The State Bank of Pakistan (SBP), under BPD the Circular- C17 of 2004, dated 7th June 2004, has issued guidelines to the banks and DFIs (the banks) for setting up a complaints section for the resolution of complaints relating to banking services or grievances of clients.
This is a positive development and would provide relief to the public as well as the clients. Like Prudential Regulations, it would enhance discipline in the working of the banks.
The SBP issued these guidelines as it was receiving complaints every day from clients that the concerned banks, due to bureaucratic attitude, were not attending to their grievances resulting in financial losses or damage to their businesses.
Moreover, complaints forwarded by the SBP to various banks were also not handled promptly. The SBP viewed this situation with concern and decided to streamline things through proper measures.
The SBP has issued minimum guidelines for the handling of complaints, devising a system for redressal, taking immediate corrective action for complaints of recurring nature, appropriate training of personnel posted in the complaints section and submitting an analytical report periodically to the bank management.
The SBP has asked the banks for immediate intimation of the name and contact numbers of senior officer heading the complaint section, and set a 10 working days time limit for response of complaints, the issue of an interim reply in case further investigation is required and the final reply has to be sent within a period not exceeding 45 working days.
The banks would, within 30 days, prepare and circulate a leaflet, in Urdu and English, regarding the lodging of the complaints and the procedure for resolution thereof.
They must also ensure that where a complaint needs to be probed further, the same may be investigated by an employee who is not directly involved with that particular complaint.
The bank's internal auditors would carry out regular a performance audit of the complaint section for effectiveness and utility.
The SBP would particularly check performance during onsite inspection and reflect the results in overall assessment of the bank. Non compliance of instructions and negligence in handling complaints would invite strict action against the banks and the concerned staff.
It is felt that the SBP has wisely given broad guidelines only and has left the details to be worked out by the respective banks according to their circumstances.
In order to see this useful initiative producing results at the earliest, this paper attempts to elaborate certain pertinent aspects for the consideration of the banks and SBP as well as for review by the general public and bank customers.
Effectiveness, utility and performance of the complaints section would largely depend on the senior officer posted as head of the section and the support and guidance provided to him by the top management.
The incumbent might fair well, if he is qualified in banking, legal or financial services, having a varied, full-time work experience in different departments, posted at head office as well as in the regions, at senior level for about ten years. Other officers posted in the section should also have similar exposure.
All of them should be fully conversant with the banking laws, rules and regulations, including the Prudential Regulations and instructions issued by SBP from time to time. Banking procedures, practices, safeguards and the forms actually used for processing different transactions should be at their finger tips. They should have in their section, up-dated copies of all these documents for ready reference purposes.
This section needs a few good officers and an adequate staff to handle secretariat services.
The officers posted in the section should also be further trained through an appropriate orientation course to enhance their skills and to better equip them for expeditious disposal of complaints and related matters.
The section might be provided on a priority basis with separate offices, meeting room, telephones, telex, fax, photocopying facilities, etc.
The incumbent senior officer should devote his whole time to the affairs of this section. He has to, first of all, realise that, though he stays in the service of the bank, he has to act strictly in accordance with the prescribed laws, rules, regulations and the guidelines in dealing with the complaints.
Occasions will arise when he might have to go against the bank and the bank personnel and decide in favour of the complainant. He is expected to be acting fairly and impartially like a 'judge' or an 'ombudsman' in the resolution of the complaints received from the general public or the customers.
The top management might make fairness and impartiality as an official policy to support the senior officer as well as complaint resolution process. His old colleagues, at times, might not like his approach but the task demands an independent and fair scrutiny of complaints for proper resolution.
He should talk to his colleagues and ask them to gracefully admit their lapses in providing services in the past, if any, and resolve to correct them for the future.
There is nothing wrong in saying, "I am sorry to the complainants" when one had earlier acted against the rules and was not courteous enough as one should be in the banking profession.
A fair and impartial approach, if consistently followed over time, would establish the reputation of the complaint section and lay the foundation for cordial ties between the bank and the customers for a mutually profitable relationship.
The senior officer might have general powers of superintendence over the complaints section. He might be authorised to incur expenditure on behalf of the complaint section up to a specified amount.
He might periodically travel to the regions or zones to sort out the complaints pertaining to that area.
The banks might designate officers in the regions or zones to liaison with the complaints section and arrange meetings with the complainants there as otherwise the complainants shall be bothered to travel to Karachi, where the head offices of most of the banks are located.
The majority of the complaints might pertain to any or more of the following:
-- Non-payment or inordinate delay in the payment or collection of cheques and drafts;
-- Monthly financial penalty on not maintaining minimum balance in the account- exceptionally high for some foreign banks; collection of excessive service charges;
-- Refusal for provision of particular service on flimsy pretext;
-- Delayed credit allowed on encashment of financial instruments issued by the National Saving;
-- Non-issue of drafts;
-- Non-adherence to prescribed working hours by branches for business including collection of utility bills;
-- Rude or insulting behaviour of the bank staff;
-- Refusal of claims in respect of unauthorised or fraudulent withdrawals from deposit accounts, or fraudulent encashment of a cheque or a bank draft etc;
-- Difficulty in operations of any savings, current or any other account;
-- Delays in receipt of export proceeds, handling of export bills and collection of bills;
-- Lack of truth in lending conditions and charges; reference to SBP for CIB about a customer as a wilful defaulter;
-- Charging of mark-up on mark-up;
-- Adjustment of loan instalments to an account other than prescribed; failure to honour guarantee/letter of credit commitments;
-- Refusal to open deposit accounts without any valid reason;
-- Non-observance of SBP directives on profit or interest rates on loans and advances; delays in sanction, disbursement or non-observance of prescribed time schedule for disposal of loan applications and non-acceptance of application for loans without furnishing valid reasons to the applicant. There might be many more areas for complaints.
General public or the account holders are normally docile and would generally not wish to make a formal complaint to the bank management if the matter is tactfully handled by the intervention of the senior officers or the manager of the branch, acting fairly and impartially.
The bank officers are expected to follow the rules equitably with all clients and they should have up-dated circulars to clarify matters, there and then, and to resolve disputes.
The senior officer shall inform about the receipt of any complaint, alongwith a copy of the complaint to the branch or office or department named in the complaint. He may require it to provide information and certified copies of any document relating to the subject matter of the complaint which is or is alleged to be in its possession.
To comply with the principles of natural justice and fair play, he might require additional details from the complainant and might arrange a meeting of the parties.
Where a complaint requires further investigation, he must send an interim reply to the complainant, indicating the reasons for the time to be taken and expected date of action.
He should endeavour to promote a settlement of the complaint by agreement between the complainant and the bank officers named in the complaint through conciliation or mediation, in the light of applicable laws, rules, regulations and guidelines.
Different complaints might require different approach for resolution. Some complaints could be settled amicably if the fault is admitted by the concerned staff and his bank and by rectifying the action against which the complaint was made. No payment of damage will be involved.
Other complaints might have financial implications such as return of excessive service charges collected, or crediting of larger profit.
In such cases, the senior officer might seek approval, depending upon the amount of refund or adjustment, from the credit committee or the Chief Executive or the Board of Directors. Suitable internal guidelines and delegation of power need to be made by the Chief Executive or the Board for streamlining the whole process and to allow payments to the complainants after his acceptance of the settlement arrangements.
The bank might handle even frivolous complaints tactfully while rejecting the complaint. He shall be guided by the evidence placed before him by the parties, the principles of banking law and practice, directions, instructions and guidelines issued by SBP from time to time and such other factors which in his opinion are necessary for justice.
If a complaint is not settled within the prescribed period, despite efforts and affording the parties reasonable opportunity to present their case, the senior officer may submit his recommendations to the top management.
The leaflet to be prepared by the banks shall provide guidelines as to what types of complaints shall be entertained by the complaints section and the procedure to be followed for resolution of complaints.
The complainant himself or his authorised representative shall sign the complaint and state clearly the name and address of the complainant, the name and address of the branch or office of the bank against which the complaint is made, the facts giving rise to the complaint supported by documents, if any, that are desired to be relied upon by the complainant, the nature and extent of the loss caused to the complainant and the relief sought from the bank. Involvement of legal advisors at this stage might not be advisable.
The complaint should be made, using the complaint form included in the leaflet, not later than six months after the cause of action has arisen. The leaflet shall provide the name, addresses and contact numbers of the head of the complaint section.
The complaint service provided by the bank is free. However, any costs involved for travel to the branch, regional office or the head office of the bank and the incidental expenses shall be borne by the complainant.
The leaflet shall be posted on the notice boards at each of the bank branches or offices as also on their website. A copy of the leaflet shall be supplied to customers upon request.
The banks might be ready to face a flood of written complaints in the initial days, particularly from loan defaulters and from people who had wished to avail the loan facilities and their loan applications had been under process for some time.
The complaints, despite resolution, in due course are likely to accumulate. The complaints section, being set up under SBP guidelines, is considered to be a harbinger of the independent institution of the Banking Ombudsman in the country.
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