The fine print is key: Know your rights as a bank customer

Don't do banking transactions without being fully aware of the fine print

You have two bank accounts. One with a public sector bank and one with a private bank. While the former gives you a passbook you update regularly, the latter sends you emailed statements once a quarter. Both are valid proof of the entries of debit and credit in your account. But if you ask the private bank for a passbook, the bank is bound to give you one, provided you had opted to receive the passbook while opening your account. 

Similarly, while trying to withdraw money from the account of a deceased person, a public sector bank might allow it immediately, while in a private bank, the branch manager might not. The latter might not be authorised to allow withdrawal from a deceased person’s account beyond a limit.  

For customers, both instances could look like deficiency in service and reason to lodge a complaint. Increasing awareness about customers’ rights and the Code of Conduct for banks is one reason for the rise of complaints under the Banking Ombudsman Scheme. In 2015-16 there was a rise of 21 per cent in the complaints, as compared to the previous year, according to the Annual Report of the Banking Ombudsman Scheme 2015-16. According to the report, in 2013-14 the total number of complaints was 75,573; in 2014-15 it was 85,131 and in 2015-16 it was 1,02,894.

According to A C Mahajan, chairman, Banking Codes and Standards Board of India (BCSBI), “Customers are now coming forward to lodge complaints with the Banking Ombudsman (BO), unlike earlier. But going by the number of complaints and the number of commercial bank branches, it seems like roughly one complaint per branch in a year. This means a  lot of customers are not lodging complaints.”

Nature of complaints

Non-adherence to BCSBI’s Code of Conduct accounts for the largest share of complaints and has been so for three to four years. In 2013-14 it was 26 per cent, in 2014-15 it was 29 per cent. In 2015-16, it was 34 per cent. The second largest share of complaints was related to ATM and debit cards which accounted for almost 13 per cent.  

“BCSBI conducts customer meets in various cities to apprise about the Code of Conduct for banks. This helps customers know their rights and the services they can rightfully expect from banks. So customers now write to the BO, especially the younger generation,” says Mahajan. 

Following demonetisation, transaction services such as ATM withdrawals, net banking, etc will assume more importance than the regular deposit, investment and loans that banks normally provide. So, complaints will also reflect that,  says Ashvin Parekh, of Ashvin Parekh Advisory Services.

In case of a loan transaction, often the most important terms and conditions are not communicated to customers. Or sometimes consent is not taken for charges added later. Mahajan cites the example of one bank that started debiting from customers’ accounts a charge in the name of ‘speed clearing’ of cheques. Customers often chose to ignore it. 

Sometimes, what a customer perceives as delay might not be really so. For instance, in case the account is debited, but cash is not dispensed, banks have up to seven days to settle the transaction. But customers lodge complaints immediately. 

But when the delay by the bank is not warranted, then the customer’s complaint is justified. For instance, banks are supposed to process loan proposals within few days, but sometimes they take more than a month. “Banks often ask for information in piecemeal manner, though they should ideally ask for all details by way of a check-list,” says Mahajan.

Similarly, reasons for rejecting the loan proposal should be communicated to the customer and the reason should be valid. If not, it amounts to deficiency of service. Even not communicating rise in interest rates or charges is deficiency of service. For instance, if a bank that charges fees for safe deposit vaults depending on the number of visits by the customer, then it should be conveyed to the customer upfront. Otherwise the customer may misconstrue it as over-charging.

Method of lodging the complaint 

Customers can lodge a complaint with the OBO through physical mode, (hand delivery/post/courier/fax) or through electronic mode such as e-mail or online. 

While the physical mode of lodging complaints continues to be most popular, over the years its share has come down. From 67 per cent in 2013-14, it was 51 per cent in 2015-16. As against this, the proportion of complaints lodged through electronic mode has increased by 62 per cent. This is another reason for the increase in the number of complaints, says the report. 

PSU v/s private, foreign banks 

According to the annual report, public sector bank s accounted for 64 per cent of the total complaints, while private sector banks accounted for 26 per cent, foreign banks accounted for three per cent, Regional Rural Banks and Scheduled Urban Co-operative Banks accounted for two per cent of the complaints. Non-bank entities covered by the BO accounted for five per cent of the complaints. 

According to V N Kulkarni, former Bank of India official and counseller with erstwhile debt counselling centre Abhay, in many cases, public sector bank officials are not aware of the Code of Conduct, which may lead to the violation of the code. Today, customers know that for convenience and efficiency they can go to private banks, but for cheaper services and safety they can go to PSU banks, says Parekh. “Customers have different expectations from different banks. When these expectations are not met they feel it is a deficiency of service,” he adds.