A Study on Effectiveness of Indian Banking Ombudsman

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International Journal of Mechanical Engineering and Technology (IJMET) Volume 9, Issue 5, May 2018, pp. 267–274, Article ID: IJMET_09_05_030 Available online at http://iaeme.com/Home/issue/IJMET?Volume=9&Issue=5 ISSN Print: 0976-6340 and ISSN Online: 0976-6359

A STUDY ON EFFECTIVENESS OF INDIAN BANKING OMBUDSMAN

Kantamaneni HemaDivya Assistant Professor, KoneruLakshmaiah Educational foundation (K L University) Green Fields, Vaddeswaram, Guntur district, Andhra Pradesh, India

Koteshwar Reddy MBA Student, KLU Business School KoneruLakshmaiah Educational foundation (K L University) Green Fields, Vaddeswaram, Guntur district, Andhra Pradesh, India

Satyadev Kota MBA Student, KLU Business School KoneruLakshmaiah Educational foundation (K L University) Green Fields, Vaddeswaram, Guntur district, Andhra Pradesh, India

ABSTRACT In the present banking system, 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 they are service organizations. The capability of the banking industry to attain the socioeconomic objectives and in the procedure bringing more and more customers into its fold will eventually depend on the satisfaction and connectivity of the customers. Banks have a strong belief that a happy customer is the primary factor in developing their business. In current competitive banking scenario most of Indian banks are more inclined towards the banking business & profit, which cause the ignorance of banking norms by the Indian banks & responsible for banking grievances. So, the present paper tries to analyse the role of the banking Ombudsman in India and tries to evaluate the effectiveness of the Banks ombudsman as a banking dispute redressal body. Keywords: Banking Ombudsman, banking Disputes, Banking Redressal Mechanism customer relations, banking performance Cite this Article: Kantamaneni, HemaDivya T, Koteshwar Reddy and Satyadev Kota, A Study on Effectiveness of Indian Banking Ombudsman, International Journal of Mechanical Engineering and Technology, 9(5), 2018, pp. 267–274 http://iaeme.com/Home/issue/IJMET?Volume=9&Issue=5

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1. 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.

2. OBJECTIVES OF THE BANKING OMBUDSMAN 1. To present the modalities of Banking Ombudsman Scheme 2. To understand the duties, functions & powers of the Ombudsman 3. To present the services of the Banking Ombudsman offered to the customer. 4. To analyze the role of Banking Ombudsman in resolving customer complaints.

3. REVIEW OF LITERATURE The number of studies has been conducted regarding the services of banking ombudsman to their customers. Some of them are listed below 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. Furthermore, 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

http://iaeme.com/Home/journal/IJMET 268 [email protected] A Study on Effectiveness of Indian Banking Ombudsman 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.

3.1. Data Collection The present study is based on secondary data. The secondary data were collected from technical books, articles, previous studies, committee reports, Indian Banks Association Bulletin (IBI), RBI bulletins, staff training college of the HDFC Bank and from data relating to banks. The present study is confined to five years i.e. 2011 to 2015

3.2. Data Analysis

TABLE 1 No of Complaints Received during the Year PARTICULARS 2011-12 2012-13 2013-14 2014-15 NO OF OBOs 15 15 15 15 COMPLAINTS RECEIVED DURING 72889 70541 76573 85131 THE YEAR % of Change -3.22% 8.55% 11.18%

CHART 1 No of Complaints received during the year From the above table it is clear that complaints received on banks is increasing year by year, Whereas no of complaints received in the year 2012-13 decreased by 3.22% as against the previous year 2011-12,But complaints received in the years 2013-14 & 2014-15 have increased almost by 5.3% & 8% respectively when compared to the year 2012-13. The reason for increase in the no of complaints is due to lack of sufficient banking ombudsman offices as well as lack of sufficient officers and required staff. Delay in disposal and settlement of complaints is causing to carry forward the complaints which remain unsolved in previous years to current years, this is one of the crucial factor which accounts for increase in complaints year by year

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TABLE 2 OBO WISE RECEIPTS OF COMPLAINTS % CHANGE IN % TO TOTAL 2011- 2012- 2013- 2014- OBO 2014-15 OVER COMPLAINT 12 13 14 15 2013-14 S AHMEDABAD 4590 4838 4588 4965 8.22 5.83 BANGALORE 3486 3318 4101 4610 12.41 5.42 BHOPAL 5953 4920 4907 5451 11.09 6.4 BHUBANESWAR 1826 1523 1498 2448 63.42 2.88 CHANDIGARH 3521 3094 3162 3131 -0.98 3.68 CHENNAI 6614 7255 8775 8285 -5.58 9.73 GUWAHATI 708 807 770 1054 36.98 1.24 HYDERABAD 5167 4303 4477 4366 -2.48 5.13 JAIUR 4209 4099 4104 4088 -0.39 4.8 KANPUR 9633 9012 8389 8818 5.11 10.36 KOLKATA 4838 4388 4698 5277 12.32 6.2 MUMBAI 7905 8607 9965 10446 4.83 12.27 NEW DELHI 9180 9444 11045 14712 33.2 17.28 PATNA 2708 2785 3253 4456 36.98 5.23 THIRUVANATAPURA 2541 2148 2841 3024 6.44 3.55 M

CHART 2 OBO-WISE RECEIPT OF COMPLAINTS As per the data in table 2 Ombudsman offices received most no bank complaints from Kanpur, whereas Least no of complaints were received from Guwahati in the year 2011-2012. Highest no of complaints were received by ombudsman offices from Delhi and lowest no of complaints have come from Guwahati in 2012-13, 2013-14 & 2014-15 years respectively. Complaints from Bhubaneswar have increased by about 64% of complaints In 2014-15 as against same period in 2013-14.Delhi stood in first place in total % of complaints received over a period of four years with 17.28

TABLE 3 MODES –WISE RECEIPT OF COMPLAINTS MODE 2011-12 % 2012-13 % 2013-14 % 2014-15 % E-mail 9499 13 11381 16.1 15181 19.8 19508 22.9 On line 10026 13.8 8160 11.6 9785 12.8 11634 13.7 post 53364 73.2 51000 70.3 51607 67.4 53989 63.4 total 72889 100 70541 1 76573 100 85131 100

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CHART 3 MODEWISE RECEIPT OF COMPLAINTS The data in table 3 above shows about 70% of complaints were received by postal/courier in every year, however complaints being received by postal mode have come down from 73.2% in 2011-12 to 63.4 in 2014-15. Complaints received by online mode and email are less than complaints received by any other mode, but there is significant rise % of complaints received by online mode and email from 0.13022% & 0.13075 in 2011-2012 to 22.96 in &13.6666 2014-15.This shows that customers are more interested in filing complaints by email or online mode than by postal/courier mode.

TABLE 4 GROUP WISE CLASSIFICATIONS OF COMPLAINTS 2011- 2012- 2013- 2014- Particulars % % % % 2012 2013 2014 2015 INDIVIDUAL 66279 90.93 65808 93.30 70913 92.60 78353 92.03 INDIVIDUAL 2635 3.615 2245 3.18 2163 2.824 2566 3.01 BUSINESS PARTNERSHIP 253 0.347 227 0.321 151 0.197 255 0.30 LIMITED 690 0.946 628 0.890 510 0.666 699 0.82 COMPANY TRUST 150 0.205 213 0.301 184 0.240 224 0.263 ASSOCIATION 461 0.632 325 0.460 297 0.387 281 0.330 GOVT 521 0.714 390 0.552 287 0.374 376 0.441 DEPARTMENT PSUS 80 0.109 222 0.314 266 0.347 234 0.274 OTHERS 1820 2.496 483 0.684 1802 2.353 1319 1.54 TOTAL 72889 100 70541 100 76573 100 85131 100

CHART 4 GROUP WISE CLASSIFICATIONS OF COMPLAINTS Over 90% of complaints mentioned in the table 4 above were received by banking ombudsman offices from individual persons. Most interesting fact is complaints received

http://iaeme.com/Home/journal/IJMET 271 [email protected] Kantamaneni, HemaDivya T, Koteshwar Reddy and Satyadev Kota from individual persons has increased by about 3% in 2014-15(90.93%) as against 2014-15 (93.5%) , however % of complaints from individuals were decreased by .90% (92.4%)in 2013-14 & 1.20% in (92.1%) in 2014-15when compared to 93.3% in 2012-13 Lowest % of complaints were received from public sector units as mentioned below 0.10975593% in 2011- 12, 0.314711% in 2012-13, 0.347381 in 2013-14, 0.27487 in 2014-15.

TABLE 5 BANK-WISE CLASSIFICATION OF COMPLAINTS

2011- 2012- 2013- 2014- BANK GROUP % % % % 12 13 14 15 NATIONALISED BANKS 22326 30.63 21609 30.63 24391 31.85 28891 34 SBI & ASSOCIATES 25848 35.46 23134 32.80 24367 31.82 26529 31.16 PRIVATE SECTOR 15090 20.70 15653 22.19 17030 22.24 19773 23.23 BANKS FOREIGN BANKS 5068 6.96 4859 6.89 5016 6.56 3406 4 RRBs 1439 1.97 1489 2.11 1590 2.07 1966 2.31 OTHERS 3118 4.28 3797 5.38 4179 5.46 4566 5.3

72889 100 70541 100 76573 100 85131 100 TOTAL

CHART 5 BANK-WISE CLASSIFICATION OF COMPLAINTS The data in table 5 shows highest no complaints by banking ombudsman offices from customers are against nationalized banks. At the same time almost equal no complaints were also on SBI and its associated banks. Lowest no of complaints received from customers were on regional rural banks. This indicates that regional rural banks are performing better than any other category of banks. The reason for more complaints received on public sector banks is the staff in these banks is not as efficient and punctual as staff in private and other banks.

TABLE 6 CATEGORIES –WISE COMPLAINT DISTRIBUTION

2011- 2012- 2013- 2014- PARTICULARS % % % % 12 13 14 15 DEPOSIT ACCOUNTS 8713 11.95 3913 5.547 4032 5.266 4661 5.475 REMITTANCES 3928 5.389 2664 3.777 2659 3.473 2700 3.172 ATM/DEBIT/CREDIT CARD 14492 19.88 17867 25.33 18474 24.13 18123 21.29 RELATED LOANS AND ADVANCES 6016 8.254 5996 8.5 5655 7.385 4846 5.692 LEVY OF CHARGES WITHOUT 3806 5.222 3817 5.411 4547 5.938 5510 6.472 PRIOR NOTICE PENSION PAYMENTS 5944 8.155 5740 8.137 6555 8.56 5777 6.786 FAILURE TO MEET 18365 25.2 18130 25.7 20368 26.6 24850 29.19 COMMITMENTS DSAsAND RECOVERY AGENTS 459 0.63 351 0.498 295 0.385 347 0.408 NOTES AND COINS 165 0.226 56 0.079 63 0.082 61 0.072 OTHERS 7327 10.05 8635 12.24 9861 12.88 14482 17.01 OUT OF SUBJECT 3674 5.041 3372 4.78 4064 5.307 3774 4.433 TOTAL 72889 100 70541 100 76573 100 85131 100

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CHART 6 CATEGORIES WISE COMPLAINT DISTRIBUTION From the above information in table 6 it was observed how complaints are category –wise distributed. Most no of cases during every year have received from the category called failure to meet Commitments with 25.2% in 2011-12 to 29.19 % in 2014-15.This indicates that banks are not able to keep their words & gain confidence of customers. Among those categories ATM/ Debit Card related complaints have been increasing year by year from 19% in 2011-12 to 24.6% in 2014-15.

TABLE 7 DISPOSAL OF MAINTAINABLE/NON-MAINTAINABLE COMPLAINTS COMPLAINTS 2011- 2012- 2013- 2014- % % % % DISPOSED 12 13 14 15 MAINTAINABLE 37455 51.39% 39400 56.52% 44822 56.90% 43035 50.80% NON MAINTAINABLE 35430 48.61% 30304 43.48% 33923 43.10% 41625 49.20% TOTAL COMPLAINTS 72885 100% 69704 100% 78745 100% 84660 100 DISPOSED

CHART 7 DISPOSAL OF MAINTAINABLE/NON-MAINTAINABLE COMPLAINTS Table 7 gives information about how maintainable or non-maintainable complaints in every year disposed or solved by the banking ombudsman offices. Maintainable complaints solved in the year 2013-14 have increased from 51.39% in 2011-12& 56.52% in 2012-13to 56.90% in 2013-14. Every year more than 50% of maintainable complaints were disposed or solved. Whereas maintainable complaints disposed or solved in the year 2014-15 (50.80%) has come down by 6.1% for the same period in 2013-14 (56.90%).

4. SUGGESTIONS From the overall study of this research it is found that there is some lacking in customer knowledge about the benefits of Banking Ombudsman Scheme. So it is very essential to spread awareness among the customers so that bank customers can avoid unnecessary risk related to banking transactions.

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Awareness about this scheme should be created through many ways like social media where majority of customer’s access. By distributing the pamphlets and keeping banners in every bank can also create the awareness among the customers. Awareness campaigns should be conducted by organizing seminars, conferences etc.

5. CONCLUSION The banking ombudsman scheme is a boon and very important channel for redressal of grievances by the general public against banks and banking services. .In the competitive banking era, banks have to strive hard for retaining and enlarging their customer base by providing prompt and efficient services. Customers are satisfied only when the services provided by the banks are according to their expectation and when their grievances are handled carefully. Reserve bank of India has taken a great step to redress the grievances of customers and it is called as Banking Ombudsman Scheme. Banking Ombudsman provides a platform for the customers so the customers can approach for getting solutions of their grievances. From the above discussion and analysis shows that a good number of complaints is received and redressed by banking ombudsman, it can be said that customers are very much satisfied with the services of banking ombudsman. This is in the case in urban population but rural population is still not aware about the banking ombudsman.

REFERENCES

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