Banking Ombudsman

Dr. Prashant S. Desai,

Assistant Professor of Law,
NLSIU

Meaning
BankingOmbudsman is a quasi-judicial authority
functioning under India'sBankingOmbudsman
Scheme, and the authority was created pursuant
to a decision by the Government of India to
enable resolution of complaints of customers of
banks relating to certain services rendered by the
banks.

Banking Ombudsman Scheme, 2006

Scope of the Scheme:
In 2006, the Reserve Bank of India announced the
revisedBankingOmbudsman Scheme with enlarged
scope that included customer complaints on certain
new areas, such as, credit card complaints,
deficiencies in providing the promised services even
by banks' sales agents, levying service charges
without prior notice to the customer and nonadherence to the fair practices code as adopted by
individual banks.

GENERAL PARTICULARS OF THE

SCHEME
Legal Basis: Notified in terms of Sec 35A of
Banking Regulation Act 1949
Purpose of the Scheme: Expeditious and
inexpensive redressal of customer complaints.
Areas covered:
Deficiency in banking services
Deficiency in sanctioning of loans and
advances
Other specified matters

Appoint & Tenure: Clause 4 lays down that:

(1) The Reserve Bank may appoint one or more of
its officers in the rank of Chief General Manager or
General Manager to be known as Banking
Ombudsman to carry out the functions entrusted to
them by or under the Scheme.
(2) The appointment ofBankingOmbudsman under
the above Clause may be made for a period not
exceeding three years at a time.

Powers and Jurisdictions [Clause 7]

Authority of eachBankingOmbudsman extends
to the territorial limits entailed by the Reserve
Bank of India.
TheBankingOmbudsman has power to receive
and consider complaints relating to the
deficiencies inbankingor other services filed on
the grounds of complaints.
He has to facilitate their satisfaction or settlement
by agreement or through conciliation and
mediation between the bank concerned and the
aggrieved parties or by passing an Award in
accordance with the Scheme.

 TheBankingOmbudsman exercises general

powers of superintendence and control over his
Office and is responsible for the conduct of
business there at.
The Office of theBankingOmbudsman draws up
an annual budget for itself in consultation with
Reserve Bank and exercises the powers of
expenditure within the approved budget on the
lines of Reserve Bank of India Expenditure Rules,
2005.

 TheBankingOmbudsman has to send to the

Governor, Reserve Bank, a report, as on 30th June
every year, containing a general review of the
activities of his Office during the preceding
financial year.
He has to furnish such other information as the
Reserve Bank may direct and the Reserve Bank
may, if it considers necessary in the public
interest so to do, publish the report and the
information received from
theBankingOmbudsman in such consolidated
form or otherwise as it deems fit.

Grounds of complaints [Clause 8]

Non-payment or inordinate delay in the payment
or collection of cheques, drafts, bills etc.
Delay in payment of inward remittances
Delay / failure of issuing drafts / pay orders /
bankers cheque / banking facility
Delay and failure in providing necessary banking
services and products like debit cards, netbanking etc.

 Complaints of accounts operated by NRI

Refusal in opening the deposit account and
levying additional charges for the products
without informing the customer
Non Adherence to the RBI guidelines in the
matter of credit and debit cards
Delay in disbursing of pension
Refusal / delay in accepting payment towards
taxes
Delay / refusal in servicing or redemption of
government securities
Refusal / delay in closing of accounts

 Non-adherence to the fair practices code as

adopted by the bank or 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 RBI guidelines on engagement
of recovery agents by bank
Any other matter relating to the violation of the
directives issued by the RBI in relation to banking
or other services

 Non-compliance of interest rates as per

guidelines from RBI
Delays in sanction, disbursement or nonobservance of prescribed time schedule for
disposal of loan applications
Non-acceptance of loan application without
furnishing valid reasons
Non-observance of any other directions or
instructions of the RBI from time to time.

Procedure for filing complaint [Clause

9]
Any person who has a grievance against a bank on
any one or more of the grounds mentioned in the
Scheme may, himself or through his authorized
representative (other than an advocate), make a
complaint to theBankingOmbudsman within whose
jurisdiction the branch or office of the bank
complained against is located.
But the complaint arising out of the operations of
credit cards, has to be filed before the
BankingOmbudsman within whose territorial
jurisdiction the billing address of the card holder is
located and not the place where the bank concerned
or the credit card processing unit is located.

2. The complaint in writing has to be duly signed by

the complainant or his authorized representative.
The complainant has to show the copies of the
documents, which he proposes to, rely upon and a
declaration under Clause 9(3) of the scheme. He has
to mention the following things in the complaint:
a) The name and the address of the complainant,
b) The name and address of the branch or office of the
bank against which the complaint is made,
c) The facts giving rise to the complaint,
d) The nature and extent of the loss caused to the
complainant, and
e) The relief sought for.

Conditions to be fulfilled for making a complaint

1. Before making a complaint to the Banking
Ombudsman, the complainant had to, make a
written representation to the bank. If the bank
rejects the complaint or the complainant had not
received any reply within a period of one month
after the bank received his representation or the
complainant is not satisfied with the reply given to
him by the bank.
2. The complaint should be made before one year,
from the day the complainant has received the
reply of the bank to his representation or, where no
reply is received, before one year and one month
from the date of the representation to the bank;

3. The complaint does not touch upon matter which

was settled or dealt with on merits by
theBankingOmbudsman
in
any
previous
proceedings whether or not received from the
same complainant or along with one or more
complainants or one or more of the parties
concerned with the subject matter;
4. The complaint does not pertain to the same
subject matter, for which any proceedings before
any court, tribunal or arbitrator or any other
forum is pending or a decree or Award or order
has been passed by any such court, tribunal,
arbitrator or forum;

5. The complaint is not frivolous or vexatious in

nature; and
6. The complaint is made before the expiry of the
period of limitation prescribed under the Indian
Limitation Act, 1963 for such claims.
. Appeal:If the customer is not satisfied with the
award of theBankingOmbudsman, he can
approach to the RBI, to the appellate authority
called Deputy Governor. Still he is not satisfied,
after approaching to the RBI, he can go to the
High Court

Banking Ombudsman Scheme

THANKS VERY MUCH