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 Banking Ombudsman

Banking Ombudsman

Banking Ombudsman

Banking Ombudsman is a senior official appointed by the Reserve Bank of India(RBI) or a quasi (nominal) judicial authority functioning under India’s Banking Ombudsman Scheme 2006. Banking Ombudsman has the responsibility to resolve customer complaints against deficiency in banking services. At present 15 Ombudsmen have been appointed in state capitals by the RBI to settle customer complaints relating to banking services.

Revisions of Banking Ombudsman Scheme

In 2006, the Reserve Bank of India announced the revised Banking Ombudsman 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 non-adherence to the fair practices code as adopted by individual banks.

Further, under the new scheme, the governance and operations is fully staffed and funded by the Reserve Bank instead of the banks.

Eligible Complaints 

The Banking Ombudsman can receive and consider any complaint relating to a number of deficiencies related to banking operations including internet banking. The following type of the complaints can be taken up by the Banking Ombudsman:

  1. Non-payment or delay in the payment of inward remittances or collection of cheques, drafts, bills, etc.
  2. Non-acceptance, without sufficient cause, of small denomination notes or coins tendered for any purpose and for charging of commission for this service
  3. Failure to issue or delay in issue, of drafts, pay orders or bankers’ cheques
  4. Closure of account without customer concern
  5. Refusal to close or delay in closing the accounts
  6. Non-adherence to the fair practices code as adopted by the bank; and
  7. Financial loss incurred to customer due to wrong information given by bank official
  8. Any other matter relating to the violation of the directives issued by the Reserve Bank in relation to banking or other services
  9. Non-adherence by the bank or its subsidiaries to the instructions of Reserve Bank on ATM/debit card operations or credit card operations
  10. 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
  11. Refusal to accept or delay in accepting payment towards taxes, as required by Reserve Bank/Government
  12. complaints from Non-Resident Indians having accounts in India in relation to their remittances from abroad, deposits and other bank-related matters
  13. Non-adherence to prescribed working hours
  14. Failure to honor guarantee or letter of credit commitments
  15. 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
  16. 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
  17. Delays in receipt of export proceeds, handling of export bills, collection of bills etc., for exporters provided the said complaints pertain to the bank’s operations in India
  18. Refusal to open deposit accounts without any valid reason for refusal
  19. Levying of charges without adequate prior notice to the customer
  20. Refusal to issue or delay in issuing, or failure to service or delay in servicing or redemption of Government securities
  21. Forced closure of deposit accounts without due notice or without sufficient reason.

Procedure for Filing Complaint

Before making a complaint to the Banking Ombudsman, complainant should make a written representation to the bank and the bank should have:

  1. Rejected the complaint; or
  2. No reply within a period of 1 month after the bank received the complainant; or
  3. The complainant is not satisfied with the reply given to him by the bank.
  4. If no reply is received, not later than 1 year and 1 month after the date of the  representation to the bank.

After the above step, any person who has a grievance against a bank on any one or more of the above eligible grounds can himself or through an authorized representative (other than an advocate), make a complaint to the Banking Ombudsman.

Complaint arising out of the operations of credit cards and other types of services with centralized operations, should be filed before the Banking Ombudsman within whose territorial jurisdiction the billing address of the customer is located.

The complaint should be made in writing and should be signed b y the complainant or his authorized representative. In the complaint, the following information should be clearly stated:

  • The name and the address of the complainant.
  • The name and address of the branch or office of the bank against which the complaint is made.
  • The facts giving rise to the complaint.
  • The nature and extent of the loss caused to the complainant and
  • The relief sought for.

The complainant should file along with the complaint, copies of the documents, if any, which he proposes to rely upon and a declaration that the complaint is maintainable. A complaint made through electronic means should also be accepted by the Banking Ombudsman and a print out of the complaint should be taken on the record of the Banking Ombudsman.

On submitting the complaint, the Banking Ombudsman will call for records from the Bank and will initiate hearings to arrive at a conclusion.

Rejection of the Complaint

The compliant can be rejected by the Banking Ombudsman, if it pertain to the same cause of action, 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. Further, a complaint can also be rejected, if its made without any sufficient cause or not pursued by the complainant with reasonable diligence. Finally, a compliant can be rejected, if in the opinion of the Banking Ombudsman there is no loss or damage or inconvenience caused to the complainant.

For more information about deficiencies in banking services, refer to the following articles:

Rights of Borrowers.

RBI Fair Practices Code for Lenders

Banking Ombudsman Scheme

The Banking Ombudsman Scheme was introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995. The objective of the Banking Ombudsman Scheme is to protect customers from unfair practices of the banking industry, if any. All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Banking Ombudsman Scheme. A copy of Banking Ombudsman Scheme is reproduced below for reference:

Banking Ombudsman Scheme