scheme, 2006.

Yours faithfully, (Signature of Complainant)

NOMINATION (If the complainant wants to nominate his representative to appear and make submissions on his behalf before the Banking Ombudsman or to the Office of the Banking Ombudsman, the following declaration should be submitted.) I/We the above named complainant/s hereby nominate Shri/Smt.. who is not an Advocate and whose address is as my/our REPRESENTATIVE in all proceedings of this complaint and confirm
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that any statement, acceptance or rejection made by him/her shall be binding on me/us. He/She has signed below in my presence.

ACCEPTED (Signature of Representative) (Signature of Complainant) Note: If submitted online, the complaint need not be signed

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CONCLUSION Though the Banking Ombudsman Scheme was introduced in the year 1995, with a view to do away with the banking customer complaints, the scheme was amended in subsequent years of 2002 and 2006. But the banks do not seem to have adopted the norms for their efficient functioning, that is the reason behind the increasing consumer cases against the banks, which are governed under the scheme. In the system of Banking Ombudsman, the results are delivered very soon, the procedures are fair together with cost, and proportionate to the nature of the issues involved. The system deals with cases at reasonable speed, is understandable to those who use it, is responsive to the needs of those who use it, and provides as much certainty as the nature of particular cases allows. This is true because over the past five years nearly 36000 complaints are being resolved by the Banking Ombudsman under this Banking Ombudsman Scheme. Though the Banking Ombudsman is eligible enough to deliver the bank customer complaints at the earliest yet the Consumer Redressal Forum/Commission is being taken resort of by most of the bank customers for their redressal of grievances with the bank. The reason is they are well popular among the common public which is lacking with the banking ombudsman and its working. Definitely the Scheme needs popularity in the society for its more appropriateness and effectiveness so that the aggrieved bank customer with the services of the bank prefers to knock the door of the banking ombudsman for redressal. The scheme should provide more powers and levy more duties on the banking ombudsman so that they can easily be approachable by the aggrieved bank customer.

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BIBLOGRAPHY

http://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=159 http://www.rbi.org.in/Scripts/PublicationsView.aspx?id=11113#2 http://www.nos.org/Secbuscour/25.pdf http://www.indbank.com/ombudsman.htm http://www.ucobank.com/ombudsman.htm

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