Introduction

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 Reserve Bank of India shall specify the jurisdiction or the territorial limits of the selected
ombudsman. The ombudsman shall be responsible for receiving and considering the
complaints filed by the aggrieved parties irrespective of the amount of money involved in the
complaint. He will be responsible for the settlement of the dispute between the bank and the
aggrieved party either by the process of mediation or conciliation or if necessary by giving an
award to the concerned party if the circumstances require so. The appointed ombudsman has
to submit a report to the governor of the Reserve Bank on 30th June of every financial year
regarding the activities conducted through his office during the preceding financial year and
also any other details as asked by the Reserve Bank.
The Banking Ombudsman Scheme allows an aggrieved customer to file a complaint of any
nature regardless of any amount involved, in the complaint with the ombudsman.

Powers of Banking Ombudsman

The banking ombudsman is vested with the following powers:
o Call any additional information from the bank against which any complaint has been
filed or any other bank concerned with the complaint
o Call for certified copies of any document relating to the complaint
o Maintaining confidentiality of any information or document that they may receive
o Nature of the proceedings before Banking Ombudsman is “summary in nature”
o Appellate Authority in the Scheme of Banking Ombudsman is Deputy Governor – in-
charge of the Department of the RBI which is implementing the scheme.
Grounds on which complaints can be filed
Some of the grounds on which these complaints can be filed by the aggrieved customers are-
1. Delay or non-payment of cheques, drafts, bills etc.,
2. Non-acceptance of any notes or coins of the Indian currency without giving any
sufficient cause,
3. Charging some amount of commission for any service mentioned in the above point
which the bank does not have the authority of,
4. Non-payment or delay in payment of the inward remittances,
5. Non-adherence in regards to the working hours of the banks,
6. Delay or failure to provide a banking facility, earlier promised by the officials or the
agents of the bank,
7. Refusing to open deposit accounts without any valid reason,
8. Delay or non-remittance of money or any other bank related matters regarding the
non-resident Indians,
9. Levying of any other additional charge without any previous intimation to the
customers,
10. Non-adherence to the instructions and guidelines given by the Reserve Bank in
relation to use of ATM or Debit cards, like – Account debited but cash not dispensed
by ATMs, Less cash dispensed by the ATM machine, Stolen cards, Account debited
twice for one transaction done on the abovementioned factors,
11. Non-adherence to the guidelines given by the Reserve Bank in relation to the Credit
Card facilities provided by the banks, like – Wrong billings on the card, Charging of
excess annual fees against the pre-stated fee, Unsolicited calls for add-on cards etc.
12. Inappropriate approach by the recovery agents on behalf of the banks or not following
the guidelines are given by the Reserve Bank in regards to the functioning of the
recovery agents.
13. Any other guidelines stated by the Reserve Bank.
14. Non-adherence to the guidelines given by the Reserve Bank in regards to the Mobile
or Internet Banking facility provided by the banks, like – delay or failure to effect
online payment / Fund Transfer, unauthorized electronic payment / Fund Transfer
15. Delay or refusal to accept payments towards taxes and other charges as directed by
the Reserve Bank or the government,
16. Delay in issuance or refusal to issue redemption of government securities,
17. Forced closure of deposit accounts without prior notice or without any specific
reasons for the delay in closure of any type of accounts held by the customer,
 18. Complaints on the grounds regarding non-observance of Reserve Bank guidelines on
interest rates, refusing to accept applications for loans without a valid reasons or not
disposing of the loan applications within the prescribed time or 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,
19. Non-adherence to any other guidelines or any other instructions given by the Reserve
Bank from time to time to the banks or their subsidiaries involved in the banking
business in the country.

Which Complaints are Rejected?

The Banking Ombudsman can reject any complaint in case of:
 The complaint is frivolous with inappropriate intentions
 The complaint is without sufficient cause or beyond the pecuniary jurisdiction as per
Clause 12 (5)
 The Complaint is not pursued by the complainant with reasonable diligence
 There is no loss, damage, or inconvenience caused to the complainant in the opinion
of the banking ombudsman

Procedure to register a complaint

Filing of the complaint
The procedure to register a complaint regarding any of the banks by the customers starts from
the process of identifying the sort of deficiency of service from the list above mentioned.
Who can file the complaint?
The complainant may, himself or through an authorised representative make a complaint to
the Banking Ombudsman within whose jurisdiction the bank is located. It should be noted
that in cases of credit card complaints the complaint will be filed with the Banking
Ombudsman within whose territorial jurisdiction the billing address of the complainant or the
customer is located.
Details to be provided in the complaint
The complaint shall be made in writing or in electronic mode (in this case the print out of
such complaint shall be taken as a record by the ombudsman) and shall be duly signed by the
complainant or his representative in a specified form which shall state the name and address
of the complainant, name and address of the branch or office of the bank against which the
complaint has to be filed, the facts of the complaint including the quantum of loss caused to
the complainant and the relief which is sought from the ombudsman through the complaint.
The complainant is required to file copies of the documents if there are any, to support his
claim of the complaint and for the complaint to be maintainable under subclause (3) of the
abovementioned clause.
Onus on the complainant to go to the Bank first
The complainant has the onus to go to the bank first for the redressal of his complaint,
therefore, no complaint to the ombudsman shall lie unless the complainant has approached
the bank with his complaint in a written representation and the bank has rejected his
complaint or the complainant hasn’t received any reply from the side of the bank within one
month after the complaint has been received by the bank or the customer is not satisfied with
the redressal provided to him. Also, the complaint with the ombudsman has to be filed within
one year from the received reply from the bank or where no reply has been received by the
bank then not later than one year and one month from the date of representation. The
complaint will not lie to the ombudsman in case if the same cause of action which was settled
on merits by the Ombudsman in any previous case has been brought to him.
Directions issued by the Ombudsman
After the complaint has been filed to the ombudsman, he has the power to direct the bank,
against which the complaint has been filed to furnish any information or certified copies of
any documents relating to the complaint. The ombudsman has the responsibility to maintain
the confidentiality of the information provided but is not barred due to the above clause from
disclosing any information or document considered by him to be reasonably required to
comply with any legal requirements or the principles of natural justice and fair play in the
proceedings
Settlement of the complaint through mediation/conciliation
As soon as possible the banking ombudsman shall send the copy of the complaint to the
branch office of the bank mentioned in the complaint by the complainant and initiate to
promote a settlement of the complaint by agreement between the parties through mediation or
conciliation.
The banking ombudsman performs the following roles as an arbitrator:
o Any dispute between the bank and the customer of the bank or maybe amongst the
banks is received by the Banking Ombudsman for arbitration.
o The ombudsman assumes the arbitrator role once the dispute is referred to him by the
parties and gets the consent of the parties to do so through a duly stamped and
notarized affidavit of understanding.
o At any stage after assuming the charge of arbitrator, if the ombudsman feels he is not
able to perform his given role independently, he can refuse to continue to be an
arbitrator
o The banking ombudsman follows all the rules and guidelines as per the Arbitration &
Conciliation Act, 1996
o If the dispute is for an amount less than INR 10 lakh and parties agree for arbitration
in writing, then the ombudsman can act as an arbitrator
If the complaint is not settled
In case if the complaint is not settled by agreement within a period of one month from the
date of receipt of the complaint or from the period which is allowed by the ombudsman, the
ombudsman after hearing the parties involved in the case, may pass an award or reject the
complaint.

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.
Appeal
The party to the complaint aggrieved by the award given by the ombudsman or by the
rejection of the complaint may within thirty days of the date of receipt of communication of
the award, may appeal before the appellate authority.
 INSURANCE OMBUDSMAN
The institution of insurance ombudsman in India was established through the Governing
Body of Insurance Council (GBIC) under the Redressal of Public Grievances Rules 1998.
Subsequently, the insurance ombudsman was set up after the government of India passed a
notification dated 11th November, 1998.
The insurance ombudsman is set up for quick disposal of the grievances of the insured
customers and to resolve their grievances. It is also responsible for building policyholders’
confidence in the system.
Under the insurance ombudsman scheme, any person who has a grievance against an
insurer (insurance company), may himself or through their legal heirs, nominee or assignee,
make a complaint in writing to the Insurance Ombudsman within whose territorial
jurisdiction the branch or office of the insurer.
Due to the insurance ombudsman, it has become possible to generate and sustain the faith
and confidence among the insurers and the customers.

Qualification of Insurance Ombudsman:

A person appointed for insurance ombudsman should not be less than 55year of age but not
exceed 65year of age at time of application.
He should be a member of civil service or all India service of the union and should held a
post of joint secretary or equivalent to the Government of India; or
He should served at least 25years in the insurance industry and has held post not less than
one level below that of a director of board.
An insurance ombudsman will hold the office for a term of three years or till he attains the
age of 70years, whichever is earlier. But he is not eligible for reappointment.

Appointment of Insurance Ombudsman:

The insurance ombudsman shall be appointed by the council of insurance ombudsman on
the recommendations of the selection committee. Currently there are 17 Ombudsman
functioning in all over India.

Removal of Insurance Ombudsman:

An ombudsman may be removed from office on the ground of gross misconduct during his
term of office by the council for insurance ombudsman. The word gross misconduct includes
(physical incapacity, or unsoundness of mind, or insolvency, or conviction for an offence
involving moral turpitude, or engagement in any other paid employment, or conflict of
interest, or furnishing false information for selection process or omits to specify material
facts).

Powers and functions of Insurance Ombudsman:

 The ombudsman shall receive and consider complaints or disputes
 To decide what procedure to be followed.
 Settle disputes without hearing parties based on facts.
 Dismiss the case if the complaint has no merit.
 Ombudsman important function is award making.
 Ombudsman must act fairly and equitably.
 Ombudsman should not decide the case when he has interest over the subject matter
 The ombudsman shall act as counsellor and mediator relating to matters where there is
written consent of the parties to the dispute.
 Central Government or IRDAI can refer matter to the insurance ombudsman[4].

Grounds for complaints before Insurance Ombudsman:

 delay in settlement of claims, beyond the time specified in the regulations, framed under the
Insurance Regulatory and Development Authority of India Act, 1999;
 any partial or total repudiation of claims by the life insurer, General insurer or the health
insurer;
 disputes over premium paid or payable in terms of insurance policy;
 misrepresentation of policy terms and conditions at any time in the policy document or
policy contract;
 legal construction of insurance policies in so far as the dispute relates to claim;
 policy servicing related grievances against insurers and their agents and intermediaries
 issuance of life insurance policy, general insurance policy including health insurance policy
which is not in conformity with the proposal form submitted by the proposer;
 non-issuance of insurance policy after receipt of premium in life insurance and general
insurance including health insurance;
 any other matter resulting from the violation of provisions of the Insurance Act, 1938 or the
regulations, circulars, guidelines or instructions issued by the IRDAI from time to time or the
terms and conditions of the policy contract.

Procedure for complaints:

 Any person who has a grievance against an insurer, may himself or through his legal heirs,
nominee or assignee, make a complaint in writing to the Insurance Ombudsman within
whose territorial jurisdiction the branch or office of the insurer complained against or the
residential address or place of residence of the complainant is located.

 The complaint shall be in writing, duly signed by the complainant or through his legal heirs,
nominee or assignee and shall state clearly the name and address of the complainant, the
name of the branch or office of the insurer against whom the complaint is made, the facts
 giving rise to the complaint, supported by documents, the nature and extent of the loss
caused to the complainant and the relief sought from the Insurance Ombudsman.

No complaint to the Insurance Ombudsman shall lie unless:

a. The complainant makes a written representation to the insurer named in the

complaint and

i. Either the insurer had rejected the complaint; or

ii. The complainant had not received any reply within a period of one month
after the insurer received his representation; or
iii. The complainant is not satisfied with the reply given to him by the insurer;

b. The complaint is made within one year

i. After the order of the insurer rejecting the representation is received; or

ii. After receipt of decision of the insurer which is not to the satisfaction of the
complainant;
iii. After expiry of a period of one month from the date of sending the written
representation to the insurer if the insurer named fails to furnish reply to the
complainant.

 The Ombudsman shall be empowered to condone the delay in such cases as he may consider
necessary, after calling for objections of the insurer against the proposed condonation and
after recording reasons for condoning the delay and in case the delay is condoned, the date
of condonation of delay shall be deemed to be the date of filing of the complaint, for further
proceedings under these rules.

 No complaint before the Insurance Ombudsman shall be maintainable on the same subject
matter on which proceedings are pending before or disposed of by any court or consumer
forum or arbitrator.

After 2021 amendment to insurance ombudsman rule 2017 ICT (Information and Communication
Technology) was introduced for complaint redressal. So now insured can file complaint through
online without paying any fees. It enables the insured to track the status of their case and video
conference hearings. These amendments will strengthen the timeliness and cost-effectiveness of the
mechanism.

Award under Insurance Ombudsman rule:

 Where the complaint is not settled by way of mediation, the Ombudsman shall pass an
award, based on the pleadings and evidence brought on record.

 The award shall be in writing and shall state the reasons upon which the award is based.

 Where the award is in favour of the complainant, it shall state the amount of compensation
granted to the complainant after deducting the amount already paid, if any, from the award:
 Provided that the Ombudsman shall :
i. not award any compensation in excess of the loss suffered by the complainant as a
direct consequence of the cause of action;
ii. not award compensation exceeding rupees thirty lakhs (including relevant expenses,
if any).

 The Ombudsman shall finalise its findings and pass an award within a period of three months
of the receipt of all requirements from the complainant.
 A copy of the award shall be sent to the complainant and the insurer named in the
complaint.

The insurer shall comply with the award within thirty days of the receipt of the award and
intimate compliance of the same to the Ombudsman.

The complainant shall be entitled to such interest at a rate per annum as specified in the
regulations, framed under the Insurance Regulatory and Development Authority of India Act,
1999, from the date the claim ought to have been settled under the regulations, till the date
of payment of the amount awarded by the Ombudsman.
 The award of Insurance Ombudsman shall be binding on the insurers

Insurance Ombudsman cases:

1. Insurance Ombudsman (Bhubaneswar)

Facts:
Insurer alleging suppression of material fact concerning health and pre-existing illness by the
life assured.
Findings of the case:
Insurer could not prove beyond doubt that life assured suffered from serious illnesses before
taking the policy.
Decision:
Insurer was directed to settle the claim within one month from the receipt of the consent
letter.

2. Insurance Ombudsman (Ahmedabad)

Facts:
While taking the policy life assured had informed in great detail the state of his health and
habits due to which several special reports were called for and the proposal was accepted
with extra premium.
Findings of the case:
The life assured died within ten months from the date of proposal. The claim was repudiated
on the grounds of suppression of material facts on the basis of certificate of treatment,
prescription, letters of doctor and hospital. It was observed that all the diagnosis/treatment
commenced after 7 days from the date of acceptance of risk. All the documents proved that
the deceased was not aware of his ailment at the time of taking the proposal.
Decision:
The insurer was directed to pay the full amount.
 3. Insurance Ombudsman (Chennai)
Facts:
The insurer alleging non disclosure of material fact of suffering from Acute Lymphoblastic
Leukaemia (ALL) with relapse with refractory disease in the proposal form and hence the
claim is repudiated.
Findings of the case:
The deceased had been undergoing treatment for ALL since 2000 and he underwent
orchidectomy for relapse in 2003. Did not disclose this in proposal form submitted in Dec
2005.

Decision:
There is clear medical evidence to show that the deceased was suffering from Leukaemia
well before signing the application for insurance. Hence the complaint is dismissed and the
decision of the insurer was upheld.

Appeal against Ombudsman:

In case a complainant is not satisfied with the award of an Insurance Ombudsman he can exercise his
right to take recourse to the normal process of law against the insurance company. However, the
award of Insurance Ombudsman shall be binding on the insurers.