Banking Ombudsman Scheme-About Banking Ombudsman Scheme in India

About Banking Ombudsman Scheme 2006

The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to 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. All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.

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. As on date, fifteen Banking Ombudsmen have been appointed with their offices located mostly in state capitals. Address and Area of Operation of Banking Ombudsman

Grounds of complaints in Banking Ombudsman

The Banking Ombudsman can receive and consider any complaint relating to the following deficiency in banking services (including internet banking):

  • 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 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; and
  • 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.

Procedure to file a Complaint

  • First of all file the complaint with the bank
  • And if the reply is not received from the bank within a period of one month after the bank concerned has received one’s representation, or the bank rejects the complaint, or if the complainant is not satisfied with the reply given by the bank. Then go the Banking Ombudsman’s.

If one rejects the Banking Ombudsman’s decision

If one is not satisfied with the decision passed by the Banking Ombudsman, one can approach the appellate authority against the Banking Ombudsmen’s decision. Appellate Authority is vested with a Deputy Governor of the RBI.

If one is aggrieved by the decision, one may, within 30 days of the date of receipt of the award, appeal against the award before the appellate authority. The appellate authority may, if he/ she is satisfied that the applicant had sufficient cause for not making an application for appeal within time, also allow a further period not exceeding 30 days.

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.