Have you ever wondered what steps to follow in case of grievance related to banking transactions as quite often we face issues like short cash dispense, loss of chq by the bank or delay in remittance from abroad. At times we do not get a proper resolution from the bank so in such a scenario can we approach some other authority. The answer is a Banking Ombudsman but before that it becomes essential to understand about an Ombudsman.
Ombudsman is an official who looks after the interests and also legal affairs of public. The person is responsible for investigating and addressing the complaints by individuals. This official is usually appointed by the Government or by Parliament. Ombudsman is a way of resolving grievances without the need of going to a court
What is Banking Ombudsman?
Banking Ombudsman is a quasi- judicial authority and the same was created by Government of India to provide effective complaints resolutions. It is a senior official appointed by the reserve bank of India to address the complaints by the banking customers. Some people also call it Ombudsman Banking
Origin: Banking Ombudsman Scheme 2006
The Reserve Bank of India first introduced the banking Ombudsman scheme in 1995 and it was revised in 2002 to over regional and rural banks. Then again there was a revision in the year 2006 which is known as “Banking Ombudsman Scheme 2006” to cover complaints for ATM transactions, debit and credit cards, deduction of service charges etc. It was last amended in February 2009, to cover problems due to internet banking. This RBI Banking Ombudsman scheme covers all banks- PSU Banks, Rural and Co-operative Banks. The Ombudsman Banking has been defined under clause 4 of the Banking Ombudsman Scheme, 2006.
The reserve Bank shall specify the territorial limits to which the authority of each of the Banking Ombudsman shall extend.
Appointment & Tenure
The Reserve Bank of India on recommendation by its Governor may appoint one or more officials for this post. The minimum age to be considered shall be 55 years. The person selected will be appointed for a period of 3 years which could be further extended for a period not exceeding 2 years and subject to age limit of 65 years.
Clause 12 Grounds of Complaints
1) Complaints Pertaining to Deficiency in any of the Banking Services such as:-
- Non payment or delay in payment of cheques, drafts, bills etc
- Non acceptance of small denomination notes without any reason and also charging of commission in respect thereof
- Non issuance of drafts to customers
- Non adherence to prescribed working hours by the branches
- Failure to honour guarantee or letter of credit
- Claims in regards to fraudulent withdrawals or fraudulent encashment of cheque or a bank draft
- Complaints for any of the accounts pertaining to delays , non credit of proceeds to parties accounts
- Complaints for non observance of RBI`s directives applicable to rate of interests on deposits or violation of directives on any other matter
- Complaints from exporters for delays in receipt of export proceeds, handling of export bills, collections of bills
- Complaints from NRI`s in regards to remittance from abroad
- Complaints pertaining to refusal to open deposit accounts without any valid reason
2) Complaints Concerning Loans and Advances
- Non observance of Reserve Bank directives on interest rates
- Delays in sanction or disbursement of loan applications
- Non acceptance of loan application without any valid reason
- Non observance of any other directives by RBI.
Ombudsman Banking: Procedure for Lodging Complaint
Any person who has a grievance against a bank in regards to banking services as mentioned above in Clause 12 of the scheme can approach Banking Ombudsman for addressing his concern. The person himself or through an authorized representative can make a complaint to Banking Ombudsman within whose jurisdiction the branch or office of the bank complained against is located.
The complaint filed should be in writing duly signed by the complainant or his representative in form specified in Annexure –A of the scheme. It should clearly state the name and address of complainant along with name and address of branch of bank against which complaint is being made. It should also give facts causing complaint supported by documents along with description of nature and extent of loss.
Rejection of Complaints on Grounds
1) If the complainant hasn`t first approached the bank named in the complaint and the complaint would be accepted only if the other bank has
- Rejected the complaint or
- No reply received within 1 month after the concerned bank received the case or
- Person is not satisfied with the reply given
2) If the complaint has been made to Ombudsman later than one year after the cause of action
3) If the complaint is in regards to the same subject matter which was settled though Banking Ombudsman in any previous proceedings
4) If the complaint for same subject matter is pending before any court, tribunal or arbitrator or a final order has already been passed by such an authority
5) If the complaint is frivolous, vexatious or malafide in nature
6) If there is no loss or damage caused to complainant
7) If it is pursued without sufficient cause and reasonable diligence
8) If the complaint is outside the purview of the scheme
9) If the bank branches fall outside the jurisdiction of Ombudsman as several states are clubbed together since it`s not available in all states.
Examples of Cases Solved
1) Mr. X the complainant had issued a chq dated 20/10/2004 to their supplier for Rs.5,00,000 and mentioned the supplier`s account no at the back side of the chq. The chq was deposited in drop box of ABC bank on 22/10/2004 at about 10.30 a.m. The chq was taken out of the drop box by a miscreant who opened a current account on 24/10/2004 with Y bank in the name of same supplier. The chq was deposited in account on 25/10/2004 and amount got credited on 27/10/2004. Rs.3 lakhs were withdrawn in morning of 29/10/2004 and Rs.1,80,000 in the afternoon.
Decision- Y bank was found to be deficient in opening the current account without proper introduction and verification and the collecting bank was imposed with liability.
2) A complaint was made with RBI Banking Ombudsman regarding an ATM transaction as when the complainant was trying to withdraw cash, there was a power failure. So he could not withdraw the cash and his account was debited for Rs.600/-. A complaint was made to the bank but no actions were taken as he got a reply from the bank that he might have withdrawn cash.
Decision- On perusal of disputed transactions and cash summary as per ATM records, it was observed that cash was not dispensed and they reimbursed the amount.
RBI Banking Ombudsman Offices in India are located at Mumbai Delhi, Bangalore, Hyderabad and 11 other locations. Banking Ombudsman email can be obtained from RBI website for respective locations in Delhi, Mumbai and others