About 28% of complaints filed with the Reserve Bank of India’s banking ombudsman between July 2017 and June 2018 were about digital transactions and card payments, the central bank revealed in its annual report on the Banking Ombudsman Scheme. The scheme was introduced in 1995 as a forum for consumer complaints against banks and has since undergone several revisions. The RBI said that due to the increasing volume of complaints about digital payments, it was in the process of formulating a separate ombudsman for digital transactions. It said the ombudsman received 163,590 complaints in 2017-18. Issues with ATMs and debit cards accounted for 15.1% of these; credit cards 7.7%; and mobile and electronic banking – included as a category for the first time – another 5.2%. 

Digital and card payment complaints

  • Of the 163,590 complaints, 24,672 were related to ATMs and debit cards, up from 16,434 in 2016-17. Of these, 60% had to do with ATMs debiting accounts without dispensing cash.
  • There were 12,647 complaints about credit cards, up from 8,297 the previous year. Of these, 30% were related to wrong billing and debits; 8% were about wrong or delayed reporting or not updating credit status with the Credit Information Bureau; and 5% concerned threatening calls and ‘inappropriate approach’ of recovery agents.
  • There were 8,487 complaints about mobile and electronic banking, which was included as a category when the scheme was last revised in July 2017.
  • The report said that the increasing use of digital transactions and the consequent rise in such complaints coincided with the RBI’s instructions on ‘Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’ issued on July 6, 2017.

Ombudsman for digital transactions

As a first step towards setting up a separate ombudsman for complaints about digital payments, the RBI said it Consumer Education and Protection Department organised a seminar on Consumer Protection in Digital Transactions on August 30, 2018 to discuss regulatory and customer protection issues with stakeholders. Issues discussed included:

  • the necessity for a clear definition of what constitutes a digital transaction
  • the trade-off between requirements of the grievance redressal system and freedom for innovations
  • the need for adequate talent with the required skill sets
  • the feasibility of co-regulation, considering that certain service providers are outside the RBI’s regulatory purview.

Streamlining resolution of ATM-related complaints

The RBI announced that a group had been set up to analyse the pattern of ATM-related complaints and identify issues that cause bottlenecks in their redressal, including the issuer and acquirer bank dynamics. The group, headed by the PNO of SBI and with representatives from NPCI, ICICI, HDFC and Corporation Bank, has submitted its report, which the RBI is examining.

Fifth revision of Banking Ombudsman Scheme

The ombudsman scheme, launched in 1995, was revised for the fifth time in July 2017. Here are the salient features of latest revision:

  • The Rs 10 lakh restriction on the disputed amount for accepting a case was removed.
  • The maximum award the ombudsman can issue was raised from Rs 10 lakh to Rs 20 lakh.
  • Compensation of Rs 1 lakh for loss of time, expenses, harassment and mental anguish, previously available only for credit card complaints, was extended to all types of complaints.
  • Additional grounds for filing complaints were introduced – mis-selling of third-party products, and deficiency in mobile and electronic banking services.
  • The scope of appealable clauses was widened to include complaints closed on the grounds of “requiring consideration of elaborate documentary and oral evidence”.
  • The procedure for settling a complaint by agreement was made easier by providing an opportunity for complainants to furnish their submission in writing within a timeframe, on the written submission made by the bank.

RBI planning uniform complaints system for all digital payments

Earlier this month the RBI announced it was planning to standardise timelines to resolve customer complaints and compensation claims across all authorised digital payments systems and said new framework would be in place by the end of June. It said the various payment systems – UPI, NEFT, IMPS – had different timelines for resolving customer complaints, which the new framework would standardize. “It is necessary to harmonise the turnaround time of resolution of customer complaints and chargebacks, and to have a compensation framework in place for the benefit of customers,” the RBI’s note read.