Banking Ombudsman Scheme

The Banking Ombudsman Scheme is an effective mechanism for resolving complaints and grievances of customers against banks and financial institutions in India. The scheme was introduced by the Reserve Bank of India (RBI) to provide an independent and accessible platform for customers to seek redressal for various banking-related issues. Here are detailed notes on the Banking Ombudsman Scheme:

  1. Objective:
    • The primary objective of the Banking Ombudsman Scheme is to promote and maintain public confidence in the banking system by ensuring fair and efficient resolution of customer complaints.
  2. Coverage:
    • The scheme covers scheduled commercial banks, regional rural banks, and scheduled primary cooperative banks. Non-scheduled banks are not covered under the scheme.
  3. Types of Complaints:
    • Customers can lodge complaints with the Banking Ombudsman for various issues, including: a. Non-payment or inordinate delay in payment of cheques, drafts, or electronic fund transfers. b. Mis-selling of financial products and services. c. Unauthorized transactions on the customer’s account. d. Charging of excessive fees or interest rates. e. Failure to provide or delay in providing banking services. f. Violation of RBI guidelines or the Banking Code and Standards Board of India (BCSBI) Code.
  4. Process of Filing Complaints:
    • Customers can file complaints with the Banking Ombudsman through various means, including writing a letter, sending an email, or using the RBI’s online complaint management system (CMS).
    • The complaint should be made within one year from the date of the cause of action or when the customer became aware of it.
  5. Jurisdiction of Banking Ombudsman:
    • The scheme divides the country into different zones, each having its designated Banking Ombudsman. The Banking Ombudsman has jurisdiction over complaints arising within that zone.
  6. Mediation and Conciliation:
    • The Banking Ombudsman attempts to resolve complaints through mediation and conciliation, where both parties can come to a mutually agreeable solution.
  7. Adjudication:
    • If the complaint is not resolved through mediation or conciliation, the Banking Ombudsman will pass an award based on the evidence and submissions made by both parties.
    • The award is binding on the bank, but the customer has the right to reject it. If the customer rejects the award, they can approach a court for redressal.
  8. Award Amount:
    • The Banking Ombudsman can award compensation up to Rs. 20 lakh to the complainant for loss suffered due to the bank’s deficiency in service.
  9. Transparency and Accountability:
    • The Banking Ombudsman Scheme ensures transparency and accountability in its functioning. The Ombudsman has to report quarterly to the RBI on the complaints received and resolved.
  10. Appeal Process:
  • If the customer is not satisfied with the decision of the Banking Ombudsman, they can appeal to the Deputy Governor of the RBI within 30 days from the date of receipt of the award.

The Banking Ombudsman Scheme provides a straightforward and efficient process for resolving customer complaints against banks. It acts as an impartial mediator and adjudicator, ensuring that banks adhere to regulatory guidelines and offer satisfactory services to their customers. The scheme strengthens customer confidence in the banking system and contributes to the overall stability and efficiency of the banking sector in India.