The Banking Ombudsman is a quasi-judicial authority formed with the aim to address and resolve

complaints of the Bank’s customers. The Section 35A of the Banking Regulation Act of 1949 deals
with the Banking Ombudsman Scheme. Finance and banking aspirants are required to have an
understanding of the Banking Ombudsman scheme for the exam as well as practical purposes.

o The Banking Ombudsman Scheme was announced by the Reserve Bank of India (RBI) in 2006.
o The scheme not only covers the scheduled commercial banks but also regional rural banks and
scheduled primary cooperative banks.
o Recently, the RBI extended the Banking Ombudsman concept to the NBFC (Non-Banking
Financial Institutions) as well.
o Around 15 Banking Ombudsman have been appointed and their offices are mostly situated in
the State Capitals.

Banking Ombudsman – Important Facts

o The Banking Ombudsman concept was announced by the Reserve Bank of India in 2006. It was
later revised and amended in 2007 and 2009 to provide this office a wider role in the field of
customer complaints and to adjudicate disputes. It came into existence on 01st January 2006.
o The Banking Ombudsman Scheme of 2006 is applicable to all the commercial, regional rural,
and scheduled primary cooperative banks across the country.
o Any executive of the rank of General Manager or the Chief General Manager or other suitable
authority is eligible to be appointed as the Banking Ombudsman.
o The period of office of an Ombudsman is 3 years.
o It is a service without any fees or charges.

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.

What are the Pre-conditions for Filing Complaints?

Following are the pre-conditions followed and satisfied by the customers of the bank in order to file
complaints with the Banking Ombudsman against a bank:

o The complaint should have made written representation to the bank and that complaint has
been rejected or the complainant has not received any reply within a period of 1 month from
the date the bank has received his/ her representation or he is not satisfied with the reply
provided.
o The complaint is not made later than one year after the complainant has received the reply of
the bank on his complaint.
o The complaint does not pertain to the same subject matter for which the suit proceedings are
pending before any Court, Tribunal, or Arbitrator, etc. or decree or award or order has already
been passed by such authorities.
o Compensatory amount is limited to INR 10 Lakhs
o The complaint should be genuine and not a silly one with inappropriate intentions.
What are the Grounds of Complaints?
Common grounds of inapt services in banking that can be entertained under the banking
Ombudsman scheme include the following:

o Non-payment or inordinate delay of payment and collection of bills, cheques, etc.

o Refusal to open a deposit account or close the account or delay in closing the accounts without
a valid reason for any such delay or refusal.
o Non-acceptance of small denominations of notes and coins without a valid reason.
o Failure to follow the BCSBI (Banking Codes & Standard Board of India) guidelines and indulging
in unfair practices.
o Non-adherence to follow the prescribed hours of serviceability.
o Failure to issue or delay in issue of drafts, pay orders, or banker’s cheques, etc.
o Any other matter relating to non-adherence of the directives issued by the RBI, the Regulators
of Banks and Financial Institutions, in relation to banking or other services.
o Delay or failure to credit the proceeds to the parties’ accounts or non-observance of the RBI
guidelines.
o Complaints from NRI (Non-Resident Indian) having accounts in India in relation to their
remittances from overseas, deposits, or other bank-related transactions.
o Non-acceptance of application for credit facility is sufficient ground for filing complaint

How to File a Complaint?

o Complaints should be filed in writing and signed by the complainant or his/ her authorized
representative stating clearly their name and address.
o It should also have the complete name and address of the bank’s branch or office against
which the complaint is being filed.
o Along with the complaint, the complainant should also provide facts of the case, documentary
proof, if any, nature and extent of loss, and the relief sought.

Other Matters Prescribed by RBI from Time-to-Time

o Levying of charges without adequate prior notice to the customer
o Non-adherence by the bank or its subsidiaries to the RBI instructions on ATM/ Debit Card, or
Credit Card operations
o Non-disbursement or delay in disbursement of pension (to the extent the grievance can be
attributed to the action on the part of the concerned bank, but not as far as the employees are
concerned.
o Refusal to accept or delay in accepting payments towards taxes, as prescribed by the RBI or
the government.
o Within one month the bank shall comply and intimate the compliance to the ombudsman.
o Refusal to issue or delay in issuing or failure to service or delay in servicing or redemption of
government securities
o Banks are required to display salient features of the scheme to guide the common public

Which Complaints are Rejected?

The Banking Ombudsman can reject any complaint in case of:

o The complaint is frivolous with inappropriate intentions

o The complaint is without sufficient cause or beyond the pecuniary jurisdiction as per Clause 12
(5)
o The Complaint is not pursued by the complainant with reasonable diligence
 o There is no loss, damage, or inconvenience caused to the complainant in the opinion of the
banking ombudsman

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As an Arbitrator
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

Consumer Protection Act

o The COPRA (Consumer Protection Act) was enacted in 1986 Act 68 of 1986 and implemented
on 15th April 1987
o In 2002, the Act was amended comprehensively and the amended version was implemented
from 2003

Objectives

The Consumer Protection Act was enacted to promote and protect the important rights of the
consumers. Some important Consumer Protection Act objectives are:

o Right to be protected against marketing of goods that are harmful to life and property
o Right to be informed about the quality, quantity, potency, purity, standard price of goods and/
or services in order to protect the consumer against unfair trade practices or exploitation of
consumers and provide consumer education
o Right to be heard and assured that the consumer interest will receive due consideration
o Right to be assured wherever possible and access to an authority of goods at competitive
prices

Central Councils
o The government of India has established the CCPC (Central Consumer Protection Council) for
hearing the complaints of consumers or complainants. The CCPC is also called as the Central
Council
o Chairman of the Central Council is generally the Minister of Consumer Affairs in the Central
Government
o Consumer interest under the CPA will be protected by the Consumer Protection Councils
o Even at the state level, the CPCC is in existence and the state’s Minister of Consumer Affairs is
the Chairman.
Learn more about History of Banking in India here!

Objectives of the Councils

o Protect the rights of the consumers against marketing of goods and services that are harmful
to their life and property
o Right to be informed about the quality, quantity, price, etc. of the product and/ or services
o Right to have access to various goods and services at competitive prices
o Assure consumer that their interest is being taken care of by the council
o The council’s main objective is to implement the consumer’s right to be heard
o The state or central government can establish various redressal agencies to address and
resolve consumer complaints
o Under the Consumer Protection Act, the redressal of grievances is done through the following
Commissions:
o District Consumer Disputes Redressal Forum (also known as District Forum) to hear
disputes at district level. Jurisdiction of handling disputes of up to INR 20 lakhs.
o State Consumer Dispute Redressal Commission (also called State Commission). It can
handle disputes with claims between INR 20 lakh to INR 100 lakh.
o National Consumer Redressal Commission (also called National Commission). It can
handle disputes above INR 100 lakh.

Banking Code & Standard Board of India (BCSBI)

o Competitive forces alone do not ensure fair treatment, quality, justifiable prices, and
transparency of bank services to the customers.
o For addressing these issues along with other customer services issues the RBI set up a
committee under the chairmanship of S.S Tarapore. It suggested setting up the BCSBI as an
autonomous watchdog for ensuring transparency and promised level of bank services to the
customers.

Role of BCSBI

o To combine both self-regulation and statutory regulation

o To evolve comprehensive codes and standards for customers’ fair treatment
o Act as a watchdog to ensure that the banks deliver services in accordance with the codes
o Promote self-regulation among banks
o To follow a collaborative approach

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Code of Banks’ Commitment to Customers

The Code covers the products and services offered by the banks to individual customers. It mainly
relates to the following:

o Deposit accounts
o Safe deposit lockers
o Settlement of accounts of deceased account holders
o Foreign exchange services
o Remittances within India
o Loans and advances and guarantees
o Credit cards
 o Internet banking

Updates related to Banking Ombudsman

Presently, the banking ombudsman has 20 regional offices across India. The newest regional office
was established in Jammu and Kashmir in April 2017. Following is the list of all regional offices
countrywide:

Ahmedabad, Gujarat Kolkata, West Bengal

Bengaluru, Karnataka Mumbai, Maharashtra

Bhopal, Madhya Pradesh New Delhi (i)

Bhubaneswar, Odisha New Delhi (ii)

Chandigarh Patna, Bihar

Chennai, Tamil Nadu Thiruvananthapuram, Kerala

Guwahati, Assam Dehradun, Uttarakhand

Hyderabad, Andhra Pradesh Ranchi, Jharkhand

Jaipur, Rajasthan Jammu, Jammu & Kashmir

Kanpur, Uttar Pradesh Raipur, Chhattisgarh