Banking Ombudsman Scheme: Read the details here
Banking Ombudsman: is a quasi judicial authority fu2006, and the authority was created pursuant to a decision made by the Government of India to enable resolution of complaints of customers of banks relating to certain services rendered by the banks. The Banking Ombudsman Scheme was first introduced in India in 1995, and was revised in 2002. The current scheme became operative from 1 January 2006, and replaced and superseded the banking Ombudsman Scheme 2002. Presently the Banking Ombudsman Scheme 2006 (As amended upto July 1, 2017) is in operation.
What is the Banking Ombudsman Scheme?
The Banking Ombudsman Scheme is an expeditious and inexpensive forum for bank customers for resolution of complaints relating to certain services rendered by banks. The Banking Ombudsman Scheme is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995.
Who is a Banking Ombudsman?
The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking services covered under the grounds of complaint specified under Clause 8 of the Banking Ombudsman Scheme 2006 (As amended upto July 1, 2017).
How many Banking Ombudsmen have been appointed and where are they located?
As of date, twenty Banking Ombudsmen have been appointed with their offices located mostly in state capitals.
Which is the banks covered under the Banking Ombudsman Scheme, 2006?
All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co -operative Banks are covered under the Scheme
What are the grounds for complaints?
The Banking Ombudsman can receive and consider any complaint relating to the following deficiency in banking services:
- 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 to the instructions of Reserve Bank on ATM / Debit Card and Prepaid Card operations in India by the bank or its subsidiaries
- Non-adherence by the bank or its subsidiaries to the instructions of Reserve Bank on credit card operations
- Non-adherence to the instructions of Reserve Bank with regard to Mobile Banking / Electronic Banking service in India by the bank
- 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;
- Non-adherence to the provisions of the Code of Bank’s Commitments to Customers issued by 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;
- Non-adherence to Reserve Bank guidelines on para-banking activities like sale of insurance / mutual fund /other third party investment products by banks
- Any other matter relating to the violation of the directives issued by the Reserve Bank in relation to banking or other services.
- A customer can also lodge a complaint on the following grounds of 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 matter as may be specified by the Reserve Bank from time to time.
When can one file a complaint?
One can file a complaint before the Banking Ombudsman if the reply is not received
from the bank within a period of one month after the bank concerned has received
one’s complaint, or the bank rejects the complaint, or if the complainant is not
satisfied with the reply given by the bank.
When will one’s complaint not be considered by the Ombudsman?
One’s complaint will not be considered if:
- One has not approached his bank for redressal of his grievance first.
- One has not made the complaint within one year from the date of receipt of the reply of the bank or if no reply is received, and the complaint to Banking Ombudsman is made after the lapse of more than one year and one month from the date of complaint made to the bank.
- The subject matter of the complaint is pending for disposal / has already been dealt with at any other forum like court of law, consumer court etc.
- Frivolous or vexatious complaints.
- The institution complained against is not covered under the scheme.
- The subject matter of the complaint is not pertaining to the grounds of complaint specified under Clause 8 of the Banking Ombudsman Scheme. If the complaint is for the same subject matter that was settled through the office of the Banking Ombudsman in any previous proceedings.
Where can one lodge his/her complaint?
- One may lodge his/ her complaint at the office of the Banking Ombudsman 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.
Can a complaint be filed by one s authorized representative?
Yes. The complainant can be filed by one s authorized representative (other than an advocate).
Is there any cost involved in filing complaints with Banking Ombudsman?
No. The Banking Ombudsman does not charge any fee for filing and resolving
Is there any limit on the amount of compensation as specified in an Award?
The amount, if any, to be paid by the bank to the complainant by way of compensation for any loss suffered by the complainant is limited to the amount arising directly out of the act or omission of the bank or ₹ 20 lakhs (₹ Two Million), whichever is lower.
Can the Banking Ombudsman reject a complaint at any stage?
Yes. The Banking Ombudsman may reject a complaint at any stage if it appears to him that a complaint made to him is:
- not on the grounds of complaint referred to above
- compensation sought from the Banking Ombudsman is beyond ₹ 20 lakh (₹ Two Million).
- requires consideration of elaborate documentary and oral evidence and the proceedings before the Banking Ombudsman are not appropriate for adjudication of such complaint
- the complaint is without any sufficient cause
- the complaint that it is not pursued by the complainant with reasonable diligence
- in the opinion of the Banking Ombudsman there is no loss or damage or inconvenience caused to the complainant.
What happens if the complaint is not settled by agreement?
- If a complaint is not settled by an agreement within a period of one month, the Banking Ombudsman proceeds further to pass an Award. Before passing an award, the Banking Ombudsman provides reasonable opportunity to the complainant and the bank, to present their case.
- It is up to the complainant to accept the award in full and final settlement of or to reject it.
Is there any further recourse available if one rejects the Banking Ombudsman’s decision?
- Any person aggrieved by an Award issued under Clause 12 or the decision of the Banking Ombudsman rejecting the complaint for the reasons specified in sub-clause (d) to (g) of Clause 13 of the Banking Ombudsman Scheme 2006 (As amended up to July 1, 2017) can approach the Appellate Authority. The Appellate Authority is vested with a Deputy Governor of the RBI.
- Other recourse and/or remedies available to him/her as per the law can also be explored. The bank also has the option to file an appeal before the Appellate Authority under the Scheme.
How does the appellate authority deal with the appeal?
The appellate authority may:
- dismiss the appeal; or
- allow the appeal and set aside the Award; or
- 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
- modify the Award and pass such directions as may be necessary to give effect to the modified award; or
- pass any other order as it may deem fit.