In many cases like wrong reporting to CIBIL, upgrading credit card without consent, mis-selling and blank clause in loan agreement by banks, the Ombudsman has ruled in favour of the customer

Banking customers continue to run from pillar to post to resolve their grievances, however, many of them fail to approach the Banking Ombudsman, who over the last year has ruled in customers’ favour on several occasions. According to the Reserve Bank of India’s (RBI) annual report on Banking Ombudsman (BO), during 2010-2011, total number of cases registered with the BO fell by 10% to 71,274 cases from 79,266 cases a year ago.

Interestingly, of the total complaints received, 31% belonged to the State Bank of India (SBI) group, followed by 29% of other nationalised banks. While complaints relating ATM, debit and credit cards continue to dominate the list, the report has explained some of the interesting cases dealt by the BO in favour of the customers.

Moneylife brings you some of these cases

Wrong reporting to CIBIL

Pinky (named changed) was not given a home loan as her CIBIL score was not good. She had made full and final settlement of her outstanding dues on her earlier personal loan. However, she learnt that the payment made was credited to the usual account and the account was not closed. This resulted in accumulation of charges and she was denied the home loan. Despite complaining to the bank, the issue remained unresolved and she approached BO. The BO observed that the bank made the outstanding amount as ‘Nil’ but updated CIBIL as ‘Settled’. It held bank guilty of deficiency in service and ordered to pay Pinky a compensation of Rs5,000 as expenses. The BO observed that since a CIBIL report is crucial parameter in sanctioning loans, banks should regularly update it.

Upgrading credit cards without consent

Mr Nair (name changed) a senior citizen is a credit card holder. Seeing a bank’s offer on platinum credit cards, he asked the bank to send him the related literature which will allow him to take a buying decision. However the bank, without his consent, sends him the platinum card along with the literature. It later sends him a bill of around Rs5,500. Mr Nair was not interested in this card and requested the bank to cancel it. The bank, instead of resolving the issue, harassed him for the outstanding amount on the platinum card. Mr Nair approached the BO. The ombudsman directed the bank to reverse the card fees and related charges and confirm Nil on the card account. It also asked the bank covert the platinum card into a lifetime free card.

Cheques dropped in drop box

To avoid the long rush at the counter to deposit his cheque, Rahul (name changed) dropped it in bank’s drop box. Surprisingly, his cheque was not credited and on inquiring it was revealed that the bank did not receive it. Later he learns that the cheque was paid to some other bank. On complaining to the other bank, he finds that a new account was opened in his name and the amount was withdrawn soon after it was credited. He complained to the BO, who found that the bank, which had opened the account, was lax in monitoring the account and the KYC (know your customer) norms and the account holder was not traceable. Rahul was paid his cheque amount by the other bank on the direction of the BO.

Mis-selling

Ashok (name changed) bough two insurance policies, each of Rs50,000 from his bank. Later he realized that he has to pay a premium of Rs50,000 on half-yearly basis. Considering his weak financial position, he approached the bank, which in turn asked him to contact the insurance company.

The insurance company assured Ashok that nothing was payable on these polices. But later when he asked them to cancel his polices, he was informed that the policies have lapsed due to non-payment of premiums and no amount is payable to him. The matter went to BO. Representatives of the insurance company and bank’s branch manger were present. The insurance company argued that they had sent repeated reminders to the policyholder on premium payment but were unable to produce any document. Meanwhile, the bank manager confirmed that he had sold the policy on the condition that it required one-time payment as explained by the insurance company. The BO observed that policy was sold to Ashok without even considering his financial status and education level and insurance company did not produce any evidence. The BO concluded that the company mis-sold insurance policy and bank was party to it. The company agreed to refund the collected amount of Rs1 lakh.

Blank clause in the loan agreement

An education loan was sanctioned to Veena (name changed) against the collateral of JDA patta of a property by the bank. Veena wanted to construct house on the plot and thought of foreclosing the loan. However bank insisted on the payment of foreclosure charge of Rs38,960. Veena paid the said amount but also complained to the BO office. While hearing the matter, the BO found that that the relevant clause in the loan agreement was left blank. It directed the bank to refund the foreclosure charges.