The Telegraph
Monday , April 16 , 2012
Since 1st March, 1999
CIMA Gallary

More rejection than redressal

The 15 banking ombudsmen in the country spend more time rejecting consumer complaints than redressing them.

If you look at the annual reports of the Ombudsman Scheme in the last three years brought out by the Reserve Bank of India, you will find that 60-70 per cent of the complaints is rejected by the Ombudsmen. And this percentage is on the increase.

During the year 2010-11, for example, out of 71,274 complaints filed before the ombudsmen, as many as 50,474 complaints were rejected. And the percentage of such eliminated complaints has actually gone up compared to the previous years — in 2009-10, for example, out of 79,266 complaints filed before the ombudsmen, 51,857 were rejected.

Two factors are responsible for this huge dismissal of consumer complaints. While one is the lack of consumer awareness about certain pre-requisites for filing the complaint, the other is the long list of grounds for rejection of complaints provided in the Ombudsman Scheme itself. Together, they are weakening the redress system, being run at a cost of Rs 26.07 crore (2010-2011).

One of the first requirements of filing a complaint before the ombudsman is that the consumer should have first pursued the remedy provided by the bank. However, banks find it convenient to keep consumers ignorant about this pre-condition. So, a large percentage of complaints is straightaway rejected by the ombudsmen for being “first resort complaints”. In the past four years, for example, 31-42 per cent of the complaints has been thrown out only on this ground.

Another factor contributing to the high elimination rate is the long list of “grounds for rejection” provided under the Ombudsman Scheme. For example, an ombudsman can reject a complaint if, in his opinion, there is no loss or damage or inconvenience caused to the complainant. Or if he feels that the complaint was not pursued by the complainant “with reasonable diligence” or it was filed “without sufficient cause”.

For it to be an effective system of alternate redress for bank customers, the scheme has to be completely overhauled. The list of complaints that are outside its jurisdiction should be drastically pruned and so also the grounds for rejection. And the scheme should be in tune with the principles of consumer justice and equity.