ASSIGNMENT

TOPIC: ROLE OF BANKING OMBUDSMAN IN INDIAN BANKING INDUSTRY

SUBMITTED TO: Dr. C. Kishan Rao

SUBMITTED BY: PANKAJ KUMAR 12010121234 BANKING & FINACIAL SERVIVES

BANKING OMBUDSMAN The Banking Ombudsman is a senior official, appointed by the Reserve Bank of India to address grievances and complaints from customers, regarding deficiencies in banking services. It covers all kinds of banks PSU Banks, Private Banks, Rural banks and cooperative banks. Even though, it was originally setup in 1995, there were major revisions in 2006 covering transactions related to complaints of ATM cards, debit cards and credit cards, deduction of service charges by banks without prior intimation, unfair practices of banks and non-compliance by direct sales agents (DSA) of banks for services promised while opening an account etc. It was last amended in Feb, 2009 to cover deficiencies arising out of internet banking too.

LAW RELATED TO BANKING OMBUDSMAN IN BRIEF The Banking Ombudsman Scheme, 2006 provides for resolution of complaints by bank customers relating to certain services rendered by banks. It follows the process conciliation & settlement to resolve disputes. The Ombudsman is a mid authority. It power to both the parties - bank and its customer, to facilitate resolution of complaint through mediation. The Banking Ombudsman is a person appointed by the Reserve Bank of India to redress customer complaints against certain deficiency in banking services.

A complaint on any one of the following basis or deficiency in banking or other services may be filed with the Banking Ombudsman having jurisdiction.

Levying of charges without any notice or Information. Charging higher rate of interest linked to BPLR on Housing Loan Any Loss suffered because of lack of co-ordination from Bank side Unreasonable credit card charges Fraudulent transfer of funds by using net banking Fraudulent transactions against lost credit card Cheque lost in transit by the bank Non-updating of CIBIL records Loss of cheque from Cheque drop box

Closure of any account with providing any information or reason When bank demands unreasonable proofs for opening of account Change in terms and conditions without notice or valid reason Delay in providing any service Miss-selling of Insurance products Forcing customers to take insurance policies for processing Loans Rejection of Loans Harassment to customer or misbehaviour for any reason Casual approach from Bank on performing its duties

COMPLAINT UNDER SECTION: Banking Ombudsman Scheme 2006 WHOM TO COMPLAIN / WHERE TO COMPLAINT? A complainant may file a complaint with the Banking Ombudsman simply by writing on a plain paper. Can also be submitted online (in www.bankingombudsman.rbi.org.in) or by sending an email to the Banking Ombudsman. There is an established way for filing a complaint, which is available to all bank branches. However, it is not necessary to use this format. The plaintiff must, However, incorporating all required information.

HOW TO FILE THE CASE? Before filing a complaint with the Ombudsman, the complainant must first make a written representation to the bank against which aggrieved. You can make your complaint to the banking Ombudsman if the reply is not received from the bank within one month after the bank concerned has received his representation or the bank rejects the complaint, or the complainant is not satisfied with the answer you gave the bank. The complaint must, however, be made before has emerged after one year after the cause of action. The complaint should not be to the same matter which was resolved through the office of Ombudsman in any previous proceedings. or the same object for which any proceedings before any court or arbitrator or any other forum is pending or a decree or award or a final order, which has already been approved by any competent court, tribunal, arbitrator or forum.

The complaint must have the name and address of the author, the name and address of the branch office of the bank against which the complaint is made, the facts giving rise to the complaint supported by documents, if any, the nature and extent of the losses incurred by the applicant, the relief asked the Ombudsman and a declaration of compliance with the conditions that are required to be fulfilled by the applicant. If the terms of the agreement (offered by the bank) are acceptable to the complainant in full and final settlement of his complaint, the Ombudsman pass an order in accordance with the terms of the agreement, which is binding on the bank and the complainant. If the complaint is not settled by agreement within a period of one month, the Banking Ombudsman goes on to spend a premium. Before passing an award, the Banking Ombudsman provides a reasonable opportunity for the complainant and the bank, to present their case. He has in examination, documentary evidence placed before him by the parties, the principles of banking law and practice, directions, instructions and guidelines issued by the Reserve Bank of India and other factors which it considers necessary in the interests of justice. Next After an award is passed, it sends a copy to the applicant and the bank mentioned in the complaint. this is open to the plaintiff to accept the award in full and final settlement of the complaint or to reject it. If the award is acceptable to the claimant, you must send a letter of acceptance of the award to the bank within 15 days from the date of receipt of the copy of the award for him. You can also make a written request to the Ombudsman, for the extension of time and the reasons for requesting the extension. If the Ombudsman is satisfied with the reasons given by the applicant in its letter of request for extension of time (for sending his letter of acceptance of the grant) may be granted extension of time until the new deadline of 15 days for compliance. If the bank is satisfied with the award within a period of one month (from the date of receipt of the letter of acceptance of the complainant), the bank is obliged to comply with the award and intimate compliance Ombudsman. If the complainant is dissatisfied with the award passed by the Ombudsman, he can approach the Appellate Authority against the decision Ombudsmen Banking. The rejection of an award from the applicant does not affect any other remedy and / or remedies available to him under the law. The court of appeal is the Deputy Governor of the Reserve Bank of India. Any party aggrieved by the award may, within 45 days from the date of receipt of the award, appeal against the decision before the appellate authority. The appellate authority may, if satisfied

that the applicant had sufficient cause for failure to file the appeal request within time, also allow a period not exceeding 30 days. 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 ad pass such directions as may be necessary to give effect to the modified award; or pass any other order as it may deem fit.

REAL LIFE CASES SOLVED BY BANKING OMBUDSMAN

1. How a person got compensation of Rs 16,200 because he got less money from ATM The complainant maintained an account with Andhra Bank. He withdrew an amount of Rs 500 from the ATM of Dhanlaxmi bank on July 28, 2009. The cash dispensed by the machine was only Rs 400. However, his account was debited by Rs 500. The amount of Rs 100 was credited back to his account only on January 27, 2010 (Around 162 days late) & despite lodging the complaint immediately, no penalty was paid to him as per the instructions issued by DPSS, vide its circular dated July 17, 2009. Since the bank had delayed in affording the credit to the complainants account by more than five months, the BO directed the bank to pay the penalty amount of Rs 16,200 for the delayed period (Rs 100 for each 162 days). 2. How a senior citizen claimed Rs 1 lakh in compensation for Harassment regarding the loan he never took Even though the complainant had no business relationship with Oriental Bank of commerce, he was getting calls/SMS from the recovery agents using abusive language & demanding repayment of some loans which he had never taken. Several complaints to the bank against this harassment calls fetched no effect. The bank pleaded to the BO that the telephone numbers from which he was getting the abusive calls did not belong to any of their recovery agents. Based on this, the BO closed the case under clause 13(d) of BO Scheme (i.e. complaint without any sufficient cause). As the complainant continued to get the harassment calls, he went in appeal. During the appeal, the bank admitted that the phone numbers from which he was getting abusive harassment calls belonged to their recovery agents and that they had since taken necessary

corrective action to discontinue such calls. The Authority observed that the bank had not conducted proper due diligence while sanctioning the loan to some third person indicating a major KYC lapse. To cap it all, the bank had misguided the BO resulting in the BO pronouncing a wrong order, damaging the credibility of the BOS. The AA set aside the decision of the BO and directed the bank to pay the appellant Rs 1 lakh towards compensation. 4. How a person got Rs 6,500 as interest for Failed ATM transaction In a case of failed ATM transaction where the account was debited though no cash was dispensed it was observed that as per BOs orders the amount was credited to complainants account, but the bank did not pay the penal interest in terms of extant RBI instructions for the delayed period credit of approximately 2 months. The bank was directed to pay penalty at Rs 100 per day amounting to Rs 6500.