The Reserve Bank of India (RBI) has begun taking class action against banks for

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decisions that are detrimental to the interests of their customers, the banking ombudsman’s 2008-09 annual report released by the RBI on Monday said.

RBI has initiated class action against a foreign bank and a public sector bank because their methods of calculating interest rate on deposits and housing loans, respectively, were not in the interest of their customers.

According to the report, yet another PSU bank was asked to re-credit insurance premium that was debited to savings account holders without their concurrence under a group insurance scheme.

A class action is a general direction issued in cases that could benefit not only the applicant but also all customers who are affected.

The complaints against banks were received by the banking ombudsmen appointed by the RBI for different regions in the country to deal with customer complaints against banks after the lenders failed to provide relief to the customers. Based on the customer complaints, RBI had filed class action suits against three banks — one foreign bank and two public sector banks.

“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,” said the report, which did not name the banks involved.

Indian customers seem to be most dissatisfied with the foreign banks operating in India. According to the report, the number of complaints against foreign banks rose by 91 per cent in 2008-09 from a year ago. Of the total 11,700 complaints registered by 18 ombudsmen across the country, 2,838 were against HSBC. Close on heels were Citibank with 2,563 complaints. Standard Chartered, Barclays and ABN Amro are the other foreign banks against which there are a large number of customer complaints.