Banking Ombudsman

Souvik Banerjee
Asst.Professor
Sri Sri Institute of Management Studies
 Banking Ombudsman Scheme
• The Banking Ombudsman Scheme makes
available an expeditious and inexpensive
forum to bank customers for resolution of
complaints relating to certain services
rendered by banks.
• The Banking Ombudsman Scheme was
introduced under Section 35 A of the
Banking Regulation Act (BR Act), 1949
with effect from 1995.
• All Scheduled Commercial Banks, Regional
Rural Banks and Scheduled Primary Co-
operative Banks are covered under the Scheme.
• Appointment of Banking Ombudsman:
The Banking Ombudsman is a senior official
appointed by the RBI to receive and redress
customer complaints against deficiency in
certain banking services (including Internet
banking and loans and advances). At present,
fifteen Banking Ombudsmen have been
appointed, with their offices located mostly in
state capitals.
 Filing a Complaint to the Banking
Ombudsman
• One can file a complaint before the Banking
Ombudsman if
(a) the reply to the representation made by the customer to
his bank is not received from the concerned bank within
a period of one month after the bank has received the
representation
(b) the bank rejects the complaint, or
(c) if the complainant is not satisfied with the reply given by
the bank.

The Banking Ombudsman does not charge any fee for

filing and resolving customers' complaints
 Limit on the Amount of
Compensation as Specified in an
Award

• The 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 Rs 10 lakhs, whichever is
lower
• Further, the Banking Ombudsman may award
compensation not exceeding Rs 1 lakh to the
complainant only in the case of complaints
relating to credit card operations for mental
agony and harassment.
• The Banking Ombudsman will take into account
the loss of the complainant's time, expenses
incurred by the complainant and harassment
and mental anguish suffered by the complainant
while passing such award.
 Further recourse available
If a customer is not satisfied with the decision
passed by the Banking Ombudsman, he can
approach the Appellate Authority against the
Banking Ombudsman's decision. Appellate
Authority is vested with a Deputy Governor of
RBI. He can also explore any other recourse
available to him as per the law. The bank also
has the option to file an appeal before the
appellate authority under the scheme
 Some salient features
• The Banking Ombudsman is a quasi
judicial authority
• The offices of the Ombudsman are located
throughout the country.
• A single office caters to multiple areas.
For example, the office of the Ombudsman
at Mumbai caters to the whole of
Maharashtra and Goa
• In cases where the bank has centralized
some of its operations, like housing loans,
credit cards, etc. and the complaint relates
to any such centralized operation, the
complaints would have to be made to the
Banking Ombudsman in the State in which
the bank customer receives the bill
How does the process work?
• One has to file a written and signed
complaint with the office of the
Ombudsman
• The complaint does not have to be in any
specific format
• You may also file your compliant
electronically
• The Banking Ombudsman will provide the
opportunity to settle the dispute by
agreement
• In the event of failure to resolve the issues
by the parties between them, the banking
Ombudsman will hear each side, assess
the documents and pass an Award
• either party to the dispute does not agree
with the Award and wants to pursue the
matter further, they can file an appeal
before an Appellate authority
 Things on which complaint is
generally lodged
• Interest rates
• Cheques
• Loan recovery procedure
• Fixed deposits
• Lockers
 Efficiency of the Banking
Ombudsman Scheme
• During the year 2007-08, the Banking
Ombudsmen received 47887 complaints. The
Banking Ombudsman could settle 89 percent of
the total complaints
• During the year 2006-07 the number of
complaint was 38,638. The Banking
Ombudsman could settle 84 percent cases.
• Further, of the 11percent of complaints carried
forward (during 2007-08) to the next year, only
as little as 6 percent were more than 2 months
old.
 Criticism
• The scheme is not entirely error free and
some consumers have complaints against
the Ombudsman’s office
• In some instances,  impolite behavior and
delay in responding to customers has
been a common cause of distress
• Please visit http://www.customer-
complaint.in to get the list of deficiencies
in the services of the ombudsman