The Banking Ombudsman Scheme was introduced by the RBI in 1995 as an alternative, expeditious and inexpensive forum to resolve complaints relating to deficiencies in banking services. It covers all commercial, regional rural and scheduled primary cooperative banks.
Banks are trusted establishments
where you deposit your money for safekeeping. The account holder has the right
to withdraw deposited funds and use the bank’s services associated with his
account. During this time when the deposits are held with the bank, a customer
builds a banking relationship and expects certain level of service from the
banking institution. There can be times when these expectations are not met and
may end in dispute. During such times, the Reserve Bank of India steps in as
the middleman to mediate settlement.
What is Banking
Ombudsman?
Ombudsman is a regulator who
investigates complaints and mediates fair settlements. The Banking Ombudsman
(BO) is an authority appointed by the Reserve Bank of India to address consumer
grievances against the banks in India. Any customer who has a grievance against
a bank or against a certain deficiency in the banking service can lodge a
complaint with the Banking Ombudsman in whose jurisdiction the branch of the
bank complained against is located. As on date, there are 15 Banking Ombudsmen
in India with their offices located mostly in the State Capitals. All Scheduled
Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks
are covered under the Scheme.
The Banking Ombudsman (BO) has a
legal power as it is a quasi-judicial authority. It has power to summon both
the parties – bank and its customer and facilitate resolution of complaint
within 30 days. The Banking Ombudsman may reject a complaint at any stage if it
appears to the body that a complaint made is not on the grounds of complaint
covered by BO or compensation sought from the BO is beyond Rs 10 lakh.
Banking Ombudsman
Scheme, 2006
The Banking Ombudsman Scheme was
launched under Section 35 A of the Banking Regulation Act, by RBI with effect
from 1995 for resolution of complaints relating to certain services rendered by
banks. Even though, this scheme was introduced in 1995, major revisions were
made in the year 2002, 2006 and in Feb, 2009. The new scheme also addresses
complaints related to online banking, debit cards, credit cards etc.
Types of Complaints
addressed by Banking Ombudsman:
a)Deficiency in banking services
(including Internet Banking):
The Banking Ombudsman can receive
and consider any complaint relating to the following:
Non-payment or
inordinate delay in the payment or collection of cheques, drafts, bills etc.;
Non-acceptance, without
sufficient cause, of
small denomination notes tendered for any purpose, and for
charging of commission in respect thereof;
Non-acceptance, without
sufficient cause, of coins
tendered and for charging of commission in respect thereof;
Non-payment or delay in
payment of inward
remittances ;
Failure to issue or
delay in issue of drafts, pay
orders or bankers’ cheques;
Non-adherence to
prescribed working hours
;
Failure to provide or
delay in providing a banking
facility (other than loans and advances) promised in writing by
a bank or its direct selling agents;
Delays, non-credit of
proceeds to parties accounts, non-payment of deposit or non-observance of the
Reserve Bank directives, if any, applicable to rate of interest on deposits in any savings, current or
other account maintained with a bank ;
Complaints from
Non-Resident Indians having accounts in India in relation to their remittances from abroad,
deposits and other bank-related matters;
Refusal to open deposit accounts
without any valid reason for refusal;
Levying of charges without
adequate prior notice to the customer;
Non-adherence by the
bank or its subsidiaries to the instructions of Reserve Bank on ATM/Debit card operations
or credit card
operations;
Non-disbursement or
delay in disbursement of pension
(to the extent the grievance can be attributed to the action on the part of the
bank concerned, but not with regard to its employees);
Refusal to accept or
delay in accepting payment towards taxes,
as required by Reserve Bank/Government;
Refusal to issue or
delay in issuing, or failure to service or delay in servicing or redemption of Government securities;
Forced closure of
deposit accounts without due notice or without sufficient reason;
Refusal to close or delay in closing the accounts;
Non-adherence to the fair practices code as
adopted by the bank or non-adherence to the provisions Banking Codes and
Standards Board of India and as adopted by the bank ;
Non-observance of
Reserve Bank guidelines on engagement of recovery agents by banks; and any
other matter relating to the violation
of the directives issued by the Reserve Bank in relation to
banking or other services.
b) Deficiency in service with
respect to loans and advances
Non-observance of
Reserve Bank Directives on interest
rates;
Delays in sanction,
disbursement or non-observance of prescribed time schedule for disposal of loan applications;
Non-acceptance of
application for loans without furnishing valid
reasons to the applicant; and
Non-adherence to the
provisions of the fair
practices code for lenders as adopted by the bank or Code of
Bank’s Commitment to Customers, as the case may be;
Non-observance of any
other direction or instruction of the Reserve Bank as may be specified by the
Reserve Bank for this purpose from time to time.
The Banking Ombudsman
may also deal with such other matters as may be specified by the Reserve Bank
from time to time.
Process of filing a
complaint with the Banking Ombudsman:
1. Approach your Bank first: Before filing a complaint with Banking Ombudsman for your Bank,
it is mandatory to first approach your Bank for redressal of grievance. If your
bank does not reply within one month or rejects your complaint or if you are
not satisfied with the reply given by the bank, then you can proceed with the
process of filing a complaint with the Banking Ombudsman.
2. File complaint with BO by
providing necessary details: You can simply
write your complaint on a plain paper and send it to respective BO office i.e.
under whose jurisdiction, the bank branch complained against is situated. For
complaints relating to credit cards and other types of services with
centralized operations, complaints may be filed before the Banking Ombudsman
within whose territorial jurisdiction the billing address of the customer is
located. You can also file your complaint online through BO’s website or write
an email to Banking Ombudsman. Your application should have the name and
address of the complainant, the name and address of the branch or office of the
bank against which the complaint is made, facts giving rise to the complaint
supported by documents, if any, the nature and extent of the loss caused to you
(the complainant), the relief sought from the Banking Ombudsman and a
declaration about the compliance of conditions, which are required to be
complied with by you (i.e. the complainant).
3. BO tries to make an
agreement: Once a complaint is received,
the BO acts as middleman and tries to settle the complaint by agreement between
the complainant and the bank (against which the complaint is filed) within one
month of filing the complaint. During the process, if the terms of settlement
(offered by the bank) are acceptable to the complainant, the BO passes an order
as per the terms of settlement, which becomes binding on the bank and the
complainant.
4. BO passes a judgement: If a complaint is not settled by an agreement within a period of
one month, the BO proceeds to pass a further judgement. Before passing a
judgement, the BO provides reasonable opportunity to the complainant and the
bank, to present their case. It is up to the complainant to accept the decision
in full and final settlement of his/her complaint or to reject it.
5. Appeal against BO’s
judgement before the appellate authority: If one is not satisfied with the decision passed by the Banking
Ombudsman, then he/she can approach the appellate authority against the BO’s
decision within 30 days of the date of receipt of the judgement. Appellate
Authority is vested with a Deputy Governor of the RBI. The bank also has the
option to file an appeal before the appellate authority under the scheme.
6. Decision by appellate authority: The appellate authority may
i. Dismiss the appeal; or
ii. Allow the appeal and set aside the award; or
iii. Send the matter to the Banking Ombudsman for fresh disposal in accordance with such directions as the appellate authority may consider necessary or proper; or
iv. Modify the award and pass such directions as may be necessary to give effect to the modified award; or
v. Pass any other order as it may deem fit.
i. Dismiss the appeal; or
ii. Allow the appeal and set aside the award; or
iii. Send the matter to the Banking Ombudsman for fresh disposal in accordance with such directions as the appellate authority may consider necessary or proper; or
iv. Modify the award and pass such directions as may be necessary to give effect to the modified award; or
v. Pass any other order as it may deem fit.
Source: RBI website
