Banking

According to official records and data, there are 94,384 rural cooperative banks in India, along with 27 public sector banks, 21 private sector banks, 49 foreign banks, 56 regional rural banks, and 1562 urban cooperative banks. According to the World Bank’s 2017 Global Findex Report, the Jan Dhan Yojana’s extensive implementation has led to 80% of Indian adults having a bank account. It should be noted, too, that only 29% of those with bank accounts have engaged in digital transactions, and only 5% have accessed their accounts online or using mobile devices. The majority of Indians still rely on physical bank access due to digital illiteracy and a lack of resources to access financial services. Government initiatives such as Digital India and Bharat Net Programme aim at increasing the internet penetration into rural areas for greater use of e-banking. Government programmes like Digital India and the Bharat Net Program seek to increase internet access in rural regions so that more people can utilise e-banking.

Grounds For Complaint

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;
• 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;
• 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 or 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.

A customer can also lodge a complaint on the following grounds of deficiency in service with respect to loans and advances

• 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 any other direction or instruction of the Reserve Bank as may be specified by the Reserve Bank for this purpose from time to time;
• a customer would also be able to lodge a complaint against the bank for its non-adherence to the provisions of the fair practices code for lenders or the Code of Bank’s Commitment to Customers issued by the Banking Codes and Standards Board of India (BCSBI).

When Complaints Would Not Be Accepted

There are various situations which might cause the complaint to be rejected. These include situations where the consumer is unable to file an appeal against an order within a period of three months, where the complaint is based on a frivolous cause of action, where the complaint falls outside the jurisdiction of the authority approached, and when the complaint has been filed under wrong sections of the act, and other such situations. This requires careful reading of all acts and regulations.

Complaint Redressal Mechanism

1. Complaint Management System (“CMS”) through Integrated Grievance Redressal Mechanism (INGRAM)

On 24th June 2019 RBI launched a software application called Complaint Management System (“CMS”) through Integrated Grievance Redressal Mechanism (INGRAM) in order to effectively support the Ombudsman framework 2006.

2. Integrated Ombudsman Scheme, 2021

The Banking Ombudsman appointed has jurisdiction over all commercial banks, regional banks and scheduled primary cooperatives in India.

The Reserve Bank- Integrated Ombudsman Scheme, 2021

3. Public Grievances Redressal Mechanism

Grievances received in the Department of Financial Services online or by post / manually in the Department of are processed and forwarded through CPGRAMS (Centralized Public Grievance Redress and Monitoring System) to the concerned organizations for resolution/disposal and are monitored and periodically reviewed.

Department of Financial Services- Public Grievances Redressal Mechanism

4. Approaching any other appropriate judicial or quasi-judicial body

The complainant is free to take the service provider to a court or any other suitable venue (judicial or quasi-judicial). The proceedings in consumer commissions are not mired by the niceties of procedure, allowing the complainant to file a complaint for himself. As a consumer, the aggrieved party can take the service provider to the appropriate consumer commission, based on the pecuniary and territorial jurisdiction. The jurisdictions of the various consumer commissions are as follows-

a) District Commission:

The aggrieved consumer can reach out to the District Commission under section 34 of the CPA, 2019, which provides that the district commission shall entertain matters where the value of the goods or services paid as consideration does not exceed more than one crore rupees.

b) State Commission:

In cases where the value of the goods or services paid as consideration is more than one crore, but less than 10 crores, the consumer can approach the State Commission. Moreover, in cases of unfair contracts, the State Commission has original jurisdiction and the consumer can be directly approached. An appeal against the order of the District Commission can also be made under section 47 of the CPA, 2019.

c) National Commission:

The National Commission can entertain matters where the value of goods or services paid as consideration exceeds 10 crores. Section 58 also provides that complaints against unfair contracts can be entertained by NCDRC when the amount of value paid exceeds 10 crores. The NCDRC also has appellate jurisdiction against the orders of any State Commission and Central Authority.

Moreover, it must also be kept in mind that section 100 of the CPA, 2019 provides that the remedy under CPA is in addition and not in derogation of other available remedies.
Another remedy available to consumers is mediation. Chapter 5 of the Consumer Protection Act provides for establishing mediation cells and resolving consumer complaints using mediation.

5. Special Courts for securities

These courts dispense of offenses concerning securities operations and the subjects related therewith. The Special Court (Trial of Offenses Relating to Transactions in Securities) Act, 1992 empowers the Central Government to appoint Custodian, who shall publish a notification in the Official Gazette regarding the list of persons involved in the offense connected with transaction of securities. The Act provides that if a person aggrieved by the notification or revocation ordered by the Custodian shall file a petition before the Special Court within thirty days of such order.

6. Central Consumer Protection Authority

If the commission finds violations of rights of consumers or in notice of trade practices which is unfair it can inquire or cause an inquiry, either on receipt of complaint or suo moto or as directed by Central Government. If the commission finds, after preliminary inquiry, of an existence of a prima facie case of consumer rights violation or it is in notice of any unfair trade practice or any wrong or inaccurate advertisement which is prejudicial to public interest or to the interests of the consumers,it can order an investigation by the District Collector or by Director General.
The consumer can complain to the District Collector of the respective district for investigation and subsequent proceedings by the CCPA. He/she/they can also submit a complaint via email, at com-ccpa@nic.in.

Regulatory Bodies

• Reserve Bank of India (RBI) is the central bank of India and manages credit supply, regulates operations of banks, and helps maintain a healthy financial system.
• Securities and Exchange Board of India (SEBI) protects the interests of the participants and enforces a set of rules to ensure that the market functions effectively
• Insurance Regulatory and Development Authority of India (IRDAI) promotes orderly growth and proper functioning of the insurance industry in India.
• The Ministry of Corporate Affairs is one of the financial regulators in India that regulates the functioning industrial and services sectors.
• Pension Funds Regulatory and Development Authority (PFRDA) regulates pensions

Legislations

1. Banking Regulation Act, 1949

The Banking Regulation Act, 1949

2. Banking Regulation (Amendment) Act, 2020.

3. Banking Ombudsman Scheme, 2006

The Banking Ombudsman Scheme, 2006

4. Reserve Bank of India Act 1934

Reserve Bank of India Act, 1934

5. Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881

6. The Payment and Settlement Systems Act, 2007

The Payment and Settlement Systems Act, 2007

7. The Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992

8. The Special Court (Trial of Offences Relating to Transactions in Securities) Rules, 1992

The Special Court (Trial of Offences Relating to Transactions in Securities) Rules, 1992

Landmark Judgements

1. Bank of Baroda v. Ranjeet Singh

The provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 left no manner of doubt that the Legislature had clearly forbidden any other Court or Authority to exercise any jurisdictional power or authority except the SC and HC exercising their jurisdiction u/Art. 226 and 227 of the Constitution in relation to matters specified in s. 17 of the 1993 Act. Therefore, the District Forum was not justified in allowing the interim application of the Respondent seeking return of the documents.

2. Metco Export International v. Federal Bank Limited and others

The National Commission reiterated the fact that commercial purpose shall depend on the facts and circumstances of each case. Here it was held that availing of this service is not an activity directly leading to profit and thus the complainant was a consumer.

3. CITI Bank N. A., Home Loan Department and another v. Ramesh Kalyan Durg and another

If the Complainants suffer the loss due to loss of the said documents the bank will be liable to compensate the Complainant.

4. HDFC Bank Ltd. v. Balwinder Singh

Practices involving forced repossession by the bank are strongly deprecated.

5. Prakash Chimanlal Sheth v. HDFC Bank limited, Maharashtra

Bank officials declining to encash the cheque is a deficiency of service.

6. Neelam Pansari & Another v. C.G.M State Bank of India & Another

NCDRC held SBI liable for deficiency in service for unnecessary increase in the rate of interest.

Sample Of Complaint:

The below mentioned link would direct the user to complaint form which is to be filed before the
ombudsman- Form of Complaint

DCDRC format.

SCDRC format

NCDRC format.

Important Links And Resources

For more information on grievance redressal- Complaints

FAQs