While at the peak of their performance, autonomous institutions and business entities need to promptly address emerging issues before they turn into serious problems, rather than hoping for the future to take care of them.

Lingering unresolved policy issues and inefficiencies in systems and procedures hurt the organic growth of entities. It goes without saying that those calling the shots should remain alert to emerging as well as shrinking opportunities in a changing external environment. No less important, institutional growth should not be stifled by regressive regulations nor by the absence of progressive and prudent oversight over time.

However, the ability to face external shocks is primarily determined by internal organisational strength and weaknesses. At times the government may be required to extend short-term relief while taking care that such props may not turn into permanent crutches.

It is in this backdrop, for example, the performance and problems of Banking Mohtasib Pakistan (BMP) as outlined in its latest annual report (2020), need to be assessed. Things have to be seen, keeping in view its virtuous mandate as an alternative (amicable and speedy) dispute resolution (ADR) forum. The ADR mode is a much better way of settling disputes than a prolonged complex litigation process witnessed in courts.

Interestingly, the ombudsman’s own performance has been impacted adversely by reported judicial interventions and a long wait for a final decision.

The Banking Mohtasib Pakistan’s own performance has been impacted adversely by reported judicial interventions and a long wait for a final decision

The BMP wants changes in some procedural mechanisms made in 2013 through the amendment in the Federal Ombudsman Institutional Order Act, a deviation from its original charter of 2005. Ombudsman Kamran Shahzad considers BMP as an independent extended arm of the State Bank of Pakistan (SBP) in resolving banking complaints fairly and judicially.

The BMP’s primary function is to address complaints speedily, amicably and free of cost, or with minimal cost, while ensuring that the banks comply with the prescribed rules and regulations in a fair and judicious manner.

In its regular interaction, BMP provides SBP latest data, information, analysis and other inputs to help the regulator update rules and regulations wherever thought appropriate by it.

Similarly, the ombudsman keeps senior bank management informed of areas pertaining to their systemic deficiencies and weak controls particularly in the bank’s pioneering effort to adopt advanced technological products.

Based on its experience and listed in the BMP’s latest annual report to the SBP, commercial banks are the following recommendations:

• The notice period for complaints may be cut from 45 days to 15 days.

• Complainants may be allowed to submit an undertaking instead of attestation by the Oath Commissioner.

  • The bank’s largely lengthy process of internal approval in making agreed payments may be made compliant to the relevant law.

  • The recent suspension of Covid-19 related biometric verification conditionality should either be lifted or some alternative may be introduced to protect account holders from the growing number of frauds.

An SBP review released to the media on March 6 showed that e-banking complaints shot up by 177 per cent and related average per bank branch complaints surged by 83pc during calendar years 2016 to 2019. Bank staff should be properly trained and technologically advanced to meet today’s challenges.

• All circulars and modifications on each subject may be centralised and incorporated in a master circular to facilitate banks and all other stakeholders to comply with SBP rules and regulations.

The BMP points out that a variety of SBP circulars and modifications on the same subject coupled with an influx of information from time to time are perhaps difficult to be closely followed by bank staff in letter and spirit.

• A comprehensive consumer complaint database, presently dispersed among individual banks and the SBP and BMP offices, needs to be consolidated for an effective analysis which could facilitate the regulator/banks to better identify and address recurring problems and areas of weak control.

  • The managers or officers of banks appearing at the hearing of cases have no authority from their institutions to negotiate and arrive at an amicable settlement and tend to refer simple issues to their head offices, which delays the process of speedy justice. The problem needs to be addressed.

One may also look at banks’ financial performance. In the final quarter of 2020, they posted a combined profit of Rs48 billion primarily on the back of their risk-free investments in government papers. The profit was 8pc lower than the same period last year, owing to a drop in interest income, and also debt provisioning.

In the same quarter, the aggregate profits earned by all listed companies grew year-on-year by 38pc to Rs213bn.

It is time for banks to have a fresh look at the fundamentals of their organic growth excluding investment in government bonds.

Quite puzzling is the fact that despite the vital role the central bank is playing in the current nascent recovery, the bill for granting unprecedented autonomy to the SBP drastically restricts its role to ensuring price stability to meet the inflation target set by the government, rather than economic growth.

The BMP’s organisational capacity is also being put to a test owing to the 62pc surge in complaints over the past three years. There were 4,168 outstanding complaints to be resolved at the end of December 2020, up from 1,052 in 2018.

The total number of complaints of 19 different categories received by the BMP during 2020 was 22,750, including 10,704 by its own secretariat and 12,046 through Prime Minister’s Portal. Of these, 16,123 cases were resolved amicably with the BMP’s approval while 5,071 complaints were rejected on different counts. The outstanding number of complaints on December 31, 2020, were 4,168 from a total of 25,528 that also included 2,778 carried forward unresolved from 2019. The BMP orders were a mere 166. The relief provided to complainants amounted to Rs598 million.

In view of the surging workload, the BMP’s skilled workforce at all levels of complaints is planned to be strengthened. It intends to improve its management to further facilitate and accommodate the growing number of complainants. This includes a user-friendly system to help them lodge and track their complaints through an online portal and mobile application. This is a part of its agenda to update its in-house complaint processing software with state of art technological products. To improve its service quality, the ombudsman has also conducted a survey to evaluate BMP office performance.

Published in Dawn, The Business and Finance Weekly, , March 15th, 2021