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The banking industry has gone through a tough and transformative phase over the past few years with multiple challenges confronting those associated with it.

One is Technological Upgradation and shift towards digitalization of Banking Services.

Second is thorny issue of rising impaired assets {Non-performing assets}, further complicated by Loan-waiver introduced for political reasons.

Third is emphasis on Financial Inclusions for socio-economic motives.

While the Indian banking sector has undergone significant reforms over the last few years, there has been a significant increase in competition in the banking industry from the emergence of FinTech companies, Payment Banks{ like PayTM Bank, AirTel Bank, online wallets & UPI platforms due to technological advancement and tech-savvy human resources. Digitilisation is all around the banking spectrum….The objective is to eventually benefit the customers with better service.

Customer service in banking is one of the most important ways to keep customers coming back. It includes responding to customers’ inquires and complaints in a effective and timely manner and interacting with customers through face to- face meetings, telephone, mail, fax and email.

As a whole the majority of neo-customers or customers, who are non-techno-savy and lacking financial literacy are facing a number of difficulties –which is resulting in sudden rise of complaints-mostly related to Digitalization { as observed in data furnished below.

To retain customers, the bank and its staff has to provide service that is quick, error-free and convenient. Good customer service is the heart of banking. Today banks have a wide variety of competitors like NBFC / Non-banking entities like Credit card service providers for business. Because of the amount of competition, unique products in the market, banking industry has to provide an outstanding customer service and continually strive for improvements in this area.

Frequently Occurring Problems are:-

  • Charging Higher Interest rate than decided for loans during sanction
  • Not providing NOC for Auto/ Home Loans
  • Delay in sanction of loans esp. Housing Loan and Auto Loan
  • Unsatisfactory redressal
  • Non-observance of Fair Practice Code
  • Incorrect interest (ROI) / Excess Billing in Credit cards
  • Additional / un-justified Charges have been levied to my Debit / Credit Card
  • ATM discrepancies (ATM related problems)
  • Mis-sellings/Insurance policy given on credit cards without consent
  • Misbehavior of DSA’s / Call Centers / Recovery Agents

DIGITAL Transaction:-

  • Money has got debited from my A/c, but has not been credited
  • Wallet / Debit Card has been debited twice for the same transaction / service / product
  • Problem related to Cash Back/ Refund/ Incentives
  • Unable to pay via BHIM App
  • Aadhaar Enabled Payment System
  • E-Wallet to bank account credit has not happened
  • Wallet has been blocked by the respective Wallet service provider
  • KYC to Wallet service provider , but the same is not upgraded to fulfill KYC Compliance

Grievance Redressal System

Tier 1 – The first tier of redressal advised by NCH to complainants is the nodal officers / Principal Nodal officer of the respective bank

Tier 2A- Banking is one of the few sectors, which have the tier II system in the Banking Ombudsman Scheme covering the entire country.

Tier 2B- Appelate Authority In case the Tier 1 & 2A do not provide respite, the consumer can approach the Dy Governor of Reserve Bank of India, as an appellate authority.

Tier 3- In case consumer is not satisfied with the award of Banking Ombudsman or appellate authority, he can move to Consumer Forum for relief.

RBI Limiting Liability

Now,Customers have zero to limited liability in unauthorised transactions

The Reserve Bank of India reiterated the framework on limiting customers’ liability in unauthorised electronic banking transactions. The norms include ‘zero liability’ and ‘limited liability’ for customers.

A customer need not bear any loss if the deficiency is on the part of the bank and in cases where the fault lies neither with the bank nor with the customer but lies elsewhere in the system and the customer notifies the bank within three working days of receiving the communication from the bank about the unauthorised transaction.

Where the loss is due to customer’s negligence, the customer has to bear the entire loss until the unauthorised transaction is reported to the bank.

In cases where the fault lies neither with the customer nor with the bank but lies elsewhere in the system and the customer reports the unauthorised transaction with a delay of four to seven working days after receiving the communication about the transaction, the maximum liability of the customer ranges from Rs 5,000 to Rs 25,000, depending on the type of account/instrument.

If the unauthorised transaction is reported beyond seven working days, the customer liability shall be determined as per the bank’s Board-approved policy. The bank is required to credit (shadow reversal) the amount involved in the unauthorised electronic transaction to the customer’s account within 10 working days from the date of notification by the customer. The bank has to resolve the complaint and establish the liability of the customer, if any, within 90 days of the receipt of the complaint. Further, banks have been mandated to require the customers to register their mobile numbers for SMS alerts and for electronic transactions.

Liability of mobile wallet users to be zero, limited in case of fraud, on par with credit card users too.

If you lose money through an unauthorised electronic banking transaction such as a cyber attack on the bank or hacking of your online account, your extent of liability will be limited, even zero if you inform the bank immediately.

Now the RBI will extend this safety net to unauthorised electronic transactions involving prepaid payment Instruments (PPIs) such as digital wallets Mobikwik, Oxigen and Amazon Pay.

Digital Ombudsman w.e.f. 1st Feb’19

As announced in the Monetary Policy Statement of December 5, 2018, the Reserve Bank of India (RBI) launched with effect from 1st Feb’19 the Ombudsman Scheme for Digital Transactions (OSDT) vide Notification dated January 31, 2019 for redressal of complaints against System Participants as defined in the said Scheme.

The Scheme, launched under Section 18 of the Payment and Settlement Systems Act, 2007, will provide a cost-free and expeditious complaint redressal mechanism relating to deficiency in customer services in digital transactions conducted through non-bank entities regulated by RBI. Complaints relating to digital transactions conducted through banks will continue to be handled under the Banking Ombudsman Scheme. The offices of Ombudsman for Digital Transactions will function from the existing 21 offices of the Banking Ombudsman and will handle complaints of customers from their respective territorial jurisdiction.

The Scheme provides for an Appellate mechanism under which the complainant / System Participant has the option to appeal against the decision of the Ombudsman before the Appellate Authority.

The complete Scheme is available on RBI's website.