The move to exempt banks from the purview of class-action suits follows Reserve Bank of India’s (RBI’s) opposition to their inclusion. In its submission to the parliamentary standing committee on finance, headed by former Finance Minister Yaswant Sinha, RBI had said that including them within the purview of class-action suits “may affect depositors’ interest and, hence, should not be extended to banking companies”.
RBI had further argued that the banking sector already has a well-defined grievance redress mechanism, including the banking ombudsman scheme. Operational since 1995, RBI’s ombudsman programme was revised — in 2002, 2006 and 2009 — to provide a system of quick and inexpensive redress of customer grievances against banks.
It allows appeals from complainants and banks with respect to decisions made by the banking ombudsman and also includes complaints for deficiencies arising out of internet banking, failure to adhere to the fair practices code for lenders, code of banks’ commitment to customers issued by the Banking Codes & Standards Board of India and not observing RBI guidelines on the engagement of recovery agents by banks.
In the case of banking companies, the ministry said it is ready to “address the suggestion of RBI appropriately with legislative vetting”, the report released by the parliamentary standing committee said. When asked to comment on the matter, Corporate Affairs Secretary R Bandyopadhyay said the central bank’s concerns would be addressed in the new law.
However, the ministry maintains that the Companies Act should be applicable to all companies and there should not be sector-specific exemptions.