THE BANKING OMBUDSMAN SCHEME Introduction - An Ombudsman is an official who investigates complaints and mediates fair settlements, especially

between aggrieved parties. The term Ombudsman was first used in Sweden in 1809 with the parliamentary Ombudsman being appointed by the Govt. - In the year 1995, the Reserve Bank of India first introduced the banking Ombudsman Scheme. Then in the year 2002, it replaced this scheme and introduced a new scheme called The Banking Ombudsman Scheme 2002 in the year 2006 the RBI again modified the scheme and introduced The Banking Ombudsman Scheme 2006. - The Banking Ombudsman Scheme has come into effect from January 1, 2006 under this scheme, the Reserve Bank of India appoints Ombudsmen who are required to resolve complaints relating to the deficiency of certain services in banks. - This scheme is applicable to whole of India to all commercial banks, Regional Rural bank and also scheduled Primary Co-operative Banks. - The Reserve Bank of India has issued a directive to all banks as per powers vested in it in Sec. 35A of the Banking Regulation Act to comply with the provisions of this scheme. - Since it is directive, banks are bound to comply with the same failing which they can be penalized by the Reserve Bank. - The applicability of the scheme can be suspended by Reserve Bank with respect to any bank for any period. - As per clause 15 of the scheme all banks are required to display the purpose of the scheme and also the name address of the banking Ombudsman in all branches and offices in such places so that it is put to notice of public visiting the premises. - The banks are also required to make available a copy of the scheme in every branch with the designated officer for this purpose. A notice stating that such copy is available with the designated officer should also be displayed. - The banking Ombudsman is a quasi-judicial authority. It has power to summon the bank and the complainant. Appointment of Banking Ombudsman and Establishment of his office - As per the clause 4 of the scheme, the Reserve Bank of India has to appoint one or more of its officers in the rank of Chief General Manager or General Manager as the Banking Ombudsman to carry the functions entrusted to them under this scheme. - An ombudsman can be appointed for a period of three years at a time. - The officer of the Ombudsman will be located at such place as to be specified by the Reserve Bank. - In order to expedite the disposal of the complaints the Banking Ombudsman can hold sitting in any place in his area of jurisdiction as may be considered necessary and proper by him. - The Reserve Bank will provide the required staff to the secretariat of the Ombudsman - The salary of the Ombudsman and the cost of his secretariat will be borne by the Reserve bank. - The Reserve Bank of India will specify the geographical jurisdiction to which the authority of each Ombudsman will extend. - The banking ombudsman is a quasi-judicial authority. It has power to summon the parties, bank and the complainant.

Power and Duties of Banking Ombudsman The Banking Ombudsman will discharge the following functions. He will receive complaints relating to deficiency in banking services. He will facilitate the settlement of these complaints through the conciliation and mediation between the bank and the aggrieved party. And if necessary he will pass awards for this purpose which are to be complied by the bank. Grounds of Complaint Note: The chapter V which was in the earlier scheme giving power to the Ombudsman to act as an arbitrary has been repealed and therefore under the new scheme the Ombudsman is not required to perform the same function. The Banking Ombudsman will hear complaints relating to deficiency of service in the following areas: Collection of Cheques: Delay in collection of cheques and also non-payment of cheques / drafts / bills. Issue of drafts: Failure to issue or delay in issue of draft / banker cheque or pay orders. Remittances: Non-payment or delay in payment of inward remittances. Cash Receipt: Non-acceptance of small denomination notes / coins or charging commission for this purpose. Working Hours: Non-adherence to prescribed working hours by branches. Guarantee: Failure to honour guarantee or letter of credit commitment by banks. Banking Services: Failure to provide or in providing banking services as promised in writing by a bank or its direct selling agents. Deposit Account opening: Complaints pertaining to refusal of opening accounts without any valid reason. Deposit Accounts operation: Complaints pertaining to delay / non-credit of proceeds / non-observance of RBIs directive on rate of interest on any SB / CA or any other account. Deposit Account Closure: Forced closure deposit account without due notice. Refusal to close or delay in closure of deposit accounts. Non-resident deposits: Complaints from NRIs in respect of their deposit account in India. Receipt of export proceeds: Delay in receipt of proceeds or delay in handing of export bills or in collection bills provided such complaint pertains to operation in India. ATM / Debit card and Credit card operation: Non-adherence to the institutions given by Reserve Bank on ATM / Debit Card or Credit Card operation. Service Charges: Levying charges without the prior notice to the customer. Pension: Non-disbursement of delay in disbursement of pension. Taxes: Refusal to accept taxes or delay in accepting taxes. Government Securities: Refusal or delay in issuing, servicing or making redemption of Govt. Securities. Non-adherence to Fair Practice Code: Non-adherence to fair practice code as adopted by bank. Non-adherence of RBI directive: Violation of directives issued by the Reserve Bank of India in relation to any banking or other services. Loans and Advances: So far as loans and advances are concerned only complaint relating to the following areas may e filed with Banking Ombudsman. Any other matter: The Banking Ombudsman can also deal with any other matter as may be RBI from time to time.

Procedure for filing complaint - A complaint can lodged with Banking Ombudsman only when written complaint has been given to the bank no satisfactory solution has been given by the bank. - The complaint has to be made in written by the person aggrieved or by his authorized representative. The specially debars any advocate to act as authorized representative to lodged the complaint and appear for the hearing. - The complaint can be made in the prescribed format given in annexure A to the scheme through it is not mandatory. Even a complaint can be made in plain paper. The complaint has to file copies of documents, if any, which he proposes to rely upon and a declaration that the complaint is maintainable. No fee or court fee need be paid for filling such complaint. - A complaint can also be made through electronic means and print out of the same will be taken on record. - A complaint covered under this scheme received by the Govt. or Reserve bank can also be entertained by the Ombudsman if forwarded to him. - A complaint can be made with the Banking Ombudsman only if a written representation has been made to be bank the bank had rejected complaint or no reply is received by the complaint one month after the bank received his representation or the complainant is not satisfied with the reply given by the bank. - The complaint has to be made within one year from the date of receipt of the reply from the bank or where no reply is received within one year and one month from the date of representation to the bank. - Further the complaint has to be made within the limitation period of the claim. - The Ombudsman will not entertain any complaint if it relates to a subject matter for which any proceeding is pending in any Court / Tribunal / Arbitrator or any other forum or a decree / order / award has been passed. Complaint will not be considered if: a. One has not approached his bank for redressal of his grievance first. b. One has not made the complaint within one year from the date one has received the reply of the bank or if no reply is received if it is more than one year and one month from the date of representation to the bank. c. The subject matter of the complaint is pending for disposal / has already been dealt with at any other forum like court of law, consumer court etc. d. Frivolous or vexatious. e. The institution complained against is not covered under the scheme. f. The subject matter of the complaint is not within the ambit of the Banking Ombudsman. g. If the complaint is for the same subject matter that was settled through the office of the Banking Ombudsman in any previous proceedings. Process of Settlement of Complaint by Agreement - No fee need be made for preferring any complaint. - Ombudsman sends Notice: The Ombudsman has to send a copy of the complaint to the branch or office named in the complaint under advice to the nodal officer or the bank and will try to settle in complaint through agreement between the bank and the complainant by conciliation or mediation. - Appointment of Nodal officers: Each bank covered under these scheme is required to appoint nodal officers at their regional officers / zonal offices and inform the respective offices of the banking Ombudsman. The nodal

officers will be responsible for representing the bank and furnishing information in respect of complaints field against the bank. - Reply from Bank: If the complaint could not be redressed by agreement within one month from the date of the receipt of complaint, the Ombudsman will give reasonable opportunity to both the bank the complainant to present their point and then pass an award. - The Ombudsman will send the copy of award to both the bank and the complaint. - In case of complaints relating to credit card operations the amount of compensation will be determine after taking into account the loss of time, harassment, mental anguish suffered by the complainant. - Letter of Acceptance by Complainant within 15 days: After receipt of the copy of the award, the complainant has to submit a letter of acceptance to the bank to the effect that he accepts the award in full and final settlement of his claim. He is required to submit this letter within 15 days from the date of receipt of the copy of the award by him. - Compliance by Bank within thirty days: The bank within thirty days of the date of the receipt of the letter acceptance will have to comply with the award intimate of this compliance to the Banking Ombudsman. Rejection of the Complaint - The Ombudsman can reject a complaint at any stage, if it appears to him that the complaint is frivolous malafied, without sufficient cause or any such reason mentioned in clause 13 of the scheme. APPEAL - The appeal can be made by the complainant or by the bank. - The complainant can appeal if the complaint is rejected by the Ombudsman or if he is not satisfied with the award given by the ombudsman. - The time limit for preferring appeal by the complainant is 30 days from the date of the receipt of the communication of the award or the rejection of the complaint. - The time limit for filing an appeal by the bank is 30 days from the date of the receipt of the letter of acceptance of the award by the complainant [reduced from 45 days to 30 days] - A bank should appeal only with the previous sanction of the Chairman, in his absence the Manager, Director, or the executive director or the chief executive officer or any officer of equal rank. - Appeal Authority in either of the above cases when satisfied on the genuineness of the cause of delay for not making the appeal can allow for a further period not exceeding thirty days making the appeal. Current status As on date, fifteen Banking Ombudsmen have been appointed with their offices located mostly in state capitals. The maximum compensation one can seek from the Banking Ombudsman is not beyond Rs 10 lakh