Saturday, 13 April 2013

Reserve Bank of India Operational Guidelines issued to Banking Ombudsmen in India

In response to one of my applications under Right to Information Act, 2005 for information relating to guidelines issued to Banking Ombudsmen by Customer Service Department of Reserve Bank of India, CPIO of Customer Service Department denied having issued any guidelines and claimed that Banking Ombudsmen are independent in their functioning. Later on, once I submitted an appeal under RTI Act, the information was supplied that there were, in fact, some guidelines. Please see this page for details (Opens in new window). In addition to what is given in the page linked above, in the process of my quest, I came to know of another set of guidelines given to Banking Ombudsmen by Customer Service Department. This is an email issued by Mr. Kaza Sudhakar, Chief General Manager of Customer Service Department on May 19, 2010 to all the Banking Ombudsmen in India and is titled "Guidance Update". Reserve Bank of India informed in response to my RTI application that "This email was sent by Shri Kaza Sudhakar, CGM, CSD personally, in his official capacity. There are no notings about this". (See snapshot of RTI reply below)

Banking Ombudsmen have been directed as under: (Below is a transcript. For original email, see picture below...)

"Dear All,

Kindly take note of the following points while dealing with the cases:

1. Please ensure that you are within the four walls of the BO Scheme. Do not take up items beyond the 27 items mentioned in Clause 8. The Clause 8-u deals with violations to RBI Guidelines / directions regarding the banking services only but is not an omnibus clause to entertain any complaint.

2. Please avoid all time barred cases.

3. BO has no jurisdiction if a case on the same issue is pending in any court of law / consumer forum, etc. Do not entertain SARFAESI affected cases.

4. BO Scheme jurisdiction is confined to transactions within the country except internet transactions. ATM / POS transactions outside the country are not covered.

5. LC / BG cases have been removed from the scope of the BO Scheme and hence do not entertain complaints thereof.

6. Please be careful regarding the pecuniary jurisdiction of the BO for awarding compensation. In any case where a complainant demands compensation of above Rs. 10 Lakhs, or above Rs. 1 lakhs in credit card cases, please reject such complaints upfront. Here it may be noted that the disputed amount is different from compensation.

7. Do not reopen cases closed by you / your predecessor even if additional evidence surfaces or are produces post closure. Also in case of queries on closed cases which warrant a reply Please just reiterate the earlier decision giving the date in bold. We are receiving appeal cases based on the latest letter just to ensure that appeal is submitted within one month of closure of a case.

8. Do not indicate appeal provision for cases closed under non-appealable clauses (All cases other than 13-d, e, f.

Clause 11 closure

We notice that BOs are closing cases under 11 -1 (Full satisfaction) even when there is no conciliation meeting. All such cases result in appeal as agreement is vital to 11-1 closure. Whenever a conciliation meeting is held, and if the parties do not agree, then the closure has to be under 13-C as a unilateral decision by BO is not possible under oral evidence. If the BO is convinced on the basis of papers produced, then under 11-3 he can take a summary decision, and perhaps issue an award. All cases closed under 11-1 should have signatures of both the parties certifying agreement. We find that when a bank produces all the records (Switch / log / JP / Electronic Journal / Cash Balance Reports), and still the complainant insists on non-receipt of cash, then the BO cannot take evidence under oath and decide, the closure has to be under 13-C.

Please minimise closure under 13-d as the complainants are deeply upset when informed that their complaint is without cause. Instead, close it under 13-a if the BO is convinced that the bank has followed all the rules laid down in DBOD / Banks Internal Circulars. For example, if pricing is freed under DBOD guidelines, then if a bank's Board has approved a certain policy, and in the said transaction if the Board policy is adhered to, then there is no violation of DBOD guidelines, then the disposal is under clause 13-a provided disclosure norms have been followed.

BO should invariably cite the clause under which a case has been closed and ensure that the case is marked off in CTS quoting the same clause.

It may be noted that the jurisdiction of the Appellate Authority is exactly the same as that of the BO. Further, fresh evidence cannot be produced at the Appellate Stage. Hence it is very important to close a case citing the correct clause. Further, take care to mention the appeal provisions for cases closed under 13-d,e,f which are the appealable clauses.

With Best Regards,

Kaza Sudhakar
Chief General Manager

I am very happy to be able to publish these guidelines to Banking Ombudsmen because after reading these, bank customers in India shall be more aware of their rights and will have more realisitic expectations from Banking Ombudsmen.

Here are the Email Pictures 

RBI Guidelines to Banking Ombudsmen - Page 1

RBI Guidelines to Banking Ombudsmen Part - 2

How This Email was Issued (RBI response to my RTI application:

RBI reply to RTI Application

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All information given in this blog is obtained from sources in the public domain, RTI applications, discussions with bankers, bank customers in India and also with some employees of Reserve Bank of India having knowledge of the working of various Offices of Banking Ombudsman in India. All information in this blog is presented on a best effort basis and is not claimed to be complete information on any of the subjects covered in this blog. Use of any information given in this blog is purely voluntary on the part of the readers. Author of this blog does not assume any responsibility for any action of the readers related to any matter discussed in this blog or any consequences thereof. Readers of this blog are advised to consult a legal practitioner before taking any action related to any matter discussed in this blog.