A PROJECT REPORT ON

“STUDY OF GRIEVANCE REDRESSAL SYSTEM IN BANKS”

A PROJECT SUBMITTED TO

UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION THE DEGREE

OF BACHELOR IN COMMERCE (BANKING AND INSURANCE)

SUBMITTED BY

MISS. GAURI VIRENDRA MOHITE

ROLL NO. 1911630

UNDER THE GUIDENCE OF

Dr. RAJASHRI DESHPANDE

PARLE TILAK VIDYALAYA ASSOCIATION’S

MULUND COLLEGE OF COMMERCE

S.N. ROAD, MULUND (WEST) MUMBAI-400080

ACADEMIC YEAR: MARCH 2020

 A PROJECT REPORT ON

“STUDY OF GRIEVANCE REDRESSAL SYSTEM IN BANKS”

A PROJECT SUBMITTED TO

UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION THE DEGREE

OF BACHELOR IN COMMERCE (BANKING AND INSURANCE)

SUBMITTED BY

MISS. GAURI VIRENDRA MOHITE

ROLL NO. 1911630

UNDER THE GUIDENCE OF

Dr. RAJASHRI DESHPANDE

PARLE TILAK VIDYALAYA ASSOCIATION’S

MULUND COLLEGE OF COMMERCE

S.N. ROAD, MULUND (WEST) MUMBAI-400080

ACADEMIC YEAR: MARCH 2020

 DECLERATION BY LEARNER

I, the undersigned Miss. GAURI VIRENDRA MOHITE here by, declare that the
work embodied in the project work titled “STUDY OF GRIEVANCE
REDRESSAL SYSTEM IN BANKS” forms my own contribution to the research
work carried out under the guidance of Dr. RAJESHREE DESHPANDE. This
study is a result of my own research work and has not been previously submitted
to any other University for any other Degree/Diploma to this or any other
University.

Wherever reference has been made to previous works of others, it has been clearly
indicated as such and included in the bibliography.

I, here by further declare that all information of this document has been obtained
and presented in accordance with the academic rules and ethical conduct.

Certified by Gauri virendra mohite

Dr. Rajashri Deshpande

 ACKNOWLEDGMENT

To list who all have helped me is difficult because they are so numerous and the depth is
so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I would like to thank the University Of Mumbai for giving me chance to do this project.

I would like to thank my Principal, Dr. Sonali Pednekar for providing the necessary
facilities required for completion of this project.

I take this opportunity to thank our Coordinator, Mrs. Shilpa Thakur, for her moral
support and guidance.

I would also like to express my sincere gratitude towards my project guide Dr.
Rajashree Deshpande whose guidance and care made the project successful.

I would also like thank my College Library, for having provided various reference books
and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me
in the completion of the project especially My Parents and Peers who supported me
throughout my project.
 Ch. No. Content Page No.
1. Introduction to Banking 01-09
Types of Banks

Whate is Grievance Redressal?

Introduction to grievance redressal system in banks 10-19

Policy for the grievances redressal of the customer

complaints.

Customer complaint form and process

Grievance redressal option available to organisation 20-33

Types and Modes of complaints 34-40
Introduction to Ombudsman system 41-56

Characteristics,duties and functions of ombudsman 57-64

system
Types of ombudsman 65-70
Complaints considered and not considered by banking 71-73
ombudsman
Procedure for filing complaints 74
Performance of offices in ombudsman

The consumer protection act,1986

The banking ombudsman scheme,2006

2. Research Methodology

3. Review of literature

4. Analysis and interepretation of data

5. Finding and Suggetion

6. Conclusion

INDEX
 STUDY OF GRIEVANCE REDRESSAL SYSTEM IN BANKS

CHAPTER 1

INTRODUCTION

BANKING:

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-of-exchange (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 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 someone’s 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 bank’s
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 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

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 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. 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 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 Blanket.
  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.

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 Corporation’s (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 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 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.
  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.
 What Is Grievance Redressal?

Definition:

Grievance is a complaint that has been formally presented to a management representative or to a

union official.

Grievance Redressal is a management- and governance-related process used commonly in India. While the
term "Grievance Redressal" primarily covers the receipt and processing of complaints from citizens and
consumers, a wider definition includes actions taken on any issue raised by them to avail services more
effectively.

In other words Redressal Mechanism. Any member of the public who has any grievance against the
Corporation or wants any information / clarification etc. may approach Director of Grievances or any of the
Public Grievance Redressal Officers (PGRO) who shall make all possible efforts to redress the grievance.

An individual grievance is a complaint that an action by management has violated the rights of an individual
as set out in the collective agreement or law, or by some unfair practice. Examples of this type
of grievance include: discipline, demotion, classification disputes, denial of benefits, etc.
 Grievance Redressal System In Banks

INTRODUCTION:

A grievance is any dissatisfaction or feeling of injustice having connection with one’s employment situation
which is brought to the attention of management. Speaking broadly, a grievance is any dissatisfaction that
adversely affects organizational relations and productivity. To understand what a grievance is, it is necessary
to distinguish between dissatisfaction, complaint, and grievance.

Banks are responsible for the resolution of complaints in respect of customer’s service by the banking
officials. It is the foremost duty of banks to see that the complaint should be resolved completely to the
customer’s satisfaction and if the customer is not satisfied, then he should be provided with alternate avenues
to escalate the issue. It will also ensure that customers are treated fairly as technology has this unique
characteristic of bringing in equity. Unfortunately, IT has not been properly implemented which has led to
arise in the number of complaints. The purpose of the study is to find out how has complaint
redressal mechanism in the banking sector been implemented.

The paper will provide an insight into different areas of customer complaint redressal services of banks and
can adopt alternative strategies and methods for timely redressal of complaints to satisfy the customers. 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, over telephone or through online grievance redressal
system set up by the bank in its website. 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 .
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 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

o 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.
 Customers can complaint with the help of following form

COMPLAINT FORMAT

i. Name of the complainant :

ii. Address in full (for correspondence) :
iii. Age :
iv. Tel. No.(landline and mobile) :
v. E-mail id if any :

vi. Name of Branch to which the complaint is related to :

vii. Details of the complaint (Attach separate sheet if necessary) :
Whether you have already taken up with any other Functionary/Forum :

Place: Signature of the complainant

Date:
 Process

grievance redressal flow can include the following steps:

 Grievance Redressal Options available to Organizations

Paper-based Feedback Forms

These are most popular and usually used by consumer service businesses, such as hotels and restaurants.
They are less likely to be effective, as there is reduced assurance of their reaching the decision-making
authorities. These also usually do not give any formal confirmation or tracking number to the complainant.
Possibility of fake submissions also remains. Customers therefore have less confidence on such forms.
Confidence can be strengthened if a central call center sends an acknowledgement of receipt of such
feedback. Another possible reinforcement may be done by taking digitized input, which can be processed
using scantron machines.

Contact Us Links

Websites of organizations generally carry the Contact Us page, which lists the email and phone numbers to
use to submit any concerns. Many websites also provide a form to fill that automatically gets sent by email,
with confirmation to the reporter.

Customer-driven Feedback Websites

Websites such as Yelp and Trip Advisor allow customers to post grievances and recommendations about
organizations from personal experience. Designated representatives of these organizations have the option to
respond to such communications, though these responses are often just standard text. The feedback also tends
to be subjective and unlikely to be auto-sorted and forwarded for action.

Organization-oriented Portals

Organizations can subscribe to grievance redressal portals such as ActPlease.com to invite their customers to
report their grievances and request action. As such portals are configured by the organizations themselves,
they can ensure that complaints are directed properly. Act Please, being a third party site, handles anonymity
of the reporter from the organization when necessary, while ensuring the genuine nature of the person,
through SMS verification. Such SaaS Portals are easy to use and easily affordable for all organizations
including SMEs, while empowering them with the latest tools such as Mobile a/c number 60332595050
ko10pm 2000 bank me fast hai adhar card number 644451794526 and Customized Websites.
Custom-developed Ticketing Systems

Large organizations involved in customer service set up their own ticketing systems with similar features as
the SaaS portals, but with greater customization in the processing of grievances. Examples of such
organizations are Bharat Sanchar Nigam Limited and Torrent Power. Large-scale ERP software, such as SAP
and Genie also provide facility for setting up ticketed grievance redressal and customer support systems.
Types of Complaints:
The customer complaint arises due to the attitudinal aspects dealing with customers and inadequacy of the
functions/arrangements made available to the customers or gaps in standards of services expected and actual
services rendered.

Complaints related to Deposit Accounts- The complaints can be related to deposit accounts of the
customers such as

(i) Refusal to open savings accounts without valid reason.

(ii) Refusal / delay in furnishing of statement of accounts.
(iii) Non-issue of cheque books.
(iv) Insisting the account holders to drop the cheques / cash in drop boxes.
(v) Cheques put up in drop box not credited to the correct accounts.
(vi) Wrongful dishonor of cheques.
(vii)Debits for unsuccessful ATM Transactions.
(viii) Non- issue of ATM cards.
(ix) ATMs not working / frequent shut-downs; etc.

Complaints related to Remittances- The banking customer complaints can also be related to remittances
such as:

(i) Delay in collection of outstation cheques.

(ii) Delay in issue of duplicate drafts.
(iii) Delay in credit of proceeds remitted to customer's accounts.
(iv)Levying of excess collection charges.
(v) Failure to provide immediate credit of cheques as per RBI guidelines.
(vi)Non- issue of DD / Pay order / Banker's cheque.

Complaints related to Credit card: The complaints related to credit card can be such as; non-issue of credit
cards, issue of unsolicited cards, non-dispatch of account statement in time, levy of excessive service charge,
late appropriation of payments made through cheques even though deposited in time and levy of late fee in
such cases, refusal to settle Insurance claims, not adhering to settlement terms for settling credit card dues,
Freezing of cards without informing the cardholder, harassment by recovery officer, etc.

Complaints related to Loans and advance – General: Complaints can also be related to rejection of loan
applications without any valid reasons, Denying verbally without giving / providing loan application, Delay
in disposal of loan applications, Non refund of processing fee for non sanctioned loan.

(ii) Refusal / delay in furnishing of statement of accounts.

(iii) Non-issue of cheque books.
(iv) Insisting the account holders to drop the cheques / cash in drop boxes.
(v) Cheques put up in drop box not credited to the correct accounts.
(vi) Wrongful dishonor of cheques.
(vii)Debits for unsuccessful ATM Transactions.
(viii) Non- issue of ATM cards.
(x) ATMs not working / frequent shut-downs; etc.

Modes of Complaining: The customer has every right to register his/her complaint if he/she is not satisfied
with the services provided by the Bank or its service providers.
(i) Customers can give their complaint in writing or over telephone or SMS or through the Internet Banking
facility.
(ii) In case the complaint is not resolved within the given time or if he/she is not satisfied with the
solution provided by the bank, the customer can approach Banking Ombudsman or other available legal
avenues with their complaint for grievance redressal.
(iii) Internal Machinery to handle Customer complaints/ grievances: Customers who wish to provide
feedback or send in their complaint can use the following channels available with the Bank (such as Call our
Phone Banking Help lines; Email us at customer.care@ SC.com or Write to us at Customer Care Unit, 19,
Rajaji Salai, Chennai 600001; Avail 24 hours Service Assurance facility by sending SMS to our dedicated
service number: 9980033333; “May I Help You” desks are available at all our branches. Customers can also
approach our Service)
(iv) Managers at the designated desks: In case the response received through the above channels are not
satisfactory, they can write to the Central Nodal Officer, Head of Customer Care or email whose assured
response would be received through letters / emails within 5 working-days.
The information on the help line numbers and the redressal mechanism mentioned above are available in all
the branches of the banks.

Grievance Redressal Policy: The bank’s policy, on grievance redressal has been formulated taking into
account the following:
• Customers are 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.
• All complaints are dealt efficiently and fairly
• The bank employees 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 has been
built. This system would ensure that the redressal sought is just and fair and is within the given frame-work
of rules and regulation. All the employees are aware of the Complaint handling process.

Monthly Forums of Banks: The Bank also has dedicated monthly forums to discuss and analyze the causes
for the complaint numbers, the complaint resolution process and to discuss the progress and action plans on
the same.

Customer Service Committee of the Board: This committee comprises of senior officers of the Bank for
examining any issues of the customers. The Committee examines any other issues having a bearing on the
quality of customer service rendered. This Committee also reviews the functioning of Standing Committee
on Customer Service. The committee is responsible for the following functions.
• To formulate the deposit policy
• To formulate product approval process
• Annual customer satisfaction survey
 To look at and decide on policy matters pertaining to Customer Service.
• To issue guidelines to the Standing Committee on matters relating to customers.
• To seek and obtain feedback from the standing committee on areas pertaining to customer service in terms
of trends of complaints, service issues etc.
• Review and suggest way forward on the reports put up by the standing committee pertaining to complaints
cases of delays in dealing with deceased accounts etc
• To have oversight over the implementation of RBI’s circulars on customer service issued
• To look at all awards given by the Banking Ombudsman to address issues of system deficiencies brought
out by the awards. Also look at reasons for awards which have remained unimplemented for more than 3
months if any.

Standing Committee on Customer Service: The Standing Committee on Customer Service is chaired by
Head of Service of the Bank. Besides two to three senior executives of our bank, the committee also invites
two to three eminent non-executives drawn from the public as members. The committee is responsible for the
following functions:
• Evaluate feed-back on quality of customer service received from various quarters. The committee would
also review comments/feed-back/ complaints on implementation of commitments in the Code of Bank’s
Commitments to Customers. The Committee is 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 regional managers/ functional heads.
• The committee also considers unresolved complaints/grievances referred to it by functional heads
responsible for redressal and offer their advice.
• The committee submits report on its performance to the customer service committee of the board at
quarterly intervals.

Nodal Officer to handle complaints and grievances: Bank has appointed a Central Nodal Officer who is
responsible for the implementation of customer service and complaint handling for the entire bank.
• Appropriate arrangement for receiving complaints and suggestions.
• Display of the name, address and contact number of Central Nodal Officer(s)
• Contact details of Banking Ombudsman of the area
• Code of bank’s commitment to customers.

Resolution of Grievances: The customers can highlight their complaints / issues with our Bank vide the
channels mentioned earlier in the policy. The officer in the concerned unit with whom the customer has
raised the issue is responsible for the resolution of complaints/grievances. The Branch Managers can also be
contacted by the customers for lodging their complaints. The officers of the complaints redressal unit will
ensure closure of all complaints to the customers’ satisfaction. They will ensure that the complaint is
escalated to the appropriate levels in case it is not possible to resolve at his/her level. Whilst the ultimate
endeavour is to ensure we reach a situation where our customers don’t have to complain to senior
management to get an effective redressal, we have put in a robust mechanism to handle these complaints,
review them from a point of view of understanding reasons for the complaint and for the escalation and
working on prevention of recurrence thereof.

OMBUDSMAN SYSTEM IN BANKS

INTRODUCTION

An ombudsman is a person who has been appointed to look into complaints about an
organization. Using an ombudsman is a way of trying to resolve a complaint without
going to court. Banking Ombudsman is a quasi judicial authority functioning under
India’s Banking Ombudsman Scheme, 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 Banking Ombudsman
Scheme was first introduced in India in 1995, and was revised in 2002 and 2006. 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.

The Banking Ombudsman is an official authority to investigate the complaint from the
customers and address the complaint and thereby bring the solution among the aggrieved
parties. So the Banking Ombudsman plays the role of a mediator and serves the purpose
of reconciliation. The Banking Ombudsman has been defined under clause 4 of the
Banking Ombudsman Scheme, 2006.

APPOINTMENT & TENNURE

The Reserve Bank may appoint one or more of its officers 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.

The appointment of Banking Ombudsman under the above Clause may be made for a
period not exceeding three years at a time.
 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.

The provisions shall not apply in respect of any decision taken in or in connection
with any civil or criminal case by a court of law.
 TYPES OF OMBUDSMAN

TYPES OF OMBUDSMAN

Banking Ombudsman S.E.B.I. Ombudsman

Electricity Ombudsman Telecom Ombudsman

Income Tax Ombudsman Insurance Ombudsman

  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.

 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.
 Electricity Ombudsman

The Electricity Regulatory Commission, under section 181 read with sub-section

(5) 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.

 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 telecoms operators frequently threaten to
disconnects the phones and with draw the numbers given t o 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.
 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. It is proposed to initially
setup offices of Ombudsman at Delhi, Mumbai, Kolkata and Chennai.

 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.
 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 thereof;

 non-acceptance, without sufficient cause, of coins tendered and for charging of

commission in respect thereof;

 non-payment or delay in payment of inward remittances ;

 failure to issue or delay in issue of drafts, pay orders or bankers’ cheques;

 non-adherence to prescribed working hours ;

 failure to 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

 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.
 The 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.
 Frivolous or vexatious.

 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 grounds
mentioned above, may, himself or through his authorized representative (other than
an advocate), make a complaint to the Banking Ombudsman within whose
jurisdiction the branch or 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 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.

PERFORMANCE OF OFFICES IN 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 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.
Number of complaints received by the Banking Ombudsman Offices
 Period No of Offices of Complaints received Average
Banking No. of
during the year
Ombudsman No. Change complaints
from per office
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

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:
Number of complaints received in 2005-06 and 2006-07

Period Scheme No. of complaints

running From To Total
received
From To Total Total Per

month
01.04.2005 31.12.2005 9 BO Scheme, 9723 1080

months 2002
01.01.2006 30.06.2007 18 BO Scheme, 60647 3370
2006
months

 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 settled to the satisfaction of the
complainants, 15914 complaints (36%) could not 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 fora, etc. A sample analysis of 756
complaints that could not be considered under the scheme disclosed that 42% of such
complaints fell outside the purview of the scheme and 23% were first resort complaints
and could not be taken up by the Banking Ombudsmen. In 11% of the complaints,
deficiency of service could not be established and the remaining 24% complaints could
not be considered for reasons like they were pending in other fora or the complaints
required
Consideration of elaborate documentary and oral evidence etc. Details of disposal of
complaints over the last five years are furnished in the following table:

Disposal of Complaints by Banking Ombudsman Offices

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

Total complaints 9483 12034 33363 44766 54992

dealt
with during the
year

Complaints settled 3998 5440 14931 21747 29365

to the satisfaction
(42%) (45%) (45%) (49%) (53%)
of complainants (a)
Complaints that 4011 4963 12304 15914 19735
could not be
(42%) (41%) (37%) (36%) (36%)
considered under
the
scheme (b)

Total number of 8009 10403 27235 37661 49100

complaints
(84%) (86%) (82%) (84%) (89%)
disposed of (a+b)

Complaints under 1474 1631 6128 7105 5892

process
(16%) (14%) (18%) (16%) (11%)
Mode of Disposal of Complaints

The Banking Ombudsmen 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)

Sr. Year No. of Disposal by Disposal by

complaints
No. Award settlement
disposed No. % No. %
of
1. 2003-2004 3998 121 2.21 3877 97.78
2. 2004-2005 5440 165 3.03 5275 96.97
3. 2005-2006 14931 146 0.98 14785 99.02
4. 2006-2007 21747 84 0.39 21662 99.61
5. 2007-2008 29365 70 0.24 29295 99.76
 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:
 Analysis of complaints dealt with - category-wise

Category 2002-03 2003-04 2004-05 2005-06 2006-07

Deposit 1789 2500 3239 6733 5803

Accounts
(27%) (26%) (27%) (20%) (15%)
Loans and 1651 1226 2291 5215 5151
Advances
(25%) (13%) (19%) (16%) (13%)
Collection of 908 1001 1245 3058 4058
cheques/bills
(14%) (11%) (10%) (9%) (11%)
Others 2158 4756 5259 18357 23626

(34%) (50%) (44%) (55%) (61%)

Total 6506 9483 12034 33363 38638

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.
Complaints received in 2007-08: Category-wise
 Complaints received in 2006-07 & 2007-08: Category-wise

Sr.No. Nature of complaint Received during

2006-07 2007-08

1. Deposit accounts 5803 5612

2. Remittances 4058 5213

3. Credit cards 7688 10129

4. Loans and advances - General 4442 5297

5. Loans and advances - Housing 709 757

6. Charges without notice 2594 3740

7. Pension 1070 1582

8. Failure on commitments made 1469 6388

9. DSAs and recovery agents 1039 3128

10. Notes and coins 130 141

11. Others 9636 5900

Total 38638 47887

THE CONSUMER PROTECTION ACT, 1986

The consumer protection Act, 1986 is the history of socio-economic legislation in the
country. It is one of the most progressive and comprehensive piece of legislations enacted
for the protection of consumers. It was enacted after in-depth study of consumer
protection laws in a number of countries and in consultation with representatives of
consumers, trade and industry and extensive discussions within the Government.

The Aim of Consumer Protection Act (CPA) is to address the grievances of the
consumers and protecting them from the unethical practices/ behavior or unfair trade
practices of the manufacturer/ supplier. All the provisions of the Act have come into
force from 1 July 1987. The Act was amended in 1991 and 1993. To make the Consumer
Protection Act more functional and purposeful, a comprehensive amendment was carried
out in December 2002 and brought into force from 15 March 2003. As a sequel, the
Consumer Protection Rules, 1987 were also amended and notified on 5 March 2004.

Earlier though there were several legislations to protect the consumer, but the same never
proved adequate to protect consumer and compensate them for their compliances. The act
not only enhances the awareness and educate the consumer but also provide
compensation to them by summary and inexpensive proceedings. Unlike existing laws
which are punitive or preventive in nature, the provisions of this Act are compensatory in
nature. The act is intended to provide simple, speedy and inexpensive redressal to the
consumers' grievances, and relief of a specific nature and award of compensation
wherever appropriate to the consumer. It confers upon consumers eight rights i.e.: basic
needs, safety, information, choice, representation, redress, consumer education, healthy
environment. It provides remedies to the aggrieved customer in form Replace, Remove,
Refund, Redress.
CONSUMER

“Consumer” means any person who,-

Buy any goods for a consideration which has been paid or promised or partly paid and
partly promised, or under any system of deferred payment and includes any user of such
goods other than the person who buys such goods for consideration paid or promised or
partly paid or partly promised or under any system of deferred payment when such use is
made with the approval of such person, but does not include a person who obtains such
goods for resale or for any commercial purpose, or Hires any services for a consideration
which has been paid or promised or partly paid and partly promised, or under any system
of deferred payment and includes any beneficiary of such services other than the person
who hires the services for consideration paid or promised, or partly paid and partly
promised, or under any system of deferred payment, when such services are availed of
with the approval of the first mentioned person.

COMPLAINT

“Complaint” means any allegation in writing made by a complaint that: -

 As a result of any unfair trade practice adopted by any trader, the complainant
has suffered loss or damage.

 The goods mentioned in the complaint suffer from one or more defects.

 The services mentioned in the complaint suffer from deficiency in any respect.

A trader has charged for the goods mentioned in the complaint a price in excess of the
price fixed by or under any law for the time being in force or displayed on the goods or
any package containing such goods, with a view to obtaining any relief provided by this
Act.
Remedies Granted under the Consumer Protection Act, 1986 against
unfair Trade Practices.
The District Forum / State Commission / National Commission may pass one or more of
the following orders to grant relief to the aggrieved consumer :-

1. to remove the defects pointed out by the appropriate laboratory from goods in
question;

2. to replace the goods with new goods of similar description which shall be free
from any defect;

3. to return to the complainant the price, or, as the case may be, the charges paid
by the complainant;

4. to pay such amount as may be awarded by it as compensation to the consumer

for any loss or injury suffered by the consumer due to negligence of the opposite
party;

5. to remove the defects or deficiencies in the services in question;

6. to discontinue the unfair trade practice or the restrictive trade practice or not to
repeat them;

7. not to offer the hazardous goods for sale:

8. to withdraw the hazardous goods from being offered for sale

9. to cease manufacture of hazardous goods and to desist from offering

services which are hazardous in nature;

10. to pay such sum as may be determined by it if it is of the opinion that

loss or injury has been suffered by a large number of consumers who
are not identifiable conveniently:
 11. to issue corrective advertisement to neutralize the effect of misleading
advertisement at the cost of the opposite party responsible for issuing
such misleading advertisement;

12. To provide for adequate costs to parties.

RIGHTS OF CONSUMERS

Right to
Safety
Right to Right to
Be Heard Information

Right to Rights of Right to

Choice Consumers Redress

Right to Safe Right to

Environment Consumer Education

Right to
Basic Needs
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.

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 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 Safe Environment

It means the right to a physical environment that will enhance the quality of life. It
includes protection against environmental damage. It acknowledges the need to protect
and improve the environment for future generations as well. This right involves
protection against environmental problems over which the individual consumer has
control. It acknowledges the need to protect and improve the environment for present and
future generations.

Right to Choice

The right is to be assured, wherever possible, access to a variety of products and services
at competitive prices. It means the right to have access to a variety of products and
services at competitive prices and in the case of monopolies, to have an assurance of
satisfactory quality and service at a fair price. The right to choose has been reformulated
to read: the right to basic goods and services. This is because the unrestrained right of a
minority to choose can mean for the majority a denial of its fair share.
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.
THE BANKING OMBUDSMAN SCHEME, 2006

The Scheme is introduced with the object of enabling resolution of complaints relating to
certain services rendered by banks and to facilitate the satisfaction or settlement of such
complaints.

 SHORT TITLE, COMMENCEMENT EXTENT AND APPLICATION

1) This Scheme may be called the Banking Ombudsman Scheme, 2006.

2) It shall come into force on such date as the Reserve Bank may specify.

3) It shall extend to the whole of India.

4) The Scheme shall apply to the business in India of a bank as defined under the
Scheme.

 SUSPENSION OF THE SCHEME

1) The Reserve Bank, if it is satisfied that it is expedient so to do, may by order

suspend for such period as may be specified in the order, the operation of all or
any of the provisions of the Scheme, either generally or in relation to any
specified bank.
2) The Reserve Bank may, by order, extend from time to time, the period of any
suspension ordered as aforesaid by such period, as it thinks fit.
DEFINITIONS

1) ‘Award’ means an award passed by the Banking Ombudsman in

accordance with the Scheme.
2) ‘Appellate Authority’ means the Deputy Governor in charge of the Department of
the Reserve Bank implementing the Scheme.
3) ‘Authorized representative’ means a person duly appointed and authorized by a
complainant to act on his behalf and represent him in the proceedings
 Under the Scheme before a Banking Ombudsman for consideration of his
complaint.
4) ‘Banking Ombudsman’ means any person appointed under Clause 4 of the
Scheme.
5) ‘Bank’ means a ‘banking company’, a ‘corresponding new bank’, a ‘Regional
Rural Bank’, ‘State Bank of India’ a ‘Subsidiary Bank’ as defined in Section 5 of
the Banking Regulation Act, 1949 (Act 10 of 1949), or a ‘Primary Co-operative
Bank’ as defined in clause (c) of Section 56 of that Act and included in the
Second Schedule of the Reserve Bank of India Act, 1934 (Act 2 of 1934), having
a place of business in India, whether such bank is incorporated in India or outside
India.
6) ‘Complaint’ means a representation in writing or through electronic means
containing a grievance alleging deficiency in banking service as mentioned in
clause 8 of the Scheme.
7) ‘Reserve Bank’ means the Reserve Bank of India constituted by Section 3 of the
Reserve Bank of India Act, 1934 (2 of 1934).
8) ‘The scheme’ means the Banking Ombudsman Scheme, 2006.

9) ‘Secretariat’ means the office constituted as per sub-clause (1) of clause 6 of the
Scheme.
10) ‘Settlement’ means an agreement reached by the parties either by conciliation or
mediation under clause 11 of the Scheme.
ESTABLISHMENT OF OFFICE OF BANKING OMBUDSMAN

 APPOINTMENT & TENURE

1) The Reserve Bank may appoint one or more of its officers 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.
2) The appointment of Banking Ombudsman under the above Clause may be made
for a period not exceeding three years at a time.

 LOCATION OF OFFICE AND TEMPORARY HEADQUARTERS

1) The office of the Banking Ombudsman shall be located at such places as may be
specified by the Reserve Bank.
2) In order to expedite disposal of complaints, the Banking Ombudsman may hold
sittings at such places within his area of jurisdiction as may be considered
necessary and proper by him in respect of a complaint or reference before him.

 SECRETARIAT

1) The Reserve Bank shall depute such number of its officers or other staff to the
office of the Banking Ombudsman as is considered necessary to function as the
secretariat of the Banking Ombudsman.
2) The cost of the Secretariat shall be borne by the Reserve Bank.
JURISDICTION, POWERS AND DUTIES OF BANKING
OMBUDSMAN

 POWERS AND JURISDICTION

1) The Reserve Bank shall specify the territorial limits to which the authority of each
Banking Ombudsman appointed under Clause 4 of the Scheme shall extend.
2) The Banking Ombudsman shall receive and consider complaints relating to the
deficiencies in banking or other services filed on the grounds mentioned in clause
8 and facilitate their satisfaction or settlement by agreement or through
conciliation and mediation between the bank concerned and the aggrieved parties
or by passing an Award in accordance with the Scheme.
3) The Banking Ombudsman shall exercise general powers of superintendence and
control over his Office and shall be responsible for the conduct of business
thereat.
4) The Office of the Banking Ombudsman shall draw up an annual budget for itself
in consultation with Reserve Bank and shall exercise the powers of expenditure
within the approved budget on the lines of Reserve Bank of India Expenditure
Rules, 2005.
5) The Banking Ombudsman shall send to the Governor, Reserve Bank, a report, as
on 30th June every year, containing a general review of the activities of his Office
during the preceding financial year and shall furnish such other information as the
Reserve Bank may direct and the Reserve Bank may, if it considers necessary in
the public interest so to do, publish the report and the information received from
the Banking Ombudsman in such consolidated form or otherwise as it deems fit.
PROCEDURE FOR REDRESSAL OF GRIEVANCE

 GROUNDS OF COMPLAINT

1) Any person may file a complaint with the Banking Ombudsman having
jurisdiction on any one of the following grounds alleging deficiency in
banking including internet banking or other services.

 Non-payment or inordinate delay in the payment or collection of cheques,

drafts, bills etc;

 Non-acceptance, without sufficient cause, of coins tendered and for

charging of commission in respect thereof;

 Non-payment or delay in payment of inward remittances;

 Failure to issue or delay in issue of drafts, pay orders or bankers’ cheques;

 Non-adherence to prescribed working hours;

 Failure to provide or delay in providing a banking facility (other than loans

and advances) promised in writing by a bank or its direct selling agents;

 Delays, non-credit of proceeds to parties' accounts, non-payment of deposit

or non-observance of the Reserve Bank directives, if any, applicable to rate
of interest on deposits in any savings, current or other account maintained
with a bank;

 Complaints from Non-Resident Indians having accounts in India in relation

to their remittances from abroad, deposits and other bank related matters;

 Refusal to open deposit accounts without any valid reason for refusal;

 Levying of charges without adequate prior notice to the customer;

2) Non-adherence by the bank or its subsidiaries to the instructions of Reserve
Bank on ATM/Debit card operations or credit card operations;

 Non-disbursement or delay in disbursement of pension (to the extent the

grievance can be attributed to the action on the part of the bank concerned, but
not with regard to its employees);

 Refusal to accept or delay in accepting payment towards taxes, as required by

Reserve Bank/Government;

 Refusal to issue or delay in issuing, or failure to service or delay in servicing or

redemption of Government securities;

 Forced closure of deposit accounts without due notice or without sufficient

reason;

 Refusal to close or delay in closing the accounts;

 Non-adherence to the fair practices code as adopted by the bank;

 Non-adherence to the provisions of the Code of Bank's Commitments to

Customers issued by Banking Codes and Standards Board of India and as
adopted by the bank

 Non-observance of Reserve Bank guidelines on engagement of recovery agents

by banks; and

 Any other matter relating to the violation of the directives issued by the Reserve
Bank in relation to banking or other services.

3) A complaint on any one of the following grounds alleging deficiency in

banking service in respect of loans and advances may be filed with the
Banking Ombudsman having jurisdiction:

 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; and

 Non-adherence to the provisions of the fair practices code for lenders as adopted
by the bank or Code of Bank’s Commitment to Customers, as the case may be;

 Non-observance of Reserve Bank guidelines on engagement of recovery agents

by banks; and

 Non-observance of any other direction or instruction of the Reserve Bank as may

be specified by the Reserve Bank for this purpose from time to time.

4) The Banking Ombudsman may also deal with such other matter as may be
specified by the Reserve Bank from time to time in this behalf.

 PROCEDURE FOR FILING COMPLAINT

1) Any person who has a grievance against a bank on any one or more of the
grounds mentioned in Clause 8 of the Scheme may, himself or through his
authorized representative (other than an advocate), make a complaint to the
Banking Ombudsman within whose jurisdiction the branch or office of the bank
complained against is located. 3Provided that a complaint arising out of the
operations of credit cards and other types of services with centralized operations,
shall be filed before the Banking Ombudsman within whose territorial jurisdiction
the billing address of the customer is located.

2) a) The complaint in writing shall be duly signed by the complainant or his

authorized representative and shall be, as far as possible, in the form specified in
Annexure ‘A’ or as near as thereto as circumstances admit, stating clearly:

 The name and the address of the complainant,

 The name and address of the branch or office of the bank against which the
complaint is made,

 The facts giving rise to the complaint,

  The nature and extent of the loss caused to the complainant, and

 The relief sought for.

b) The complainant shall file along with the complaint, copies of the documents,
if any, which he proposes to, rely upon and a declaration that the complaint is
maintainable under sub-clause (3) of this clause.

c) A complaint made through electronic means shall also be accepted by the

Banking Ombudsman and a print out of such complaint shall be taken on the
record of the Banking Ombudsman.

d) The Banking Ombudsman shall also entertain complaints covered by this

Scheme received by Central Government or Reserve Bank and forwarded to
him for disposal.

3) No complaint to the Banking Ombudsman shall lie unless:-

a) The complainant had, before making a complaint to the Banking Ombudsman,

made a written representation to the bank and the bank had rejected the complaint
or the complainant had not received any reply within a period of one month after
the bank received his representation or the complainant is not satisfied with the
reply given to him by the bank;

b) The complaint is made not later than one year after the complainant has received
the reply of the bank to his representation or, where no reply is received, not later
than one year and one month after the date of the representation to the bank;

c) The complaint is not in respect of the same cause of action 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 cause of action ;
d) The complaint does not pertain to the same cause of action, 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;

e) The complaint is not frivolous or vexatious in nature; and

f) The complaint is made before the expiry of the period of limitation prescribed
under the Indian Limitation Act, 1963 for such claims.
 POWER TO CALL FOR INFORMATION

1) For the purpose of carrying out his duties under this Scheme, a Banking
Ombudsman may require the bank against which the complaint is made or any
other bank concerned with the complaint to provide any information or furnish
certified copies of any document relating to the complaint which is or is alleged to
be in its possession.

Provided that in the event of the failure of a bank to comply with the requisition without
sufficient cause, the Banking Ombudsman may, if he deems fit, draw the inference that
the information if provided or copies if furnished would be unfavorable to the bank.

2) The Banking Ombudsman shall maintain confidentiality of any information or

document that may come into his knowledge or possession in the course of
discharging his duties and shall not disclose such information or document to any
person except with the consent of the person furnishing such information or
document.

Provided that nothing in this clause shall prevent the Banking Ombudsman from
disclosing information or document furnished by a party in a complaint to the other party
or parties to the extent considered by him to be reasonably required to comply with any
legal requirement or the principles of natural justice and fair play in the proceedings.
 SETTLEMENT OF COMPLAINT BY AGREEMENT

1) As soon as it may be practicable to do, the Banking Ombudsman shall send a

copy of the complaint to the branch or office of the bank named in the complaint,
under advice to the nodal officer referred to in sub-clause (3) of clause 15, and
endeavor to promote a settlement of the complaint by agreement between the
complainant and the bank through conciliation or mediation.

2) For the purpose of promoting a settlement of the complaint, the Banking

Ombudsman may follow such procedure as he may consider just and proper and
he shall not be bound by any rules of evidence.

3) The proceedings before the Banking Ombudsman shall be summary in nature.

 AWARD BY THE BANKING OMBUDSMAN

1) 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 allow the parties, he may, after affording the parties a
reasonable opportunity to present their case, pass an Award or reject the
complaint.

2) The Banking Ombudsman shall take into account 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 relevant to the complaint.

3) The award shall state briefly the reasons for passing the award.
 4) The Award passed under sub-clause (1) shall contain the direction/s, if any, to the
bank for specific performance of its obligations and in addition to or otherwise,
the amount, if any, to be paid by the bank to the complainant by way of
compensation for any loss suffered by the complainant, arising directly out of the
act or omission of the bank.

5) Notwithstanding anything contained in sub-clause (4), the Banking Ombudsman

shall not have the power to pass an award directing payment of an amount which
is more than the actual loss suffered by the complainant as a direct consequence
of the act of omission or commission of the bank, or ten lakh rupees whichever is
lower.

6) In the case of complaints, arising out of credit card operations, the Banking
Ombudsman may also award compensation not exceeding Rs 1 lakh to the
complainant, taking into account the loss of the complainant's time, expenses
incurred by the complainant, harassment and mental anguish suffered by the
complainant.

7) A copy of the Award shall be sent to the complainant and the bank.

8) An award shall lapse and be of no effect unless the complainant furnishes to the
bank concerned within a period of 30 days from the date of receipt of copy of the
Award, a letter of acceptance of the Award in full and final settlement of his
claim.

Provided that no such acceptance may be furnished by the complainant if he has filed an
appeal under sub. Clause (1) of clause 14.

9) The bank shall, unless it has preferred an appeal under sub. Clause (1) of clause
14, within one month from the date of receipt by it of the acceptance in writing of
the Award by the complainant under sub-clause (8), comply with the Award and
intimate compliance to the Banking Ombudsman.
  REJECTION OF THE COMPLAINT

The Banking Ombudsman may reject a complaint at any stage if it appears to him that the
complaint made is;

a) Not on the grounds of complaint referred to in clause 8 or otherwise not in

accordance with sub clause (3) of clause 9; or

b) Beyond the pecuniary jurisdiction of Banking Ombudsman prescribed under

clause 12 (5) and 12 (6) or

c) Requiring consideration of elaborate documentary and oral evidence and the

proceedings before the Banking Ombudsman are not appropriate for adjudication
of such complaint; or

d) Without any sufficient cause; or

e) That it is not pursued by the complainant with reasonable diligence; or

f) In the opinion of the Banking Ombudsman there is no loss or damage or

inconvenience caused to the complainant.

 APPEAL BEFORE THE APPELLATE AUTHORITY:

1) Any person aggrieved by an Award under clause 12 or rejection of a complaint

for the reasons referred to in sub clauses (d) to (f) of clause 13, may within 30
days of the date of receipt of communication of Award or rejection of complaint,
prefer an appeal before the Appellate Authority;

Provided that in case of appeal by a bank, the period of thirty days for filing an appeal
shall commence from the date on which the bank receives letter of acceptance of Award
by complainant under sub. Clause (6) of clause 12;
Provided that the Appellate Authority may, if he is satisfied that the applicant had
sufficient cause for not making the appeal within time, allow a further period not
exceeding 30 days;

Provided further that appeal may be filed by a bank only with the previous sanction of the
Chairman or, in his absence, the Managing Director or the Executive Director or the
Chief Executive Officer or any other officer of equal rank.”

2) The Appellate Authority shall, after giving the parties a reasonable opportunity of
being heard

a) Dismiss the appeal; or

b) Allow the appeal and set aside the Award; or

c) Remand the matter to the Banking Ombudsman for fresh disposal in accordance
with such directions as the Appellate Authority may consider necessary or proper;
or

d) Modify the Award and pass such directions as may be necessary to give effect to
the Award so modified; or

e) Pass any other order as it may deem fit.

3) The order of the Appellate Authority shall have the same effect as the Award
passed by Banking Ombudsman under clause 12 or the order rejecting the
complaint under clause 13, as the case may be.
 BANKS TO DISPLAY SALIENT FEATURES OF THE SCHEME FOR COMMON
KNOWLEDGE OF PUBLIC

1) The banks covered by the Scheme shall ensure that the purpose of the Scheme and
the contact details of the Banking Ombudsman to whom the complaints are to be
made by the aggrieved party are displayed prominently in all the offices and
branches of the bank in such manner that a person visiting the office or branch has
adequate information of the Scheme.

2) The banks covered by the Scheme shall ensure that a copy of the Scheme is
available with the designated officer of the bank for perusal in the office premises
of the bank, if anyone, desires to do so and notice about the availability of the
Scheme with such designated officer shall be displayed along with the notice
under sub-clause (1) of this clause and shall place a copy of the Scheme on their
websites.

3) The banks covered by the Scheme shall appoint Nodal Officers at their
Regional/Zonal Offices and inform the respective Office of the Banking
Ombudsman under whose jurisdiction the Regional/Zonal Office falls. The Nodal
Officer so appointed shall be responsible for representing the bank and furnishing
information to the Banking Ombudsman in respect of complaints filed against the
bank. Wherever more than one zone/region of a bank is falling within the
jurisdiction of a Banking Ombudsman, one of the Nodal Officers shall be
designated as the 'Principal Nodal Officer' for such zones or regions.
 CHAPTER 2

RESEARCH METHODOLOGY

Is the method followed while conducting the study on a particular project? Through this methodology a
systematic study is conducted on the basis of which the basis of a report is produced.

OBJECTIVES OF THE STUDY

1. To present what is grievance redressal system in bank.

2. To understand the duties, power of the Ombudsman.
3. To understands the procedure of redressal system.
4. To present the service of the Banking Ombudsman offered to the customers.
5. To analysis the role of Banking Ombudsman in resolving customers complaints.

SAMPLE DESIGN AND SIZE

In this research,Judgment and convenience sampling method will be used to get the information about
redressal system. This method is used because we are interested in exploring gender or age in terms of
customers review. For conducting this research, a structured questionnaire is prepared and sample 52
customers of any bank are taken.

SAMPLE SIZE

It indicates the number of people to be surveyed. Through large samples give more reliable result than small
samples but due to constraint of time and money, the sample size was restricted to 52 respondents. The
respondent belongs to different income groups and professions.

SAMPLING UNIT
It defines the target populations that will be sampled i.e.it answers who are to be surveyed. In this study, the
sampling unit is the people of bank customers, Thane, Maharashtra.

Keeping in the view the nature of requirements of the study to collect all the relevant information regarding
the extent of awareness of the customers using complaint filing facilities offered by the Ombudasman, direct
personal interview method with structured questionnaire was adopted for the collection of primary data.
Secondary data has been collected through the various internet sites by surfing on internet and from the
records available with bank.

SOURCE OF DATA
Following are the sources of data:

SECONDARY DATA

 Articles on Ombudsman taken from journals, magazines published from time to time
 Through internet

PRIMARY DATA

Questionnaire was used to collect the primary data from respondent. The questionnaire was structured types
and contained questions relating to different dimensions of customers complaints and problems encountered.
An attempt was also made to elicit reasons for or non-usage. The questions included in the questionnaire
were close-ended and offering multiple choices.

NEED OF THE STUDY

1. To know what are the complaints of the customers related to the banks.
2. Promotion of Ombudsman system in the knowledge of customers.
3. Customer’s perception will be taken into consideration about the Ombudsman Scheme.

SCOPE OF STUDY
 Area is restricted to only Thane because due to the time constraint and not able to visit all the branches
in the other cities or states.
 All the classes of the customers were taken into consideration.
 This study is realistic source directly collected from the customers of bank.
 Limitation of this studies are as follows:
 As a research a based on a sample, therefore the findings may not reveal the factual information about
the research problems, through utmost care will be taken to select a truly representative sample.
 Sudden change in the Ombudsman system during the course of research can affect the result.
 The study is limited to area of Thane only.
 The sample size of only 52 was taken from the large population for the purpose of study, so there can be
difference between results of sample from total population.
 Due to continuous change in environment, what is relevant today may be relevant tomorrow.
 CHAPTER 3
REVIEW OF LITERATURE

Meaning of Literature Review

 Provides an overview and a critical evaluation of a body of literature

relating to a research topic or a research problem.
 Analyzes a body of literature in order to classify it by themes or
categories, rather than simply discussing individual works one after
another.
 Presents the research and ideas of the field rather than each
individual work or author by itself.

A literature review often forms part of a larger research project,

such as within a thesis (or major research paper), or it may be an
independent written work, such as a synthesis paper.

Purpose of a Literature Review

A literature review situates your topic in relation to previous

research and illuminates a spot for your research. It accomplishes
several goals:

 Provides background for your topic using previous research.

 Shows you are familiar with previous, relevant research.
 Evaluates the depth and breadth of the research in regards to your topic.
 Determines remaining questions or aspects of your topic in need of research
Goyal and Thakur (2008)
Concludes that public sector banks that have no monopoly licenses are to be given to
new public sector banks and foreign banks. However, when the public sector banks realized
that government was no longer there for them, they started devising various strategies for
survival and growth. In the present study, the researcher has taken 3 public and private
sector banks.

Kamakodi (2007)
Examines how computerization has influenced the banking habits and preference of
Indian customers, and which factors influence these preferences. Changing of residence,
salary and non-availability of technology based services were given as the three main
reasons for changing bank.

Jain and Jain (2006)

Show that the Indian banking industry has undergone radical changes due to
liberalization and globalization measures undertaken since 1991. There has been a
great surge in retail banking. The study based on responses received from 200
customers of Housing Development Financial Corporation (HDFC) bank, Industrial
Credit and Investment Corporation of India (ICICI) bank and some other private and
nationalized banks in Varanasi identified the various types of services offered by
banks, the level of satisfaction about different types of services, expectations about
these services and the level of segmentation among the services offered.
Shankar (2004)
Asserts that customer service in banks means satisfying the needs of customers at
the right time and in the right manner with accuracy, reliability, high service speed,
security and enquiry facility for an efficient customer service. The excellent and
managing customer relationship is the future of any business or everybody’s
business. As such, customer focus is not being viewed as just a business strategy, but
should become a corporate mission. The ongoing review shows that a customer’s
satisfaction of is an invaluable asset for the modern organization. To reduce the
complaints, bank should improve service because the survival of banking business is
 dependent on customer service invaluable asset for the modern organization. To
reduce the complaints, bank should improve service because the survival of banking
business is dependent on customer service.
Dr. Singh (2011)
Observed that the banking ombudsman is a primary focus on resolution of
customer grievances. There has been a substantial increase in the number of
complaints received by the Bank Ombudsman offices. This shows the good faith of
customers in Bank Ombudsman. Bank group wise, there has been an increase in the
number of complaints filed in the case of all scheduled commercial banks. However
there is an increase in the number of complaints from the rural areas but it does not
seem to be up to the mark. Improving accessibility of the scheme for the rural areas is
the need of the day.

Mitra, 2007

Banking industry was highly regulated by the government particularly in pre- reform
period. It was observed that the root causes of poor performance of public sector banks
were stringent regulation, administered interest rates, directed and concessional lending,
deteriorated portfolio, poor recovery process and above all lack of competition
Saraiya Committee (1972)
A customer mostly expects ability to provide what was promised dependably and
accurately. A customer wants to be assured of the knowledge and courtesy of employees
and their ability to convey confidence. A customer also expects caring and individual
concern. Realizing the role played by the banks in regards to service quality, suggested
recommended for improvement of customer services.

Talwar Committee (1975)

Examine the nature of customer services offered by the banks and opined that it is a
dynamic concept and recommended that the bank should assess and reassess the
customers’ perception about bank services, appraise customer services and improve the
customer services.
Narasimham Committee- II (1998),
In the context of customer services in banks emphasized on continuous evaluation and
improvement of the level of customer satisfaction. The committee identified the
weakness of banking sector and recommended provisions for capital adequacy,
liberalization of interest rate, easy norms for entry of foreign banks. Further, it
suggested as a part of the banking reform that an independent outside agency may be
involved to assess customers’ satisfaction level, preferably, from March 1994 with
signing the memorandum of understanding (MOU) by individual banks with RBI. The
ministry of finance proposed in December 1993 that, banks should draw up a
comprehensive code of banking practices, outlining standards for disclosure of
information about the bank’s service, and right and obligations for its customers. This
Committee is also called the “Committee on Banking Sector Reforms” and was
appointed by Central Government headed by Shri M. Narasimham.

Biswas (2008)
Articulated that innovation has become an industry phenomenon and computerized
environment in banking has transformed the banking services which ensured better
customer satisfaction. In the context of customer service in bank
Srivastava (2000)
Opined that, speeding up in the computerization of bank branches enhance the
profitability, operating efficiency, service quality, and to diversify the earning base.

Shanthi (2006)

Viewed that, banks have been upgrading technology day by day and delivering the
products and services through various innovative channels like ATM, internet
banking, mobile banking etc. But, what banks are forgetting is the personal touch that
can develop long-term relationship with customers. Small banks can take the benefit
of this because they cannot be compared with bigger banks in terms of
implementation of technology. It is in the interest of bigger banks that they should use
judicious mix of technology.
Sharma, 2002
Technology has now become a permanent concern to the business environment. The use
of modern technology by banks is one of the strategic responses that manage the
business of banking in more transparent and profitable manner in the globalized and
liberalized financial system
Agboola (2003)
Viewed that, investment in information technology has become an important component
in the overall strategy of banking operations to ensure competitive strength. It continues
to change the way relationship between banks and customers. Banking automation
occasioned by the breakthrough in information technology has brought about various
innovations that now dictate the pace for banking activities. This has far reaching effects
on both the customers and the personnel requirements.

(Ramani, 2007).

Internet banking services have revolutionized the functioning of the entire banking sector.
Most of the bank’s businesses are carried out with the help of electronic gadgets
including computers. Internet banking has not only increased the ease of banking
transactions but also reduced the amount of time and cost spent on these transactions.
Banks have invested a huge amount of money to set up IT infrastructure. This has
resulted in the improvement of productivity and efficiency of the industry and also the
quality of services to consumers. The number of customers who chose online banking as
their preferred method of dealing with their finance is growing rapidly. Cost of internet
banking amounts to a fraction of the cost incurred through alternative delivery channels.
Many customers hesitate to deal with an internet banks as they are not sure of the quality
of products and services they will receive. The distinctive features of internet banking
have given rise to some regulatory and supervisory issues. Internet banking increases
operational efficiencies reduces costs, besides giving a platform for offering value- added
services to the customers.

Patnaik (2004)

Stated the importance of ATM and viewed that ATM become an indispensable tool of
convenience as most of the people have changed the acronym to anytime money.

Selvaraj (2006) studied the customer’s perception towards utilization of ATM and
offered some suggestions for increasing the level of satisfaction of the services of ATM
users.

Nukpezah and Nyumuyo (2009)

Established that the competitive pricing as well as company image contribute to
customer satisfaction and that service quality along a number of pathways drives
customer loyalty and profitability thus: service quality, customer satisfaction, customer
loyalty, market share and profitability. The results among other things reveal that, whilst
service quality and bank image and reputation are important instigators of customer
satisfaction and loyalty, competitive pricing showed a weak linear relationship with
customer satisfaction and loyalty
Mobarek (2007)

Found that, it difficult to compete on price and need to look at other ways to retain
customers. After conducting this research, it is clearly seen that delivery channels are
lacking in meeting the demands of the customer by not making them aware of e-
banking and using obsolete or not very up-to-date technology. It was experiential that
there is a relationship between age group, occupation type and some aspects of e-
banking.

Kansal and Singh (2007)

Studied on customer’s orientations towards banking services in urban areas of Punjab
particularly the innovative services to the customers of some private banks viz, HDFC
bank, ICICI bank and Bank of Punjab. They observed that the most of the services
offered by private banks have remained unutilized by the urban customers
 Khattak and Rehman (2010)
Analyzed the customer's satisfaction and awareness level towards the Islamic Banking Industry of
Pakistan. It has investigated the relationship between different demographic variables and the
satisfaction and awareness of customers. A sample of 156 respondents from different cities of Pakistan
was selected. For the analysis, the Kruskal-Wallis one-way ANOVA was adopted to check the
relationship between demographic variables and satisfaction and awareness. The respondents expressed
their satisfaction to some of the services and expressed dissatisfaction with few. The customers
indicated that they are aware of different products but do not adopt these products.

.
Kumar (2008)

Observed that the main driver is changing customer needs and expectations. Customers in urban India
no longer want to wait in long queues and spend hours in banking transactions. This change in
customer attitude has gone hand in hand with the development of ATMs, phone and net banking along
with availability of service right at the customer's doorstep.
Roy (2001)
Articulated that customer loyalty management program must be a vital part of relationship marketing
exercise should be undertaken at the bank branches. He found that, customer loyalty is a useful tool in
retail banking. Further he suggested that bank should develop ATM usage; financial institutions should
review basic banking services as customer loyalty is a function of more than one variable.

Gopalakrishnan (2006)

In the context of customer complaint opined that, there is a dawn of realization on the banks that customer
retention is more crucial than acquiring new customers. On the other hand, the growing competition and
technological innovations have created a tremendous awareness among the customers of their rights and
entitlements. Along with several strides in banking with technology innovation, customer dissatisfaction is
also growing.
Sharma and Bardia (2003)
Suggested that most of the banks are adhering to out of court settlements, therefore, the banks under
review should also adopt this policy for quick settlement of dispute.
Murthy (2006)
Articulated that, there have been perceptible and positive changes in the approach and attitudes of
bank personnel towards customer in the recent times. An element of professionalism and market
orientation is visible in the approach of PSBs in the present competitive market. But still many
customers’ complaints continue to pour in with various authorities about the quality of customer
service. This is due to widening gap between customer expectations and actual content of customer
service in the banks. Fulfillment of customer needs calls for a proper orientation and undertaking about
the customer aspirations, customer psychology and a commitment to provide services exactly as the
customer expects. In most cases, even managers need to equip themselves with these techniques/skills
and pass them on to others working in the banks. He further suggested that grievances of customers
should be handled properly on regular basis for ensuring customer satisfaction.

Rangarajan (1996)

Articulated that, the future ability of banks to execute their strategy and achieve their business goals
will critically depend on the manner in which they are able to organize their human resources. People
in banks have to be organized effectively, the staffing levels and skill-mix to be optimized right skills
and work culture built up and individual and unit performance closely monitored in order to help
achieve institutional goals. An organization which is devoid of a proper structure will be unable to
execute its mission and strategy, meet its financial and developmental goals and survive in a
competitive environment. Dedicated in building the right skills and work culture is fundamental to the
success of banking industry in India.
 CHAPTER 4
ANALYSIS OF DATA INTERPRETATION

Gender Responses Percentage

male 26 50%
female 26 50%

INTERPRETATION:
In the above diagram, the gender ratio of male and the gender ratio of female is equal.i.e, 26
male and 26 female customers responded.

50
 Age group Responses Percentage%
18-21 33 63.5
22-28 11 21.2
Above28 8 15.4

INTERPRETATION:
Age is an important factor to decide the banking habit of customers. In this research sample
unit is segmented into three categories namely, 18-21, 22-28, above28. From the above table
it is found that the sample unit consist of a maximum of 33 customers in the age group of
18-21, 11 customers from the age group of 22-28 and the minimum representation of
customers from the age group above 28 is 8.

51
BANK NO.OF RESPONDENT PERCENTAGE
SBI 14 26.92
HDFC 12 23.08
Axis Bank 2 3.85
Others 24 46.15

INTERPRETATION:

In the research customers were asked that which bank they use. The
option for same to choose is SBI, HDFC, Axis Bank and Other. So there
are 14 customers are of SBI, 12 were form HDFC bank, 2 of Axis Bank
and 24 customers from other banks.

52
 OPERATING YEARS NO.OF RESPONDENT PERCENTAGE
Less than year 14 26.9
1-5years 32 61.5
6-10 years 6 11.5
More than 10 years Nil Nil

INTERPRETATION:

The operating years of banking account is a most important part of the study as it defines
how many customers uses the bank account for how many years. From the above table there
are 14 customers operating there account in bank for less than one year as 32 customers
operating for 1-5 years, 6 customers operating for 6-10 years and there are 0 customers
operating the account for more than 10 years.

53
 INCOMPLETE NO.OF RESPONDENT PERCENTAGE
INFORMATION
Yes 12 23.1
No 23 44.2
Sometimes 17 32.7

INTERPRETATION:

From the above table we get the data about the incomplete information about banking, as we
asked our selective customers that as they get the incomplete information about their
account or bank. So as per the data 12 customers agree about the fact that they get
incomplete information, 23 customers disagree about that fact and 17 customers agree that
sometimes they get incomplete information.

54
TRUST ABOUT NO.OF CUSTOMERS PERCENTAGE
CONFIDENTIALITY

Yes 51 98.1

No 1 1.9

INTERPRETATION:

Confidentiality of account is essential for every customers of the bank. From the above table
out of 52 customers there are 51 customers having trust for their bank related to their
account confidentiality and only 1 customer does not have trust for their bank related to
their account confidentiality.

55
 BANKING QUERY NO.OF RESPONDENT PERCENTAGE
Never 2 3.8
Yes 34 65.4
Sometimes 16 30.8

INTERPRETATION:

In banking sector, employee of the bank has to be co-operative towards their customers for
gaining the trust of the customers. As per the above table out of 52 customers there are
maximum customers i.e. 34 customers are agreed that the employee of the bank are so co-
operative when they have any query, 16 customers said that sometimes the employees of the
bank are co-operative while asking them a query and there are only 2 customer who
disagree that the employees of the bank are co-operative.

56
 IMPOLITE BEHAVIOUR NO.OF RESPONDENT PERCENTAGE
OF BANK OFFICIAL
Never 20 38.5
Sometimes 21 40.4
Often 11 21.2

INTERPRETATION:

Behavior of banking staff reflects the banking goodwill. Impolite behavior of banking staff
may lead disadvantage for banks. From the above table out of 52 customers max 21
customers faced the impolite behavior of banking staff, 20 customers said that they never
faced any impolite behavior of banking staff and 11 customers said that they often faced any
impolite behavior of staff.

57
 COMMUNICATIVE NO.OF RESPONDENT PERCENTAGE
STAFF
Yes 38 73.1
No 3 5.7
Sometimes 11 21.2

INTERPRETATION:

Communication is a most important source of connecting to the customers. Communication

between banking staff and customers has to be good. As per the above table out of 52
customers 38 customers agree that there banking staff s are communicative towards them,3
customers disagree that there banking staffs are communicative to them and only 11
customers faces that sometimes only there banking staff are communicative.

58
 SATISFACTION OF NO.OF RESPONDENT PERCENTAGE
CUSTOMERS
Yes 31 59.6
No 4 7.7
Sometimes 17 32.7

INTERPRETATION:

Satisfaction of the customers towards their complaints handled by the banking sector is
defined with the help of above table. According to the table max 31 customers are satisfied
the way there complaints are handled by the banks, 4 customers are not satisfied and 17
customers sometimes satisfied with the way of their banks handle their complaints.

59
 SUBJECT OF NO.OF RESPONDENT PERCENTAGE
COMPLAINT
ATM Transaction 17 32.7
Debit card/Credit card 12 23.1
Levying of charges 15 28.8
Borrowing of money 5 9.6
Pension 3 5.8

INTERPRETATION:

Above table explain the subject of the complaints related to the banks .Out of 52
respondent,17 customers faces the ATM transaction problems,12 customers faces Debit
card/Credit card problems,15 customers faces Levying of charges problem,5 customers
faces problem during borrowing of money and 3 customers face the problem related to
pension plans.

60
 AWARENESS OF NO.OF RESPONDENT PERCENTAGE
BANKING OMBUDSMAN
Yes 32 61.5
No 20 38.5

INTERPRETATION:

When banks are not accepting the customer’s complaints, customers can file their
complaints in banking ombudsman. According to the study of project out of 52 customers of
different banks there are only 32 customers who are aware about the ombudsman scheme
and 20 customers do not know about the banking ombudsman scheme.

61
 FILING COMPLAINT IN NO.OF RESPONDENT PERCENTAGE
OMBUDSMAN
Yes 7 86.5
No 45 13.5

INTERPRETATION:

Banking ombudsman is a sector where the complaints of the customers related to their
banking transaction are filed. According to the study and the above table out of 52
customers only 7 customers from different banks filed the complaint in banking ombudsman
and 45 customers are not still filed any complaint in ombudsman.

62
 SATISFACTION OF NO.OF RESPONDENT PERCENTAGE
CUSTOMERS
Yes 48 92.3
No 4 7.7

INTERPRETATION:

Banks gets goodwill in the market by providing large no. of good services to their
customers, ‘customer’ is a king of the market there satisfaction is must. Through the above
table out of 52 customers there are only 48 customers satisfied with the banking services
provided by their banks and only 4 customers are not satisfied with the banking services
according to the study.

63
 RATING FOR BANKING NO.OF RESONDENT PERCENTAGE
SERVICES
Good 34 65.4
Worst 1 1.9
Poor 4 7.7
Excellent 13 25

INTERPRERATION:

For the conclusion of study we asked our customers about their rating for the banking
services provided by their banks. According to the above table out of 52 customers there are
max 34 customers who rate there banks ‘Good’, 13 customers rate ‘Excellent’, 4 customers
rate ‘Poor’ and only 1 customer rate ‘Worst’.

64
 CHAPTER 5

FINDING AND SUGGETION AND CONCLUSION

This chapter summarizes the findings emerged from analysis of the

results pertaining to various aspects of grievance redressal system in banks , few
suggestions have been recommended for the efficient functioning and effective
management of the e- banking and internet banking.

Findings
The present findings from the interpretation of the results regarding factors
considered for adopting of grievance redressal system in banks, and usefulness
and benefits of ombudsman services are enumerated here.

1. In this research out of 52 customers there are maximum customers i.e. 65.4% of customers are agreed
that the employee of the bank are so co-operative when they have any query, 30.8% of customers said
that sometimes the employees of the bank are co-operative while asking them a query and there are
only 3.8% of customer who disagree that the employees of the bank are co-operative.
2. In research out of 52 customers,40.4% of customers faced the impolite behavior of banking staff,
38.5% of customers said that they never faced any impolite behavior of banking staff and 21.2% of
customers said that they often faced any impolite behavior of staff.
3. As per the research out of 52 customer samples 73.1% of customers agree that there banking staff s
are communicative towards them,5.7% of customers disagree that there banking staffs are
communicative to them and only 21.2% of customers faces that sometimes only there banking staff
are communicative.
4. According to the research, 59.6% of customers are satisfied the way there complaints are handled by
the banks, 7.7% of customers are not satisfied and 32.7% of customers sometimes satisfied with the
way of their banks handle their complaints.
5. Above research explain the subject of the complaints related to the banks .Out of 52 respondent,
32.7% of customers faces the ATM transaction problems, 23.1% of customers faces Debit
card/Credit card problems,28.8% of customers faces Levying of charges problem,9.6% of customers
 faces problem during borrowing of money and 5.85 of customers face the problem related to pension
plans.
6. According to the study of project out of 52 customers of different banks there are only 61.55 of
customers who are aware about the ombudsman scheme and 38.5% of customers do not know about
the banking ombudsman scheme.
7. In the research out of 52 customers only 86.5% of customers from different banks filed the complaint
in banking ombudsman and 13.5% of customers are not still filed any complaint in ombudsman.
8. Through the study, out of 52 customers there are only 92.3% of customers satisfied with the banking
services provided by their banks and only 7.7% of customers are not satisfied with the banking
services according to the study.
9. In research,out of 52 customers there are 65.4% of customers who rate there banks ‘Good’, 25% of
customers rate ‘Excellent’, 7.7% of customers rate ‘Poor’ and 1.9% of customer rate ‘Worst’.

Suggestions

The following suggestions are recommended for enhancing, Grievance redressal system in banks and the
advantage of ombudsman scheme for banking customers.

1. most important to make complaint to appropriate person who will resolve your
problem effectively. There is a system in Indian banking to get your problem
resolved by contacting authorities in procedure. First approach to concerned bank,
then Director of Public Grievances, Govt of India, then Ombudsman (RBI) and
finally consumer forum. If you will follow the procedure you will find result sure.
2. Banks should take necessary steps to create awareness among rural people about the
advantages of ombudsman scheme available in the banks.
3. The grievance redressal system should be enhanced to make the online enquiry and
online registration of complaints much more easier to the customers.
4. Most of the customers have not availed of the grievance redressal system and
ombudsman services therefore each banks has to provide awareness among there
customers.
5. Each Banks would prove the genuine awareness while solve the difficulty of clients
6. Suggestion boxes can be installed.this brings the problem or conflict of interest to light.
7. Informal counseling helps to address and manage grievance in the workplace
8. Open door policy can be used. The barriers that exist between the various categories are some extent broken by
personal contact and mutual understanding.
9. Banks have to focus on the reasons for which customers associated with them and try to provide individual
attention. So that customers will associate with them for longer period.
10. The staff of Banks would instill assurance in clients and time after time polite to clients, thus those customers
think secure while doing transaction in the banks.
 CHPTER 6

CONCLUSION

The majority of the clients are not related from a long stretch with their Banks and these clients are a few
times fulfilled by their Banks. The explanations behind relationship with this Public Sector Banks are Safety,
Security, Investment Tips, Faith, Individual Attention, Brand Name and Accessibility, however wellbeing
and security gets most extreme weightage. So if the customers ae not satisfied with the services provided by
there banks they can complaint to there banks accordingly and if the banks ignoring there complaints they
can register there complaints under ombudsman scheme of RBI.

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.
74