A brief Dissection Banking Ombudsmen Scheme

By : PRONOY KUMAR GHOSE on 17 June 2013 Print thi

PRO !HA" !A##

Banking sector has become the core of almost all the monetary transaction that took place in the Country. All the Financial transaction within the Country and with the Foreign Country are done through Banks. Functions of the banking sectors now-a-days ranges from accepting deposit from Public , giving loan, depository of stock e changes, etc to insurance service provider which is popularly called !Bancassurance". #any a times disputes arise between customers and banks on matters relating to banking operations such as wrong debit to accounts, e cess recovery of interest$charges, wrong dishonour of che%ues, inade%uacy in services, etc. &n order to provide %uick, ine pensive and e pedite settlement of customer's complaints, the (eserve Bank introduced Banking )mbudsman *cheme since +une ,--. under the provisions of *ection /. of Banking (egulation Act, ,-0-. 1he Banking )mbudsman *cheme enables an e peditious and ine pensive forum to bank customers for resolution of complaints relating to certain services rendered by banks.

Banking Ombudsman Scheme 2006 and Recent Amendments:

1he Banking )mbudsman *cheme is introduced under *ection /. A of the Banking (egulation Act, ,-0- by (B& with effect from +une, ,--. and was revised in 2332 and later the Banking )mbudsman *cheme, 2334 was introduced. 1he Banking )mbudsman *cheme, 2334 enables resolution of complaints of bank customer relating to certain services rendered by banks. 1he *cheme has come into force from +anuary ,, 2334

replacing the Banking )mbudsman *cheme, 2332. 1he new *cheme also provides for online submission of complaints. 1he new *cheme additionally provides for the institution of an 5appellate authority6 for providing scope for appeal against an award passed by the )mbudsman both by the bank as well as the complainant.

Who is a Banking Omdudsman:

1he Banking )mbudsman is a senior official appointed by the (eserve Bank of &ndia to redress customer complaints against deficiency in certain banking services. 1he Banking )mbudsman is appointed by the (B& under the Banking )mbudsman *cheme,,--. for redressing the grievances of members of the public. 1he Banking )mbudsman is a %uasi 7udicial authority.

Appointment of Banking Ombudsmen:

1he (eserve bank of &ndia appoints banking )mbudsman under the provisions of banking )mbudsman *cheme,2334 8as amended up to date9. According to the provisions of Chapter && clause 0 8,9 1he (eserve Bank may appoint one or more of its officers in the rank of Chief :eneral #anager or :eneral #anager to be known as Banking )mbudsmen to carry out the functions entrusted to them by or under the *cheme. As on date, fifteen Banking )mbudsmen have been appointed with their offices located mostly in state capitals.

Qualification and tenure of Banking Ombudsman:

*enior officials of high standing in the legal, banking, financial services or public administration are usually appointed as a Banking )mbudsman. 1he tenure of a Banking )mbudsman is three years, although that can be e tended for a further period not e ceeding two years, sub7ect to an overall age-limit of si ty-five years. 1he Banking )mbudsman, is re%uired to devote all of his or her time to the affairs of their office. 1he remuneration and other per%uisites payable to the Banking )mbudsman is determined

by the (B& from time to time and is borne by the banks in such proportion and in such manner as is determined by the (B&.

urisdiction! po"ers and duties of Banking Ombudsman:

According to the provisions of the Chapter &&& Clause ; 8,9 of the Banking )mbudsman *cheme,2334 8as amended up to date9, <herein after called !*cheme"=, the (eserve Bank of &ndia specifies the territorial limits to which the authority of each Banking )mbudsman appointed under the provisions of the Banking )mbudsman *cheme shall e tend.

According to the provisions of the Chapter &&& Clause ; 829 of the *cheme, 1he Banking )mbudsman shall receive and consider complaints relating to the deficiencies in banking or other services filed on the grounds mentioned in the provisions of the *cheme and 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 *cheme.

According to the provisions of the Chapter &&& Clause ; 8/9 of the *cheme, 1he Banking )mbudsman shall e ercise general powers of superintendence and control over his )ffice and shall be responsible for the conduct of business thereat.

According to the provisions of the Chapter &&& Clause ; 809 of the *cheme , 1he )ffice of the Banking )mbudsman shall draw up an annual budget for itself in consultation with (eserve Bank and shall e ercise the powers of e penditure within the approved budget on the lines of (eserve Bank of &ndia > penditure (ules, 233..

According to the provisions of the Chapter &&& Clause ; 8.9 of the *cheme, 1he Banking )mbudsman shall send to the :overnor, (eserve Bank, a report, as on /3th +une every year, containing a general review of the activities of his )ffice during the preceding financial year and shall furnish such other information as the (eserve Bank may direct

and the (eserve Bank may, if it considers necessary in the public interest so to do, publish the report and the information received from the Banking )mbudsman in such consolidated form or otherwise as it deems fit.

#rounds of $omplaint:

According to the provisions of the Chapter &? Clause @ of Banking )mbudsman *cheme,2334 8as amended up to date9,

%&' An( person ma( file a complaint "ith the Banking Ombudsman ha)ing *urisdiction on an( one of the follo"ing grounds alleging deficienc( in banking including internet banking or other ser)ices :

8a9 non-payment or inordinate delay in the payment or collection of che%ues, drafts, bills etc.A

8b9 non-acceptance, without sufficient cause, of small denomination notes tendered for any purpose, and for charging of commission in respect thereofA

8c9 non-acceptance, without sufficient cause, of coins tendered and for charging of commission in respect thereofA

8d9 non-payment or delay in payment of inward remittances A

8e9 failure to issue or delay in issue of drafts, pay orders or bankers" che%uesA

8f9 non-adherence to prescribed working hours A

8g9 failure to provide or delay in providing a banking facility 8other than loans and advances9 promised in writing by a bank or its direct selling agentsA

8h9 delays, non-credit of proceeds to parties' accounts, non-payment of deposit or nonobservance of the (eserve Bank directives applicable to rate of interest on deposits in any savings, current or other account maintained with a bank

8i9 complaints from Bon-(esident &ndians having accounts in &ndia in relation to their remittances from abroad, deposits and other bankrelated mattersA

879 refusal to open deposit accounts without any valid reason for refusalA

8k9 levying of charges without ade%uate prior notice to the customerA

8l9 non-adherence by the bank or its subsidiaries to the instructions of (eserve Bank on A1#$Cebit card operations or credit card operationsA

8m9 non-disbursement or delay in disbursement of pension 8to the e tent the grievance can be attributed to the action on the part of the bank concerned, but not with regard to its employees9A

8n9 refusal to accept or delay in accepting payment towards ta es, as re%uired by

(eserve Bank$:overnmentA

8o9 refusal to issue or delay in issuing, or failure to service or delay in servicing or redemption of :overnment securitiesA

8p9 forced closure of deposit accounts without due notice or without sufficient reasonA

8%9 refusal to close or delay in closing the accountsA

8r9 non-adherence to the fair practices code as adopted by the bankA

8s9 non-adherence to the provisions of the Code of Bank's Commitments to Customers issued by Banking Codes and *tandards Board of &ndia and as adopted by the bank A

8t9 non-observance of (eserve Bank guidelines on engagement of recovery agents by banksA and

8u9 any other matter relating to the violation of the directives issued by the (eserve Bank in relation to banking or other services.

%2' A complaint on an( one of the follo"ing grounds alleging deficienc( in banking ser)ice in respect of loans and ad)ances ma( be filed "ith the Banking Ombudsman ha)ing *urisdiction:

8a9 non-observance of (eserve Bank Cirectives on interest ratesA

8b9 delays in sanction, disbursement or non-observance of prescribed time schedule for disposal of loan applicationsA

8c9 non-acceptance of application for loans without furnishing valid reasons to the applicantA and

8d9 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 beA

8e9 non-observance of (eserve Bank guidelines on engagement of recovery agents by banksA and

8f9 non-observance of any other direction or instruction of the (eserve Bank as may be specified by the (eserve Bank for this purpose from time to time.

%+' ,he Banking Ombudsman ma( also deal "ith such other matter as ma( be specified b( the Reser)e Bank from time to time in this behalf-

According to the provision of Chapter &? Clause @ 8/9 of the Banking )mbudsman *cheme, 2334 1he Banking )mbudsman may also deal with such other matter as may be specified by the (eserve Bank from time to time in this behalf.

.rocedure for redressal of grie)ances:

According to the provisions of Chapter &? Clause - of the Banking )mbudsma Act, 2334 8as amended upto date9,

8,9 Any person who has a grievance against a bank on any one or more of the grounds mentioned in herein above of the Banking )mbudsman *cheme may, himself or through his authorised representative 8other than an advocate9, make a complaint to the Banking )mbudsman within whose 7urisdiction the branch or office of the bank complained against is located. Provided that a complaint arising out of the operations of credit cards and other types of services with centraliDed operations, shall be filed before the Banking )mbudsman within whose territorial 7urisdiction the billing address of the customer is located.

829 8a9 1he complaint in writing shall be duly signed by the complainant or his authoriDed representative and shall be, as near as thereto as circumstances admit, stating clearlyE

8i9 the name and the address of the complainant, 8ii9 the name and address of the branch or office of the bank against which the complaint is made, 8iii9 the facts giving rise to the complaint, 8iv9 the nature and e tent of the loss caused to the complainant, and 8v9 the relief sought for.

8b9 1he complainant shall 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 under the provisions of Banking )mbudsman *cheme, 2334 8as amended upto date9.

8c9 A complaint made through electronic means shall also be accepted by the Banking )mbudsman and a print out of such complaint shall be taken on the record of the Banking )mbudsman.

8d9 1he Banking )mbudsman shall also entertain complaints covered by this *cheme received by Central :overnment or (eserve Bank and forwarded to him for disposal.

8/9 Bo complaint to the Banking )mbudsman shall lie unlessE-

8a9 the complainant had, before making a complaint to the Banking )mbudsman, made a written representation to the bank and the bank had re7ected 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 bankA

8b9 the complaint is made not later than one year after the complainant has received the reply of the bank to his representation or, where no reply is received, not later than one year and one month after the date of the representation to the bankA

8c9 the complaint is not in respect of the same cause of action which was settled or dealt with on merits by the Banking )mbudsman 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 cause of action A

8d9 the complaint does not 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 by any such court, tribunal, arbitrator or forumA

8e9 the complaint is not frivolous or ve atious in natureA and

8f9 the complaint is made before the e piry of the period of limitation prescribed under the &ndian Fimitation Act, ,-4/ for such.

.o"er to call for information:

According to the provision of the Chapter &? Clause ,3 of the Banking )mbudsman *cheme, 2334 8as amended up to date9,

8,9 For the purpose of carrying out his duties under this *cheme, a Banking )mbudsman may re%uire the bank against whom the complaint is made or any other bank concerned with the complaint to provide any information or furnish certified copies of any document relating to the complaint which is or is alleged to be in its possession.

Provided that in the event of the failure of a bank to comply with the re%uisition without sufficient cause, the Banking )mbudsman may, if he deems fit, draw the inference that the information if provided or copies if furnished would be unfavourable to the bank.

829 1he Banking )mbudsman shall maintain confidentiality of any information or document that may come into his knowledge or possession in the course of discharging his duties and shall not disclose such information or document to any person e cept with the consent of the person furnishing such information or document.

Provided that nothing in this clause shall prevent the Banking )mbudsman from disclosing information or document furnished by a party in a complaint to the other party or parties to the e tent considered by him to be reasonably re%uired to comply with any legal re%uirement or the principles of natural 7ustice and fair play in the

proceedings.

Settlement of $omplaint b( Agreement:

According to the provision of the Chapter &? Clause ,, of the Banking )mbudsman *cheme,2334 8as amended up to date9, <herein after called !*cheme"=,

8,9 As soon as it may be practicable to do, the Banking )mbudsman shall send a copy of the complaint to the branch or office of the bank named in the complaint, under advice to the nodal officer referred to in the provisions of the *cheme, and endeavour to promote a settlement of the complaint by agreement between the complainant and the bank through conciliation or mediation.

829 For the purpose of promoting a settlement of the complaint, the Banking )mbudsman may follow such procedure as he may consider 7ust and proper and he shall not be bound by any rules of evidence.

8/9 1he proceedings before the Banking )mbudsman shall be summary in nature.

A"ard b( the Banking Ombudsman:

According to the provision of the Chapter &? Clause ,2 of the Banking )mbudsman *cheme,2334 8as amended up to date9, <herein after called !*cheme"=,

8,9 &f a complaint is not settled by agreement within a period of one month from the date of receipt of the complaint or such further period as the Banking )mbudsman may allow the parties, he may, after affording the parties a reasonable opportunity to

present their case, pass an Award or re7ect the complaint.

829 1he Banking )mbudsman shall take into account the evidence placed before him by the parties, the principles of banking law and practice, directions, instructions and guidelines issued by the (eserve Bank from time to time and such other factors which in his opinion are relevant to the complaint.

8/9 1he award shall state briefly the reasons for passing the award.

809 1he Award passed under the provisions of the *cheme shall contain the direction$s, if any, to the bank for specific performance of its obligations and in addition to or otherwise, the amount, if any, to be paid by the bank to the complainant by way of compensation for any loss suffered by the complainant, arising directly out of the act or omission of the bank.

8.9 Botwithstanding anything contained in the provisions of the *cheme, the Banking )mbudsman shall not have the power to pass an award directing payment of an amount which is more than the actual loss suffered by the complainant as a direct conse%uence of the act of omission or commission of the bank, or ten lakh rupees whichever is lower.

849 &n the case of complaints, arising out of credit card operations, the Banking )mbudsman may also award compensation not e ceeding (s , lakh to the complainant, taking into account the loss of the complainant's time, e penses incurred by the complainant, harassment and mental anguish suffered by the complainant.

8;9 A copy of the Award shall be sent to the complainant and the bank.

8@9 An award shall lapse and be of no effect unless the complainant furnishes to the bank concerned within a period of /3 days from the date of receipt of copy of the

Award, a letter of acceptance of the Award in full and final settlement of his claim. Provided that no such acceptance may be furnished by the complainant if he has filed an appeal under the provisions of the *cheme.

8-9 1he bank shall, unless it has preferred an appeal under the provisions of the *cheme, within one month from the date of receipt by it of the acceptance in writing of the Award by the complainant under the provisions of the *cheme, comply with the Award and intimate compliance to the Banking )mbudsman.

Re*ection of the $omplaint:

According to the provision of the Chapter &? Clause ,/ of the Banking )mbudsman *cheme,2334 8as amended up to date9, <herein after called !*cheme"=,

1he Banking )mbudsman may re7ect a complaint at any stage if it appears to him that the complaint made isA

8a9 not on the grounds of complaint referred to in under the provisions of the *chemeA or

8b9 beyond the pecuniary 7urisdiction of Banking )mbudsman prescribed under the provisions of the *chemeA or

8c9 re%uiring consideration of elaborate documentary and oral evidence and the proceedings before the Banking )mbudsman are not appropriate for ad7udication of such complaintA or

8d9 without any sufficient causeA or

8e9 that it is not pursued by the complainant with reasonable diligenceA or

8f9 in the opinion of the Banking )mbudsman there is no loss or damage or inconvenience caused to the complainant.

Appeal before the Appellate Authorit(:

According to the provision of the Chapter &? Clause ,0 of the Banking )mbudsman *cheme,2334 8as amended up to date9, <herein after called !*cheme"=,

8,9 Any person aggrieved by an Award under clause ,2 or re7ection of a complaint for the reasons referred to in sub clauses 8d9 to 8f9 of clause ,/ of the *cheme, may within /3 days of the date of receipt of communication of Award or re7ection of complaint, prefer an appeal before the Appellate AuthorityA

Provided that in case of appeal by a bank, the period of thirty days for filing an appeal shall commence from the date on which the bank receives letter of acceptance of Award by complainant under sub. clause 849 of clause ,2 of the *chemeA

Provided that the Appellate Authority may, if he is satisfied that the applicant had sufficient cause for not making the appeal within time, allow a further period not e ceeding /3 daysA

Provided further that appeal may be filed by a bank only with the previous sanction of the Chairman or, in his absence, the #anaging Cirector or the > ecutive Cirector or the

Chief > ecutive )fficer or any other officer of e%ual rank.6

829 1he Appellate Authority shall, after giving the parties a reasonable opportunity of being heard,

8a9 dismiss the appealA or

8b9 allow the appeal and set aside the AwardA or

8c9 remand the matter to the Banking )mbudsman for fresh disposal in accordance with such directions as the Appellate Authority may consider necessary or properA or

8d9 modify the Award and pass such directions as may be necessary to give effect to the Award so modifiedA or

8e9 pass any other order as it may deem fit.

/9 1he order of the Appellate Authority shall have the same effect as the Award passed by Banking )mbudsman under clause ,2 or the order re7ecting the complaint under clause ,/ of the *cheme, as the case may be.

Banks to /ispla( Salient 0eatures of the Scheme for $ommon 1no"ledge of .ublic:

According to the provision of the Chapter &? Clause ,. of the Banking )mbudsman

*cheme,2334 8as amended up to date9, <herein after called !*cheme"=,

8,9 1he banks covered by the *cheme shall ensure that the purpose of the *cheme and the contact details of the Banking )mbudsman to whom the complaints are to be made by the aggrieved party are displayed prominently in all the offices and branches of the bank in such manner that a person visiting the office or branch has ade%uate information of the *cheme.

829 1he banks covered by the *cheme shall ensure that a copy of the *cheme is available with the designated officer of the bank for perusal in the office premises of the bank, if anyone, desires to do so and notice about the availability of the *cheme with such designated officer shall be displayed along with the notice under sub -clause 8,9 of this clause and shall place a copy of the *cheme on their websites.

8/9 1he banks covered by the *cheme shall appoint Bodal )fficers at their (egional$Gonal )ffices and inform the respective )ffice of the Banking )mbudsman under whose 7urisdiction the (egional$Gonal )ffice falls. 1he Bodal )fficer so appointed shall be responsible for representing the bank and furnishing information to the Banking )mbudsman in respect of complaints filed against the bank. Hherever more than one Done$region of a bank are falling within the 7urisdiction of a Banking )mbudsman, one of the Bodal )fficers shall be designated as the 'Principal Bodal )fficer' for such Dones or regions.

Banks co)ered under the Banking Ombudsman Scheme! 2006:

All *cheduled Commercial Banks, (egional (ural Banks and *cheduled Primary Cooperative Banks are covered under the *cheme.

$ost in)ol)ed in filing complaints "ith Banking Ombudsman:

1he Banking )mbudsman does not charge any fee for filing and resolving customers" complaints.

2imit on the amount of compensation as specified in an a"ard:

1he amount, if any, to be paid by the bank to the complainant by way of compensation for any loss suffered by the complainant is limited to the amount arising directly out of the act or omission of the bank or (s ,3 lakhs, whichever is lower.

$ompensation ma( be claimed for mental agon( and harassment:

1he Banking )mbudsman may award compensation not e ceeding (s , lakh to the complainant only in the case of complaints relating to credit card operations for mental agony and harassment. 1he Banking )mbudsman will take into account the loss of the complainant s time, e penses incurred by the complainant, harassment and mental anguish suffered by the complainant while passing such award.

3o" to file a complaint before the Banking Ombudsman:

)ne can file a complaint with the Banking )mbudsman simply by writing on a plain paper. )ne can also file it online or by sending an email to the Banking )mbudsman.

$onclusion:

At present there are ,. 8Fifteen9 Banking )mbudsmen in &ndia established in ma7or

cities having 7urisdiction over the territory as conferred by the Central :overnment and these )mbudsmen are doing their best to mitigate the dispute and resolve the grievances that comes for ad7udication before them.

1he scheme is very important channel for redressal of grievances of the general public against banks and banking services. &t is framed in such a manner that it does not oust the 7urisdiction of other courts, and hence, aggrieved people do not hesitate in using the banking ombudsman as a primary forum for resolution of disputes regarding banks. 1he speciality of the banking ombudsman is that it is in position to do 7ustice in an individual case, in the sense it is not bound by the precedents and in certain circumstances, can ignore technicalities and legal rules of evidence while resolving disputes between aggrieved customer and the bank.

As number of complaint received are significant and are handled but total consumer awareness needs to grow in order to the get total satisfaction of consumer and also the Banking )mbudsman needs to handle complaints efficiently and promptly in order to provide %uick relief to the grievance of the Consumers. 1he scope of :rounds of complain are to an e tent limited and confined to the grounds mentioned in the Banking )mbudsman *cheme only and needs to be e panded in the fast growing banking service sectors for better redressal of banking customer grievance.

>fficient and e peditious settlement of dispute by the banking )mbudsman shall serve the very purpose of the Banking )mbudsman *cheme and the aggrieved consumer shall be able to get the prompt relief for any default in service by the Bank.