Ombudsman

What is Banking Ombudsman?

Banking Ombudsman is a quasi-judicial official appointed by a quasi-judicial

authority and the Reserve bank of India under India’s Banking Ombudsman
Scheme 2006, and the jurisdiction was formed following to a judgment made by
India’s government to facilitate in resolving customer complaints and objections
against insufficiency in banking services.

What can Banking Ombudsman do?

If a customer is not happy with the services and facilities rendered by the Bank,
the customer has all the power to complain to the complaint cell of the Bank. If
the Bank does not take any action or efforts, then the customer can propose the
problem with the Ombudsman of the relevant bank. The RBI has selected steps
to establish the Internal Ombudsman and make them extra self-governing.
However, several customers observe that even though the Bank has a complaint
system and an Internal Ombudsman, many of their objections continue to be
unsolved and they are not allowed and forced to address the external Banking
Ombudsman. So, the banking Ombudsman officials are introduced in every
relevant bank for the sake of customers. They look forward to all the complaints
and resolve that at their best.

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. Presently
the Banking Ombudsman Scheme 2006 (As amended up to July 1, 2017) is in
operation. All Scheduled Commercial Banks, Regional Rural Banks and
Scheduled Primary Co-operative Banks are covered under the Scheme.
Objectives of Banking Ombudsman

 To intensify and spread the awareness of the Banking Ombudsman

Scheme.

 To help in swift and legitimate redressal of complaints through the

control of IT systems, extensive and simply convenient database and
intensified aptitudes aims.

 Renders advice and feedbacks to RBI towards building relevant and up-
to-date guidelines to banks to enhance the level of customer service and
to grow their internal complaint redressal systems.

 To secure redressal of complaints of users in banking services like in a

fair manner and reasonable that will give purpose to refined customer
services in the banking sector constantly.

Who is a Banking Ombudsman?

 Banking Ombudsman is appointed by the Reserve Bank of India. As

defined in Clause 3(Definition clause), The Chief General Manager or
General Manager of the RBI are appointed as Banking Ombudsman for
the fulfilment of the duties entrusted to the said designation under The
Banking Ombudsman Scheme, 2006.
 The person should be of high standing in the Legal, Banking, Financial
Services, and/or Public Administration to be appointed to this post.
 The maximum tenure of a Banking Ombudsman can’t exceed three years
as per Clause 4 of the Banking Ombudsman Scheme, 2006. 

Where are they appointed?

Since a Banking Ombudsman redresses complaints regarding the deficiencies in

the banking sector, it makes sense that they are appointed at all places where the
RBI has branches. Therefore, Banking Ombudsman is appointed in all places
where the Reserve Bank of India happens to have offices.
Powers, Jurisdiction and Duties of Ombudsman

The powers, jurisdiction, and duties of Banking Ombudsman have been laid
down in Clause 7 of the Banking Ombudsman Scheme, 2006. The duties
defined in the scheme are as follows: –

 Receiving Complaints

The Banking Ombudsman receives and considers complaints pertaining to the

deficiencies in banking or other services filed on certain grounds like non-
payment or inordinate delay in the payment or collection of bills, cheques, and
drafts. These complaints are admitted regardless of the pecuniary value of the
deficiency in service complained.

 Settlement by Agreement:

Banking Ombudsman also facilitates the satisfaction of the complaints filed and
endeavors to settle the quarrel by an agreement between the bank and the
complainant by way of conciliation and mediation. If the bank or the
complainant fails to agree on the same terms and conditions then the complaint
is resolved by adjudicating the matter and awarding the damages per the
provisions of the scheme.

 Command over office

The Banking Ombudsman also exercises general powers of superintendence and

has full command over his office and he is also in charge of the conduct of
business thereat.

 Furnishing Annual Budget

The Banking Ombudsman is also responsible for preparing up a yearly budget

for his office in consultation with the Reserve Bank of India and he has the
authority to exercise the powers of expenditure in accordance with the budget
approved under the provisions of the Reserve Bank of India Expenditure Rules,
2005.

 Review Report

The Banking Ombudsman has the duty to send the Governor of the Reserve
Bank, an annual report, as on 30th June of consistently, containing a general
review of the of his Office’s activities during the previous financial year and
shall also provide such other information which the Reserve Bank may direct
him to. If reserve bank deems fit, it can publish the reviews, reports and other
documents received by Banking Ombudsman in public interest in such
consolidated form or otherwise as it deems fit.

What can be the grounds of complaint?

There are certain grounds on which a complaint can be lodged to a Banking

Ombudsman laid down in Clause 8 of the scheme. These grounds are: –

 Collection of Instruments

Non-payment or unnecessary deferral in the payment or collection of cheques,

drafts, bills, etc;

 Rejection of Deposit

Rejection without adequate reason, of coins or small-denomination notes

offered for any purpose, and for charging of commission in regards thereof;

 Remittances

Non-payment or delay in payment of inward remittances;

 Instruments Issuance

Failure to issue or delay in issue of drafts, pay orders or bankers’ cheques;

 Working Hours

Violation of RBI’s prescribed working hours guidelines;

  Banking Facility Default

Failure to provide or delay in providing a banking facility (except advances and

loans) promised by a bank or its immediate selling agents in writing;

 Monies’ Proceeding Default

Defer, non-transfer of proceeds in parties’ accounts, non-payment of deposit or

non-adherence of the Reserve Bank directives, if any, applicable to rate of
interest on deposits in any savings, current or other account maintained with the
bank;

 Opening or Closing of Account

Refusal to open deposit accounts without any sufficient reason for denial or
forced the closure of deposit accounts without due notice or without satisfactory
reason(s) or refusal to close or late closing of the account.

 Unjustified Charges 

The imposition of charges without sufficient prior notice to the customers are
also the grounds to file a complaint to ombudsman;

 ATM and Debit Card Default

Non-adherence of Reserve Bank’s instruction pertaining to ATM /Debit Card

and Prepaid Card operations in India by the bank or its subsidiaries on any of
the following: –

 Account debited but cash not dispensed by ATMs

 Account debited more than one time for a single withdrawal from ATMs
or POS transaction.

 Less/Excess amount of cash dispensed by ATMs that what was being

entered

 Balance debited in the account without the use of the card or details of the
card
  Credit Card’s Default

Non-adherence by the bank or bank’s subsidiaries to the instructions of the

Reserve Bank on credit card operations pertaining to any of the following:

 Unsolicited calls for Add-on Cards, insurance for cards, etc.

 Charging of yearly fees on Cards issued on the term of free for lifetime

 Wrong debits or wrong billing of your credit card 

 Threatening calls or inappropriate approach of recovery by recovery

agents including non-observance/violation of the Reserve Bank’s
guidelines on engagement of recovery agents

 Reporting of wrong credit information to Credit Information Bureau

 Delay or failure to review and correct the credit status on account of

wrongly reported credit information to the Credit Information Bureau

 Online Banking Default

Non-adherence to the Reserve Bank’s guidelines pertaining to Mobile Banking,

Electronic Banking service in India by the bank on any of the things given
below:

1. delay or failure to proceed online payment or fund Transfer,

2. unauthorized or fraudulent electronic payment / Fund Transfer.

 Pension

Non-disbursement or late disbursement of pension;

 Accepting of Payment

Denial to accept or late acceptance of payments with regard to taxes, as required

by Reserve Bank/Government;

 Government Securities
Denial in issuing or late issuance, or failure to service or late servicing or
redemption of Government securities;

 Unfair Practise

Non-adherence of the fair operation practices code as adopted by the bank or of

the provisions of the Bank’s Code of commitment towards Customers issued by
Banking Codes and Standards Board of India and as the same adopted by the
bank or any matter relating to the non-adherence of the directives issued by the
Reserve Bank in relation relating to banking or other services; 

 Grievances Pertaining to Loans

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.

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.

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.

Procedure for filing a complaint with the Banking Ombudsman

The grievance should be made in writing format. It should be approved and

signed by the customer who files a complaint or his /her empowered agent. In
the objection and complaints, the following data should be clearly asserted:

  Name and the address of the customer filing a complaint.

 The evidence and data giving rise to the complaint.

 The assistance asked for.

 The name and address of the branch or office of the bank against which
the complaint charge is made.

 The type and amount of the loss affected the customer.

The customer should file onward with the complaint, copies of the documents if
any, which he/she intends to rely upon, and a statement that the grievance is
maintainable. A grievance and complaint made through a printout of the
complaint should be taken on the report and records of the Banking
Ombudsman and electronic medium should also be acquired by the Banking
Ombudsman. On presenting the complaint, the Banking Ombudsman will be
asked for records from the Bank. It will begin hearings to reach the outcome.

The complaints can be rejected by the Banking Ombudsman

a. One has not approached his bank for redressal of his grievance first.

b. 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.

c. 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.

d. Frivolous or vexatious complaints.

e. The institution complained against is not covered under the scheme.

f. 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.

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.