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 BANKS

CENTRAL DEVELOPMENT SPECIALIZED

BANKS BANKS BANKS

COMMERCIAL BANKS

Public Sector Banks Private Sectors Banks

Foreign Banks
 CO-OPERATIVE BANKS

Primary Credit Societies Central Co-operative Banks

State Co-operative Banks

Source: http://www.ucobank.com/ombudsman.html
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 Government’s banker; maintain deposit accounts of all other banks and advances
money to other banks, when needed. The Central Bank provides guidance to other banks
whenever they face any problem. It is therefore known as the banker’s bank. It advises the
Government on monetary and credit policies and decides on the interest rates for bank deposits
and bank loans.

1. Commercial Banks:-

Commercial Banks are banking institutions that accept deposits and grant short- term 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, Grind lay’s Bank, etc. The number of foreign banks operating in our country has
increased since the financial sector reforms of 1991.

2. 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 Corporation’s (SFCs) are
examples of development banks in India.

3. Co-Operative Banks:-

People who come together to jointly serve their common interest often form a co- operative
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

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.

4. 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.

 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.

 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 small-scale 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.

CHARACTERISTICS OF BANKING OMBUDSMAN:-

 The Banking Ombudsman is a quasi judicial authority. It has power to summon both the
parties - bank and its customer, to facilitate resolution of complaint through mediation.

 All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-
operative Banks are covered under the Scheme.

 The Banking Ombudsman has power to consider complaints from Non- Resident Indians
having accounts in India in relation to their remittances from abroad, deposits and other bank-
related matters.

 The Banking Ombudsman does not charge any fee for resolving customers complaints.

Complaint can be made before a Banking Ombudsman on 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 a final order, has already been passed by any such competent court, tribunal, arbitrator
or forum.

DUTIES & FUNCTIONS OF OMBUDSMAN:-

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

 All instances or matters of alleged or suspected corruption and the misappropriation of public
moneys or other public property by officials.

 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 performed in an 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 are being or have been dealt with an
irregular manner.

 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 under the provisions when the grounds on
account of which the inquiry is desired is in the opinion of the Ombudsman.

POLICY FOR THE GRIEVANCES REDRESSAL OF THE CUSTOME

R COMPLAINTS:-
In the present scenario of competitive banking, excellence in customer service is the most
important tool for sustained business growth. Customer 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 bank’s name and image. The Bank’s 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 bank’s
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 bank’s 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 frame-work of rules and regulation. The policy document would
be made available at all 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.

 Inadequacy of the functions/arrangements made available to the customers or gaps in

standards of services expected and actual services rendered.

 The customer is having full right to register his complaint if he is not satisfied with the
 services provided by the bank. He can give his complaint in writing, orally or over telephone.
If customer’s complaint is not resolved within given time or if he is not satisfied with the
solution provided by the bank, he can approach Banking Ombudsman with his complaint or
other legal avenues available for grievance redressal.

TYPES OF OMBUDSMAN:-

TYPES OF OMBUDSMAN

Banking Ombudsman S.E.B.I. Ombudsman

Electricity Ombudsman Telecom Ombudsman

Income Tax Ombudsman Insurance Ombudsman

 Source: http://www.ucobank.com/ombudsman.html

1. Banking Ombudsman:-
The Reserve Bank of India (RBI) first introduced the Banking Ombudsman Scheme In1995,
which has been revised in 2002 and 2005. The latest revised Scheme has come into force from 1st
Jan 2006.

2. S.E.B.I. Ombudsman:-

The Securities Exchange Board of India (SEBI) under section 30 read with sub- section (1) of
section 11 of the SEBI Act, 1992, has framed the SEBI (Ombudsman) Regulations, 2003, which
were notified on 21st August 2003.

The Regulations provided for the establishment of the office of Ombudsman to redress the
Grievance of investors in securities and connected matters. The listed companies and registered
stock intermediaries have to disclose the name address and other particulars of ombudsman in
their for the benefit of the investors.

3. Electricity Ombudsman:-
The Electricity Regulatory Commission, under section 181 read with sub-section:-
of section 42 of the Electricity Act, 2003, issues guidelines for establishment of forum and
Ombudsman for redressal of grievances of Electricity consumers. The Delhi Regulatory
Commission (DERC) vide its Notification dated 11th March, 2006 has issued DERC (Guidelines
for establishment of Forum of redressal of grievance of the consumer and Ombudsman)
Regulations, 2003. It may be noted that the Ombudsman is the APPELLATE Authority under the
Electricity Act 2003, and the DERC Regulations, 2003 and therefore an electricity consumer has
to first approach the Consumer Grievance Redressal Forum established under the DERC
Regulations,2003.

4.Telecom Ombudsman:-

The Telecom Regulatory Authority of India Act, 1997, empowers the Telecom Regulatory
Authority of India Act 1997, empowers the Telecom Regulatory Authority of India (TRAI) to
make the recommendations on laying down the standards of quality of services to be provided by
the services providers and conduct the interest of the periodical surveys of Telecom services so
as to protect the interest of the consumers. The telecom operators frequently threaten to
disconnects the phones and with draw the numbers given to subscribers if the deadline for
payment is missed by a day or there is miscalculation of the tiniest amount. The TRAI is,
however, neither empowered to look into the grievances of individual customers nor take action
against the operators who do not meet quality of standards As there is no specialized body to
redress the grievance of telecom customers, they have to approach consumer forum setup under
THE Consumer Protection Act, 1986, or civil courts for Resolutions adjudication of disputes.

5.Income Tax Ombudsman:-

The government is considering creating an office of Income Tax Ombudsman to protect
individual taxpayer’s right. The Ombudsman will identify issues that increase the compliance
burden or create problems for taxpayers and bring those issues to the attention of the ministry of
Finance. The Ombudsman will make appropriate legislative proposal where necessary and send
periodical reports to the Department of Revenue, suggesting appropriate action.

6. Insurance Ombudsman:-
The Government of India, Minister of Finance, Department of Economics Affairs, Insurance
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 11th November 1998. The Insurance Ombudsman has started functioning from 1999,
to provide for efficient, cost effective and impartial settlement of claims and grievance of any
person against a Life r General Insurance in Public and private sector. The meaning of
expression ‘any other person’ is wider than ‘consumer’ and therefore, even third party having
grievance with respect to an Insurance contract can approach the Ombudsman.