What is banking ombudsman scheme?

What is banking ombudsman scheme?


The banking ombudsman scheme is an expeditious and inexpensive forum for bank customers for resolution of complaints relating to certain services rendered by banks. This scheme is introduced under section 35a of the Banking Regulation Act 1949 by the Reserve Bank of India with effect from 1995. At present the banking ombudsman scheme 2006 amended upto July 1st 2017 is in operation.

Banking ombudsman is a senior Official appointed by the Reserve Bank of India to address customer Complaints against deficiency in certain banking services covered under the grounds of complaint specified under clause 8 of the banking ombudsman scheme 2006.

Till now, 20 banking ombudsman have been appointed.

The banks that are covered under the banking ombudsman scheme 2006 include all scheduled commercial banks, regional rural banks and scheduled primary cooperative banks.

A customer can complain to the banking ombudsman if the reply from the bank is not received within a period of 1 month after the bank concerned has received one's complaint; or when the bank rejects the complaint; or if the complainant is not satisfied with the reply given by the bank.

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There are some guidelines that even the banking ombudsman will not considered a complaint.
They include;
  1. If one has not approached his bank for redressal of his grievance first
  2. If one has not made the complaint within one year from the date of receipt of the reply of the bank / if no reply is received from the bank
  3. If the complaint is made to the banking ombudsman after the lapse of more than 1 year and 1 month from the date of complaint made to the bank
  4. If the subject matter of the complaint is pending for disposal / has already been dealt with it by any other forum like Court of law, consumer court etc.
  5. If the complaint is frivolous(senseless) or vexatious(irritating)
  6. If the institution complained against is not covered under the scheme
  7. If the subject matter of the complaint is not pertaining to the grounds of the complaint specified under clause 8 of the banking ombudsman scheme
  8. If the complaint is for the same subject matter that was settled through the office of the banking ombudsman in any previous proceedings.
So, these are all some of the situations when the banking ombudsman donot consider the complaints of the customer.

The banking ombudsman does not charge any fee for filing and resolving customers complaints.

If there is any amount 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 rupees 20 lacs whichever is lower.

The banking ombudsman may provide compensation not exceeding 1 lakh rupees to the complainant for mental agony and harassment.

What happens when the complainant is not happy with the decision of the banking ombudsman?

In such cases the complainant can approach the appellate authority. The appellate authority is vested with a deputy governor of The Reserve Bank of India. The recourse and the remedies available to him as per the law can also be explored. The bank also has the option to file an appeal before The appellate Authority under the scheme.

One can file Appeal against the decision of the banking ombudsman rejecting the complaint within 30 days of the date of receipt of the decision. The appellate authority may also allow a further period not exceeding 30 days, if he or she is satisfied that the applicant has sufficient cause for not making an application for appeal within time.

What actions can an appellate authority take?

Appellate authority may:
  1. Dismiss the appeal;
  2. Allow the appeal and set aside the award;
  3. Send a matter to the banking ombudsman for fresh up disposal in accordance with such direction as the appellate authority may consider necessary or proper;
  4. Modify the award and pass such directions as may be necessary to give effect to the modified award;
  5. Pass any other order as it may deem fit;

In the next part, we will learn about, what are all the deficiency banking services that banking ombudsman can receive and consider any complaints about?

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