RBI takes class action against foreign banks & PSU for faulty rate calculation

The Reserve Bank of India (RBI) in 2008-09 banking ombudsman annual report said it has started taking class action against the banks whose decisions are not favorable to the interests of their customers.

Some of the foreign bank and public sector bank method of calculating interest rate on deposits and housing loans have not been in their customers’ interest therefore RBI is taking class action against such banks.

As per the report, one more PSU bank was asked to re-credit insurance premium that was debited on savings account holders without their consensus under a group insurance scheme.

Under a class action general direction is issued in cases that can benefit not only the applicant but also all customers who have been affected.

The RBI has appointed banking ombudsmen for different regions in the country to deal with customer complaints against banks after the lenders are not able to provide suitable solutions to the customers. Thus banking ombudsmen has received the complaints and based on these complaints RBI had filed class action suits against three banks – one foreign and two public sector banks.

Although in the report banks name were not mentioned stated, “The lawsuit against the foreign bank is regarding the mode of calculation of interest rates on deposit accounts. A PSU bank was advised to recalculate interest rate on all housing loans as per terms of the agreements entered into with all the borrowers without their application for relief.”

According to report, in 2008-09 the number of complaints against foreign banks has risen by 91% from a year ago which shows that Indian customers are most dissatisfied with the foreign banks carrying out operations in India. The total number of complaints registered by 18 ombudsmen across the country stands to 11,700, out of which 2,838 complaints were against HSBC. Next to it stands the Citibank with 2,563 complaints, followed by Standard Chartered, Barclays and ABN AMRO having large number of customer complaints.