UNIT 4

 Concept of Quality – Meaning and Definition of Service Quality

 Factors influencing customer expectations and perceptions
 Types of Service Quality
 Service Quality Dimensions
 Service Quality Gaps
 Measuring Service Quality
 Service Quality measurement Scales
 Quality circles in Banks
 Nature and Types of Customer
 Customer Service Committees - Talwar, Goiporia. Damodaran Committee and such
other committees’s recommendations
 Customer Service Committee,
 Customer Day
 Complaint Redressed Methods- Copra Forum – Ombudsman.

SERVICE QUALITY
• Service quality is a measure of how an organization delivers its services
compared to the expectations of its customers.
• Customers purchase services as a response to specific needs. They either
consciously or unconsciously have certain standards and expectations for how a
company's delivery of services fulfills those needs.
• A company with high service quality offers services that match or exceed its
customers' expectations.
•
SERVICE QUALITY – DEFINITIONS
Service quality has been defined keeping in view at least four perspectives:
(i) Excellence – Although the mark of an uncompromising student and high achievement, the
attributes of excellence may change dramatically and rapidly. Excellence is often
externally defined.
(ii) Value – It incorporates multiple attributes, but quality and value are different constructs—
one the perception of meeting or exceeding expectations and the other stressing benefit
to the recipient.
(iii) Conformance to Specifications – It facilitates precise measurement, but users of a
service may not know or care about internal specifications.
(iv) Meeting and/or Exceeding Expectations – This definition is all-encompassing and
applies across service industries, but expectations change and may be shaped by
experiences with other service providers?

FACTORS INFLUENCING PERCEPTION

Managing customer perceptions and expectations is one of the most essential
components of a successful customer service department.
1. Personal Experience
2. Social cues
3. Marketing
Personal Experience

PERSONAL EXPERIENCE IS A KEY FACTOR

The biggest influence on consumer perceptions is their experience with your
company. This covers everything from the quality of service they receive to the value that
they feel that they get from your product or service.
Price
Price is, of course, key in consumer decision-making but is not as important as you
may think. And lower is not always better. You need to carefully price your products
to reflect on how you want customers to perceive them: Are they cheap and-cheerful or high-
end luxury?
Quality
Quality is difficult to define and can apply to various aspects of your company.
They’ll also vary from customer to customer.
Level of service
How you treat your customers throughout pre and post-sale will play a large part in
whether they come back. Everybody likes to be treated with respect — especially when
parting with cash.

SOCIAL CUES
This means that social cues — word of mouth, customer reviews, and public
associations — can be an incredibly powerful form of marketing. Unfortunately, these are
also very hard to measure.
 Online Reviews
o Customer reviews on your site or elsewhere offer a great opportunity to
influence customer perceptions. When people see you resolving issues online,
it helps to form a positive impression. The same goes for the content that
people see about your brand on blogs and social media.
 Social Media
o Before the internet, the only way of finding out what people thought was to
ask them directly. But online reviews, blogs, and social media give us the
opportunity to learn about and sway public perceptions on a much wider scale.
It also gives other people the opportunity to influence consumer perceptions of
your brand
 Demographics
o Demographics also play a big part in customer behavior. If consumers
perceive that a company only caters to certain types of clientele — and they’re
not it — they’re unlikely to use that brand for fear of feeling out of place. This
is why luxury brands are so selective about their customers.

MARKETING
Marketing acts on both the previous factors. It’s used to manipulate the early
customer experience and harness the power of social cues to affect how the general
public (your potential customers) perceive your company.
 Branding
Branding is an incredibly powerful tool for influencing public perception.
Color, tone of voice, even store decoration and packaging can heavily influence how
people perceive your brand.
 Advertising
o Traditional advertising can have a huge influence on public perceptions of
your brand, and we can use it to help customers form positive associations
with our brand.
o Incorporating something like a super-bowl ad into your marketing strategy can
quickly establish your brand as a big player, and by extension, make your
brand appear more trustworthy. You can do the same over a longer period by
consistently producing high-quality, easy-to-share content.

FACTORS INFLUENCING CUSTOMER EXPECTATIONS

1. Customers’ needs and preferences
Even purchasing habits can significantly influence people’s expectations. For
instance, millennial consumers, who are always connected to the Internet, may prefer online
shopping and online payment. Thus, you should consider all these when creating and
launching your business strategies.
2. Culture or location
Buyers’ expectations vary greatly across cultures and locations. In some countries,
customers don’t want overly friendly or cheery customer service reps. Some customers,
however, don’t want to talk to agents that sound too business like or stiff. Other aspects such
as timeliness and communication style should also be taken into account.
3. Experience with other companies
When managing customer expectations, consider your competition. What are your
competitors doing to make customers happy? Can you match or exceed their performance?
What are the unique ways by which you can impress your customers?
People’s experience with other brands, especially with your competitors, can shape their
expectations from you. They might model their preferences based on what other brands can
do for them. If you can’t outshine your competitors, you can’t win customers over.
4. Other customers’ feedback
These days, your customers can spread the word about your brand instantly via the
web. They can post their feedback on review websites and on social media, which can greatly
influence your brand’s image and reputation.
5. Customers’ past transactions
This is arguably the strongest predictor of customer expectations. People past
experiences and transactions can greatly influence what they think about your brand. In fact,
just one instance of poor customer support interaction is enough to make customers think
you’re unreliable.
At every opportunity and touch point, aim to make customers happy. This will result
in a positive customer experience.
6. How you communicate
The way you talk to customers—whether in person, online, or over the phone—gives
them an idea about your brand’s personality. Thus, make sure that the way interact with them
is reflective of business’ values and identity. Also, make sure to communicate with customers
in a consistent manner, regardless of the channel used.
7. What you communicate
What you tell your customers, whether directly or through your customer support and
marketing channels, will shape their expectations. Make sure to always disseminate accurate
information. If you’ve promised something, be sure to follow through. Misleading or
incorrect information can have disastrous consequences that may affect your corporate image.

TYPES OF SERVICE QUALITY

 Reliability – A reliable service on time e.g. transport, Medicine
 Responsiveness – Responsive to the individual needs of customers
 Empathy & Tailoring – understand different customer preferences
 Competence & Diligence – to know what are doing and are paying attention
 Safety and Security – A service that feels safe and secure.
 Environments – The quality of environments such as hotel room or Airport lounge
 Tangibles – Tangible elements of a service such as quality of ingredients used by a
restaurant.
 Experiences – Overall intangible experiences offered by a service such as a theme
park that’s has a happy feel to it.
 User Interfaces – User interfaces that are pleasing and productive to use.

SERVICE QUALITY DIMENSIONS

Reliability: This refers to an organization's ability and consistency in performing a certain
service in a way that satisfies its customers' needs. This process involves every step of
customer interaction, including the delivery or execution of the good or service, swift and
precise problem resolution and competitive pricing. Customers have a certain expectation of
reliability in buying a specific product, and a company's success usually depends on its ability
to meet those expectations.

Tangibility: This is an organization's ability to portray service quality to its customers. There
are many factors that give a company highly tangible quality, such as the appearance of its
headquarters, its employees' attire and demeanour, its marketing materials and its customer
service department.

Empathy: Empathy is how an organization delivers its services in a way that makes the
company seem empathetic with its customers' desires and demands. A customer who believes
a company truly cares about their well-being is likely to be more loyal to that company.

Responsiveness: This is a company's dedication and ability to provide customers with

prompt services. Responsiveness implies receiving, assessing and swiftly replying to
customer requests, feedback, questions and issues. A company with high service quality
always responds to customer communication as soon as possible which can often indicate the
value a company places on customer satisfaction.

Assurance: Assurance is the confidence and trust that customers have in a certain
organization. This is especially important with services that a customer might perceive as
being above their ability to understand and properly evaluate, meaning that there has to be a
certain element of trust in the servicing organization's ability to deliver. Company employees
need to be mindful of earning the trust of their customers if they want to retain them.

WHAT IS SERVICE QUALITY GAPS?

The GAP Model of Service quality helps to identify the gaps between the perceived
service and the expected service. Five Gaps occur in the Service Delivery Process Like The
gap between Customer Expectation and Management Perception, Service Quality
Specification and Management Perception and many more
The GAP Model of Service quality helps to identify the gaps between the perceived service
and the expected service. Five Gaps occur in the Service Delivery Process. They are:
• The gap between Customer Expectation and Management Perception
• The gap between Service Quality Specification and Management Perception
• The gap between Service Quality Specification and Service Delivery
• The gap between Service Delivery and External Communication
• The gap between the Expected Service and Experienced Service.

GAP 1: Gap between Management Perception and Customer Expectation

• This gap arises when the management or service provider does not correctly analyze
what the customer wants or needs. It also arises due to insufficient communication
between contact employees and managers. There is a lack of market segmentation.
This Gap occurs due to insufficient market research. For Instance- A café owner may
think that the consumer wants a better ambience in the café, but the consumer is more
concerned about the coffee and food they serve.
GAP 2: Gap between Service Quality Specification and Management Perception
• This gap arises when the management or service provider might correctly
comprehend what the customer requires, but may not set a performance standard. It
can be due to poor service design, Inappropriate Physical evidence, and Unsystematic
new service Development process.
• An example would be restaurant Managers who may tell the waiters to provide the
order of the consumer quick, but do not specify “How Quick”.
GAP 3: Gap between Service Quality Specification and Service Delivery
• This gap may arise in situations existing to the service personnel. It may occur due to
improper training, incapability or unwillingness to meet the set service standards. It
can be due to inappropriate evaluation and compensation systems. Ineffective
Recruitment is the main cause of this gap.
• The failure to match the supply and demand can create this gap. There is also a lack of
empowerment, Perceived Control, and framework. An example would be a restaurant
having very specific standards of the food communicated but the restaurant staff may
not be given proper instruction as to how to follow these standards.
GAP 4: Gap between External Communication and Service Delivery
• Consumer Expectations are highly influenced by the statements made by the company
representatives and advertisements. This gap arises when these assumed expectations
are not fulfilled at the time of Delivery of Service.
• An example would be a restaurant that has printed on its menu that it serves 100%
Vegetarian Food but in reality, it serves Non-Vegetarian Food as well. In this
situation, consumer expectations are not met.
GAP 5: Gap between Experienced Service and Expected Service
• This gap arises when the consumer misunderstands the service quality. For Instance,
A Restaurant Manager may keep visiting their consumer to ensure quality check and
consumer satisfaction, but the consumer may interpret this as an indication that
 something is fishy or there is something wrong in the service provided by the
restaurant staff.
•
MEASURING SCALES - SERVICE QUALITY
Here are nine practical techniques and metrics for measuring service quality.
• SERVQUAL
• Post-service ratings
• Follow-up surveys
• In-app surveys
• Mystery shopping
• Documentation analysis
• Customer effort score (CES)
• First contact resolution ratio
• Metrics analysis

1. SERVQUAL
• This is the most common method for measuring the subjective elements of service
quality. Through a survey, you ask your customers to rate the delivered service
compared to their expectations.
• Reliability. The ability to deliver the promised service in a consistent and accurate
manner.
• Assurance. The knowledge level and politeness of the employees and to what extent
they create trust and confidence.
• Tangibles. The appearance of e.g. the building, website, equipment and employees.
• Empathy. To what extent the employees care and give individual attention.
• Responsiveness. How willing the employees are to offer a speedy service.
2. Post-service ratings
• This is the practice of asking customers to rate the service right after it’s been
delivered. This is our favorite approach, because the memory of the service is still
fresh and undiluted.
• As a general rule: The easier you make it for your customers to leave instant
feedback, the better your results will be. Different scales can be used for the post
service rating. Many make use of a number rating from 1 – 10.
3. Follow-up surveys
• With this method, you ask your customers to rate your service quality through an
email survey – for example via Google Forms. It has advantages and disadvantages
compared to the post-service rating.
4. In-app surveys
• With an in-app survey, the questions are asked while the visitor is on the website or in
the app, instead of after the service or via email. It can be one simple question – e.g.
"How would you rate our service?" – or it could be a couple of questions.
Convenience is the main advantage
5. Mystery shopping
• This is a popular technique used by retail stores, hotels, and restaurants, but works for
any type of service, also digital. It consists of hiring an "undercover customer" to test
your service quality.
6. Documentation analysis
• With this qualitative approach you read through/listen to your written/recorded
service records. They can then process this into constructive feedback, or follow up
with the customer for damage control if necessary.
• Live chat and email support offer instant documentation, and especially with the
former it's easy to pick out the outliers.
7. Customer effort score (CES)
• This metric was proposed in an influential Harvard Business Review article. In it, the
authors argue that instead of delighting our customers, we should make it as easy as
possible for them to have their problems solved. That’s what they found to have the
biggest positive impact on the customer experience, and what they propose
measuring.
8. First contact resolution ratio
• First contact resolution takes place when a customer reaches out to support with a
question or issue, and they receive a resolution in that first session. So no follow-up
emails, call-backs, etc.
9. Leading metrics analysis
• First response time. This metric tracks how quickly a customer receives a response
on their inquiry. This doesn’t mean their issues are solved, but it’s the first sign of life
– notifying them that they’ve been heard.
• Response time. This is the total average of time between responses. Let’s say your
email ticket was resolved with four responses, with respective response times of 10,
20, 5, and 7 minutes. Your response time is 10.5 minutes.
• Replies per ticket. This shows how many replies your service team needs on average
to close a ticket. It’s a measure of efficiency and customer effort.
• Backlog inflow/outflow. This is the number of cases submitted compared to the
number of cases closed. A growing number indicates that you’ll have to expand your
service team.
• Customer success ratio. Good service doesn’t mean your customers always find
what they want. But keeping track of the number who found what they were looking
for versus those that didn’t can show whether your customers have the right idea
about your offerings.
• "Handovers" per issue. This tracks how many different service reps are involved per
issue. Especially in phone support, where repeating the issue is necessary, customers
hate handovers. Harvard Business Review identified it as one of the four most
common service complaints.
• Things gone wrong. The number of complaints/failures per customer inquiry. It helps
you identify products, departments or service agents that need some "fixing."
• Instant service/queueing ratio. Nobody likes to wait. Instant service is the best
service. This metric keeps track of the ratio of customers that were served instantly
versus those that had to wait. The higher the ratio, the better your service.
• Average queueing waiting time. The average time that queued customers have to
wait to be served.
• Queueing hang-ups. How many customers quit the queueing process. These count as
lost service opportunities.
• Problem resolution time. The average time before an issue is resolved.
• Minutes spent per call. This can give you insight on who are your most efficient
operators.

WHAT IS QUALITY CIRCLE?

• Quality Circle is one such technique which has played a significant role in creating
awareness for sustained quality improvement in the banking system of developing
countries like India.
• Quality Circle is defined as a circle of quality-conscious people organized for quality
improvement and also improve their work environment through a systematic approach
i.e. bottom up approach.

CONCEPT OF QUALITY CIRCLE

• The concept of Quality Circle is primarily based upon recognition of the value of the
employees as a valuable human being, as someone who works willingly for
achievement of organization's goal by using his wisdom, intelligence, experience,
attitude and feelings.
• This concept has three major attributes :
1. It is a form of participation management.
2. It is human resource development technique.
3. It is a problem solving technique.
Quality Circles in Commercial Banks in India
Initially the quality circle movement was started in the manufacturing industries only
but it was soon realized that it had much to offer to the service sectors like banking which
employ a large work force and handles multi-dimensional functional areas.

PRINCIPLES OF QUALITY CIRCLES

The experts have identified the undernoted ten principles of Quality Circles:-
1. Voluntariness.
2. Regularity.
3. Identification, selection, analysis and solution of the problems.
4. Self-improvement.
5. Improvement of work-life.
6. Synergy- combined action or operation
7. Sincerity of purpose.
8. Application.
9. Simplicity.
10. Social Responsibility.

PURPOSE OF QUALITY CIRCLE APPROACH IN BANKS

• As quality circles in banks are mainly related with human beings such as customers
and employees in a predominantly service organizations, they should aim at providing
service efficiently and effectively at the minimum cost. Points to be considered:
• To improve their work environment.
• To solve their problems in a novel way.
• To cultivate responsive behavioral patterns among workers.
• To create healthier industrial relations.
• To improve customer services.
• To improve the quality of services.
• To sharpen and encourage worker’s creativity and innovative application

AREAS COVERED BY QUALITY CIRCLES IN BANKS

Quality Circles in Banks have shown impressive results in many directions. Empirical studies
show that the quality circles have yielded results in the following areas:
1. Customer service
2. Streamlining branch functioning
3. Increasing business and profitability by reducing overheads.
4. Recovery of bad debts.
5. Prevention of frauds.
6. Optimum utilization of manpower. Improvement in work environment, and
7. Improved job satisfaction.

TYPES OF CUSTOMERS
Types of Customers in Bank:
* Individuals
– Minors.
– Illiterates.
– Married women.
– Lunatics.
• Trustees.
• Hindu Undivided Family
• Partnership Firms
• Company
• Joint account holders.
• Executors and administrators.
• Power of attorney holders.
Customer Day
• Every Year 24th December is observed as National Consumer Day with a specific
theme in India. On this day the Consumer Protection Act, 1986 had received the
assent of the president. The enactment of this Act is considered as a historic milestone
in the consumer movement in the country.
• This day was made to protect consumer's rights and to make people aware about
it. This step is one of those steps which the government took to control the market
exploitations

CUSTOMER SERVICE COMMITTEES

• Talwar,
• Goiporia.
• Damodaran Committee and
• such other committees’s recommendations

TALWAR COMMITTEE
• In 1975, the Government of India had appointed the Talwar Committee on customer
service in banks.
Recommendations:
• Exposure to a single borrower should not exceed 25% of the bank’s capital funds (i.e.
paid up capital and free reserves).
• Group exposure should not exceed 50% of the capital funds of the bank. An
additional 10% is allowed in respect of exposure to infrastructure projects (power,
telecom, roads & ports).
• Prohibits loans to directors or to any firm or company in which directors hold an
interest.
• The banks should maintain an arms-length relationship in respect of own subsidiaries
or joint ventures; all loans to such companies have to be made at commercial rates
and are subject to limits which apply to similar companies.
• There is an aggregate ceiling fixed for loans related to owned funds of the subsidiary.
Capital Adequacy Norms
• Income from non-performing assets cannot be taken as part of the profits of banks
unless the income has been realized.
• Based on the status of an asset as an NPA, it is required to be classified as standard,
substandard, doubtful and loss assets and appropriate provisions made.
• Banks are advised to establish customer service committees at branch level.
• Standing Committee to examine them and provide relevant feedback to the Customer
Service Committee of the Board for necessary policy / procedural action.
• The Branch Level Customer Service Committee may meet at least once a month to
study complaints/ suggestions, cases of delay, difficulties faced / reported by
customers / members of the Committee and evolve ways and means of improving
customer service.

GOIPORIA COMMITTEE
• The Goiporia Committee was set up in 1990 by the Reserve Bank of India (RBI). The
Goiporia committee was given the mandate of exploring and giving recommendations
for improving customer service in the banks.
• M.N. Goiporia who was an Indian career banker and also served as the fourteenth
Chairman of State Bank of India was the Chairman of the Goiporia Committee.
• Recommendations
• The commencement of work of the employees will always be 15 minutes before the
general business hours so that banks can be made operational for the customers and
there is no waste of time.
• It is compulsory to address all the customers who come before dear closing hours
inside the bank.
• Employees should ensure that counters during business hours and uninterrupted
services are being provided to the customers that come into the bank.
 • There was specific guidance given in the bank that there must be a counter of
‘Enquiry’, or ‘May I help You’. Please counter should be near the entry of the
banking office.
Recommendations about the passbooks/statements about the savings account:
• The customer must be educated so that they keep their passbooks updated regularly
• There should be an education drive launched for the customers so that the advantages
of keeping the passbook updated should be got into focus.
• Every employee should wear their identity batches which should have their name and
photograph properly displayed so that it is better for the customers to rapport with the
officials.
• There should be induction training given to the recruits, after the training process the
banks should distribute them to their desired positions at once.

DAMODARAN COMMITTEE
• The Committee, headed by former SEBI chairman M Damodaran, was set up by the
central bank to look into the issues of customer services and evaluate the existing
system of grievance redressal mechanism prevalent in banks, its structure and efficacy
and recommend measures for expeditious resolution of complaints.
Recommendations:
• "customer service and grievance redressal should be included as a mandatory
parameter in the performance appraisal report of all employees."
"The root cause analysis of the top five types of complaints in a quarter should be
placed before the Customer Service Committee of the Board held in the subsequent
quarter.
• A brief note on the discussions held on the same should be placed before the Board in
its subsequent meeting.
• "The bank policies should clearly lay out its approach to customer care, taking into
account the geographic spread of its branches, segments of customers, needs of
special sections like senior citizens, widows, physically challenged persons, etc,“
• must also clearly define and distinguish the features for different products and
services and must indicate the target customer group
• the committee recommended that bank boards should evolve human resources
policies which will "recruit for attitude and train for skills.
• policy "should be framed to ensure that the prescribed response time for every type of
grievance should be approved by an official not below the rank of the top
management of the bank.“
• "Branch Level Customer Committee meetings may be replaced with a meeting of
customers of all banks of that area (say district-wise, block-wise) and be held in the
presence of representatives of banks at periodic intervals (monthly/quarterly).
• The proceedings of the meetings should be recorded (CCTV) for the purpose of
review of the same

COMPLAINT REDRESSED METHODS

• Consumer redressal system is a system under which the consumers can file a
complaint in a consumer court and demand justice when they are cheated by the
sellers or manufacturers or service providers of the commodity or service they buy.
• What is Grievance Redress Mechanism ('GRM') GRM means the receipt and
processing of complaints from the customer and taking necessary actions to address
the same.

COPRA FORUM
• The Consumer Protection Act,1986 (COPRA) was an Act of the Parliament of
India enacted to protect the interests of consumers in India. It was replaced by
the Consumer Protection Act, 2019. It was made for the establishment of consumer
councils and other authorities for the settlement of consumer's grievances and matters
connected with it. The act was passed in Assembly in October 1986 and came into
force on December 24, 1986.
CONSUMER FORUM
• It is a forum where a consumer may file a case against a seller in the case where
the consumer feels that he has been cheated or exploited by the seller. The point
of having a separate forum for consumer disputes is to ensure that such disputes are
speedily resolved and make is less expensive.

AUTHORITY TO FILE A COMPLAINT

A complaint can be filed before designated authorities by:
• A consumer
• Any voluntary consumer association registered under any law for the time being in
force
• The Central Government or any State Government
• The Central Authority
• One or more consumers, where there are numerous consumers having the same
interest
• In the event of a consumer's death, his legal heir or representative
• In the case of a juvenile, his parent or legal guardian
• It is to be noted, there is no need for an advocate to appear in consumer court.
Consumers can file and represent their complaints themselves or via a representative.

MODE OF COMPLAINT:
• A complaint can be filed in form of writing or online via govt. provided portal @
https://consumerhelpline.gov.in/ or through mobile apps launched by the government
of India like NCH app, Umang app or Consumer app.

The status of a complaint can be checked online and the fees for submission of the
complaint can also be submitted through an online payment portal.

Contents of the Complaint:

• The complaint should include the following information:
• Name, description, and address of the complainant
• The name, description, and address of the opposing party or parties
• Facts about the complaint, such as when and where it occurred
• Documents to back up allegations, if any
• Specifics of the dispute: a flaw in the goods/a deficiency in the service
• The relief being sought.
Procedure to be followed:
The procedure to be followed might be mutually agreed upon by the parties. If the parties are
unable to reach an agreement, the mediator will follow the procedure outlined below. The
mediator will choose the time, date, and location where all parties must be present.
• Mediation proceedings may be held in the Mediation Cell connected to the District,
State, or National Commission, and joint/separate sessions of the parties may be held.
• Within 10 days following the session, both parties must submit a Memorandum of
Concerns to the mediator and other parties involved, outlining the issues that must be
resolved.
• The mediator shall encourage a consensual resolution between the parties, convey the
parties' points of view, and aid the parties in resolving the issue using the necessary
information supplied to the mediator by both parties. The parties should achieve an
acceptable solution within 30 days.
• If the parties reach an agreement, it must be reduced in writing and signed by both the
parties and the Mediator. The mediator must also provide a thorough report on the
settlement to the relevant commission.
• If the parties are unable to achieve an agreement, the Mediator must submit a report to
the commission outlining the reasons for the failure to reach an agreement.

OMBUDSMAN SCHEME
• The Banking Ombudsman Scheme is an expeditious and inexpensive forum for
bank customers for resolution of complaints relating to certain services rendered
 by banks. The Banking Ombudsman Scheme is introduced under Section 35 A of the
Banking Regulation Act, 1949 by RBI.
• Banking Ombudsman is a quasi judicial authority created in 2006, and the authority
was created pursuant to a decision made 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.
• The current scheme became operative from 1 January 2006, and replaced and
superseded the banking Ombudsman Scheme 2002.

Who is a Banking Ombudsman?

The Banking Ombudsman is a senior official appointed by the Reserve Bank
of India to redress customer complaints against deficiency in certain banking services
covered under the grounds of complaint specified under Clause 8 of the Banking
Ombudsman Scheme 2006 (As amended up to July 1, 2017).
How many Banking Ombudsmen have been appointed and where are they located?
As on date, twenty two Banking Ombudsmen have been appointed with their
offices located mostly in state capitals.
Which are the banks covered under the Banking Ombudsman Scheme, 2006?
All Scheduled Commercial Banks, Regional Rural Banks and Scheduled
Primary Co-operative Banks are covered under the Scheme.

The type and scope of the complaints

 Non-payment or inordinate delay in the payment or collection of cheques, drafts, bills,
etc.;
 Non-acceptance, without sufficient cause, of small denomination notes tendered for
any purpose, and for charging of commission for this service;
 Non-acceptance, without sufficient cause, of coins tendered and for charging of
commission for this service;
 Non-payment or delay in payment of inward remittances ;
 Failure to issue or delay in issue, of drafts, pay orders or bankers’ cheques;
 Non-adherence to prescribed working hours;
 Failure to honour guarantee or letter of credit commitments;
 Failure to provide or delay in providing a banking facility (other
than loans and advances) promised in writing by a bank or its direct selling agents;
 Delays, non-credit of proceeds to parties' accounts, non-payment of deposit or non-
observance of the Reserve Bank directives, if any, applicable to rate of interest on
deposits in any savings, current or other account maintained with a bank ;
 Delays in receipt of export proceeds, handling of export bills, collection of bills etc.,
for exporters provided the said complaints pertain to the bank's operations in India;
 Refusal to open deposit accounts without any valid reason for refusal;
 Levying of charges without adequate prior notice to the customer;
 Non-adherence by the bank or its subsidiaries to the instructions of Reserve Bank
on ATM/debit card operations or credit card operations;
 Non-disbursement or delay in disbursement of pension
 Refusal to accept or delay in accepting payment towards taxes, as required by Reserve
Bank/Government;
 Refusal to issue or delay in issuing, or failure to service or delay in servicing or
redemption of Government securities;
 Forced closure of deposit accounts without due notice or without sufficient reason;
 Closure of account without customer concern.
 Refusal to close or delay in closing the accounts;
 Non-adherence to the fair practices code as adopted by the bank; and
 Financial loss incurred to customer due to wrong information given by bank official.
 Any other matter relating to the violation of the directives issued by the Reserve Bank
in relation to banking or other services.
 Complaints from Non-Resident Indians having accounts in India in relation to their
remittances from abroad, deposits and other bank-related matters
  non-observance of Reserve Bank Directives on interest rates;
 delays in sanction, disbursement or non-observance of prescribed time schedule for
disposal of loan applications;
 non-acceptance of application for loans without furnishing valid reasons to the
applicant; and
 non-adherence to the provisions of the fair practices code for lenders as adopted by
the bank or Code of Bank’s Commitment to Customers, as the case may be;
 Non-observance of any other direction or instruction of the Reserve Bank as may be
specified by the Reserve Bank for this purpose from time to time.
 The Banking Ombudsman may also deal with such other matter as may be specified
by the Reserve Bank from time to time.

What happens after a complaint is received by the Banking Ombudsman?

 The Banking Ombudsman endeavors to promote, through conciliation or mediation, a
settlement of the complaint by agreement between the complainant and the bank
named in the complaint.
 If the terms of settlement (offered by the bank) are acceptable to one in full and final
settlement of one's complaint, the Banking Ombudsman will pass an order as per the
terms of settlement which becomes binding on the bank and the complainant.

OMBUDSMAN REJECT A COMPLAINT

 Compensation sought from the Banking Ombudsman is beyond ₹ 20 lakh (₹ Two
Million).
 requires consideration of elaborate documentary and oral evidence and the
proceedings before the Banking Ombudsman are not appropriate for adjudication of
such complaint
 the complaint is without any sufficient cause
 the complaint that it is not pursued by the complainant with reasonable diligence
in the opinion of the Banking Ombudsman there is no loss or damage or
inconvenience caused to the complainant
Is there any time limit for filing an appeal?
• One can file the appeal against the award or decision of the Banking Ombudsman
rejecting the complaint within 30 days of the date of receipt of the Award, The
Appellate Authority may, if he/ she is satisfied that the applicant had sufficient cause
for not making an application for appeal within time, also allow a further period not
exceeding 30 days.
How does the appellate authority deal with the appeal?
• The appellate authority may:
• dismiss the appeal; or
• allow the appeal and set aside the Award; or
• send the matter to the Banking Ombudsman for fresh disposal in accordance with
such directions as the appellate authority may consider necessary or proper; or
• modify the Award and pass such directions as may be necessary to give effect to the
modified award; or
• pass any other order as it may deem fit.

INTEGRATED OMBUDSMAN SCHEME

• The integrated ombudsman scheme launched by the Reserve Bank of India (RBI),
which, essentially, amalgamates three existing ombudsman schemes into one, creating
a ‘one nation, one ombudsman’ mechanism, will go a long way in boosting customer
confidence in the banking system and make the grievance redressal process seamless
by providing a single platform to customers for getting speedy resolutions.