Complaining to the president

It took more than two years for a widow to get relief from the ultimate office of the head of the state, for the release of a small amount of around Rs400,000 wrongly withheld by a bank. In the redress process that legally is of six months, she exhausted all options, including going to the erring bank, Banking Mohtasib of Pakistan (BMP), and to the president of the country.

Although 60 days is too long a period to get relief involving a small sum amount yet, it is overstretched. According to banking regulations, in case of a complaint, the concerned bank, as a first stop, should not take more than 45 days to resolve. If the complainant is unsatisfied, then s/he can approach the BPM, which should work out the solution in 60 days. The president is authorized to take 90 days to decide on the appeal of the aggrieved party.

Nevertheless, looking at the cases that reach the head of the state for adjudication, one is amazed to see how simple these issues are, which should not have arisen in the first place or at the utmost should have been resolved at the bank customer service instead of reaching the top office of the state.

Take, for example, the case of one widow. Her husband, Mian Allah Wasaya, availed a loan of Rs3 million in 2015 from a bank and deposited Rs3.5 million worth of Regular Income Certificates (RICs) of the Central Directorate of National Savings as liquid security. He died in January 2017, and the bank, on its own, encashed the RICs then worth Rs4.155 million and charged a markup of Rs480,489. However, the accumulated markup at the time of Wasaya’s death was only Rs57,294. The widow requested the bank to charge markup till the period her husband was alive and waive off the markup after that. The bank declined, and the case landed in the office of the Banking Mohtasib, which decided in her favour. The president [of Pakistan] upheld the decision when the bank went into appeal against the BMP.

The Banking Mohtasib noted that it was the fiduciary responsibility of the bank to guide the legal heirs for adjustment of outstanding liability at this level against encashment of RICs. Moreover, instead of exercising its statutory obligation to set off the loan against liquid security, the bank continued to linger on recovery and unnecessarily piled-up markup on the principal outstanding amount, which was unfair as per the State Bank’s guidelines.

The Mohtasib also termed the bank’s claim as absurd and unprofessional that the matter pertained to the year 2018, and its books had been closed and that therefore, it was not in a position to provide financial relief. It added that no rule, regulation, law, or accountant standard was referred to that barred the bank from revisiting the old/closed cases as such transactions were a routine matter.

Similarly, another case that landed on the desk of the president and took over two years to resolve was that of Asad Abbas, who, in July 2017, used his ATM card to withdraw cash of Rs40,000, but the transaction was not successful. However, the money was debited from his account. He asked the bank to reverse the amount, but no relief was provided. Abbas then approached the BMP, which asked the bank to reverse the money.

In yet another incident, Muhammad Afzaal, in June 2020, shared his financial details with a caller from a bank’s helpline, which resulted in debiting of Rs5000 from his account. The BMP accepted Afzaal’s contention but the bank, in defiance, went into an appeal to the president. However, the president held “rare” in-person hearings in Karachi and rejected the bank’s pleas.

The reading of these cases in which complaints involving meager amounts land on the desk of the head of the state gives a shocking insight into the redress mechanism being implemented by the State Bank, banks, BMP, and the office of the president. This becomes more alarming given that such issues arise in a well-documented industry where the record is computerized and easily accessible.

The president’s office is also irked by receiving such complaints, but instead of issuing any corrective policy directive, it restricts itself to reprimanding bank managements. Should it not be asked: what is wrong with the banks that such complaints are made which are not being addressed by the banks in the first place?

In Pakistan, 53 banks and DFIs with over 16,076 branches have 57.5 million customers. The State Bank estimates that the number of complainants is increasing in proportion to the increase in banking services.

The BPM dubs receiving an increased number of complaints as an expression of public trust in the institution of the banking ombudsman. No wonder it highlights that in 2021 the BMP received 33,196 complaints, an increase of 46 per cent from the previous year.

The State Bank, however, thinks otherwise. Its Review of Complaints received against Banks/MFBs/DFIs covering the time between 2016 to 2019 recorded: “The share of BMP in total complaints being the alternate dispute resolution forum remained in the range of 0.8 per cent to 1.1 per cent. The escalation or lodgment of fewer than or around 3 per cent of complaints with alternate dispute resolution forums indicates the confidence of banking consumers in the grievance handling mechanisms of banks.”

“The review of data from the banks indicated that almost 84-92 per cent of complaints during this period were in four major categories: ATM/Debit Card, Account maintenance, E-Banking, and Credit Cards. Considering the growth in the banking industry and growth in the volume of complaints, the latter has outpaced the former”.

The role of the institution of the Banking Mohtasib in the financial industry is to resolve disputes through a process, which is mainly conciliatory, and where such mediation is unsuccessful, to adjudicate and pass a speaking order to decide the dispute.

The applicable mandate to the BMP is determined by a portion of the Banking Companies Ordinance 1962, which gives it the jurisdiction to entertain complaints from customers, borrowers, banks, or from any concerned body or organization related to banking malpractices; violations of banking laws, rules, regulations or guidelines; perverse, arbitrary or discriminatory actions; inordinate delays or inefficiency and; corruption, nepotism or other forms or maladministration.

Staffed mainly by retired bankers, the Banking Mohtasib is a link between consumers and the State Bank as it is authorized to entertain complaints against the banks which fail to act by banking laws and regulations, including policy directives or guidelines issued by the State Bank. However, in case of a dispute concerning the State Bank’s directives, this will be referred to the State Bank for clarification.

Last year, a leading bank’s annual report outlined that the bank received a total of 204,577 complaints. These were resolved, on average, within five days, while more than 50 per cent of complaints were resolved within two days.

Nevertheless, the success criteria should not be an increase in the number of complaints and their resolution but analyzing the complaints and installing prevention mechanisms. Here the role of the banking ombudsman is quite pivotal – educating and providing advice to consumers and businesses to prevent issues from escalating into a formal complaint – what to say of reaching the president of the country.

Email: nadympak@hotmail.com

The writer is a freelance contributor.