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RBI sees 387% rise in complaints against NBFCs, 57.54% rise against banks: Banking Ombudsman Annual Report

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RBI’s annual report on Banking Ombudsman SchemeOn February 9, 2021, Reserve Bank of India (RBI) released the Annual Report of the “Ombudsman Schemes of the Reserve Bank for the year 2019-20” i.e. the period covering July 1, 2019 to June 30, 2020. In accordance with the report, the complaints received at Office of Banking Ombudsman (OBO) recorded an increase of 57.54% Year-on-Year (Y-o-Y) in FY19-20. There were a total of 308,630 complaints in the FY20 as against 195,901 in FY19.

  • Complaints against NBFCs increased by 387%. The ombudsman for NBFCs received a total of 19,432 complaints in the same FY20 as against 3,991 in FY 19.
  • Of these, 85.65% were received electronically i.e. through the online portal CMS and through email, as against 72.19% in the previous year.

The Annual Report covers the activities under the Banking Ombudsman Scheme (BOS), the Ombudsman Scheme for Non-Banking Financial Companies (OSNBFC) and the Ombudsman Scheme for Digital Transactions (OSDT).

Key Highlights:

–There was an increase of 64.97% in the receipt of complaints under the three Ombudsman Schemes, from 2,00,362 complaints in 2018-19 to 3,30,543 complaints in 2019-20.

–The OBOs maintained a disposal rate of 92.36% in FY20 as against 94.03% in 2018-19.

— 72.27 per cent of the maintainable complaints were resolved through mediation and conciliation.

–The major grounds of complaints at OBOs were about digital modes of transactions viz. ATM/Debit Cards; Mobile/Electronic banking constituting 44.66% of the total complaints received.

–The average cost of handling a complaint decreased by 23.31%, from Rs 3,145/- in 2018-19 to 2,412/- in 2019-20.

–The ombudsman disposed of 48,333 complaints against State Bank of India (SBI), 15,004 against HDCF Bank Limited, 11,844 against ICICI Bank Limited, 10,457 against Axis Bank Limited and 9,928 against Punjab National Bank.

  • It should be noted that big banks will have more complaints as compared to others.

Complaints on Banks:

–The share of total complaints received against SBI and nationalised banks have decreased from 61.90% in 2018-19 to 59.65% in 2019-20, while the share of private sector banks increased from 28.04% to 31.96% in FY20.

–The highest number of complaints in NBFCs were against Bajaj Finance Limited followed by Indiabulls Consumer Finance Limited, and HDB Financial Services Limited.

— The number of appeals received decreased from 78 in 2018-19 to 63 in 2019-20.

In accordance with the Monetary Policy Statement on February 5, 2021, the three Ombudsman Schemes are being merged and integrated into a single scheme which will be rolled out starting from June 2021. Click Here to Read about Highlights of MPC

Click Here for Official report

About Banking Ombudsman Scheme (BOS):

The Banking Ombudsman Scheme (BOS) was first notified by the Reserve Bank in 1995 under Section 35 A of the Banking Regulation Act, 1949. It is administered by the Reserve Bank of India (RBI) through 22 Offices of Banking Ombudsman (OBOs) covering all states and union territories.

  • It has undergone five revisions and also forms the basis for the launch of OSNBFC in 2018 and OSDT in 2019.

Recent Related News:

i.On January 1, 2021, the Reserve Bank of India (RBI) launched the January 2021 round of household surveys namely “Inflation Expectations Survey of Households (IESH)” and “Consumer Confidence Survey (CCS)” to represent inflation  expectations and consumer confidence.

ii.On January 5, 2021, the Reserve Bank of India (RBI) announced the introduction of Legal Entity Identifier (LEI) for all payment transactions of Rs 50 crore and above undertaken by entities through Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT).

About Reserve Bank of India (RBI):

Formation– 1 April 1935
Governor– Shaktikanta Das
Headquarters– Mumbai, Maharashtra
Deputy Governors– 4 (Bibhu Prasad Kanungo, Mahesh Kumar Jain, Michael Debabrata Patra, and M Rajeswar Rao)