Bank OMBUDSMAN

28/12/2020 2 By indiafreenotes

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.

The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking services.

All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.

The Banking Ombudsman Scheme is like a fast track and inexpensive forum for the customers of the bank for resolution of their complaints regarding the services rendered by the banks in India. The Banking Ombudsman creates an onus through Section 35A of the Banking Regulation Act, 1949 to appoint a banking ombudsman, who is a senior official not below the rank of Chief General Manager or General Manager appointed by the Reserve Bank of India.

The scheme came into effect from the year 1995 and presently the current operational scheme is Banking Ombudsman Scheme (amended up to July 1, 2017).

The main aim of the scheme is to have a resolution scheme related to the services rendered by the banks in case the customer is not satisfied with the same and in cases where there is no solution provided by the banks for settlement of such complaints and disputes. The Banking Ombudsman Scheme extends to the whole country and covers the business of banking industry in the country that means all scheduled commercial banks, rural banks, cooperative banks will come under the purview of the scheme.

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 codes as adopted by the bank or non-adherence to the provisions of the code of banks 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
  • Any other matter relating to the violation of the directives issued by the reserve bank in relation to banking or other services.

Duties of the Banking Ombudsman while dealing with a complaint

  • The Banking Ombudsman has to take into account the prevalent laws and directions, guidelines and instructions given by the Reserve Bank from time to time.
  • The award given should accompany the reasons on which the award was given and also should contain the directions, if any, to the bank for any specific performance of the obligations in addition to the amount, if any, to be paid by the bank to the complainant as a compensation for the loss suffered by him due to the deficiency in service by the bank.
  • Banking Ombudsman shall not have the power to pass an Award directing payment of an amount towards compensation which is more than the actual loss suffered by the complainant as a direct consequence of the act of omission or commission of the bank, or two million rupees whichever is lower.
  • The Banking Ombudsman may also award compensation in addition to the above but not exceeding rupees 0.1 million to the complainant, taking into account the loss of the complainant’s time, expenses incurred by the complainant, harassment and mental agony suffered by the complainant.