Académique Documents
Professionnel Documents
Culture Documents
Ch. No.
Content
Page No.
Executive Summary
Preface
1.
Introduction to Banking
01-09
Types of Banks
Grievance Redressal
2.
10-19
20-33
4.
34-40
5.
41-56
6.
57-64
65-70
Case Study
71-73
Conclusion
74
Bibliography
Wibliography
Annexure A
Annexure B
PREFACE
OBJECTIVES
METHODLOGY
The methodology includes the information of the features of the Ombudsman in
the form of primary data that had been received from the Branch Managers of the
banks and the officers of the RBI. It also includes the informations from the
related books & the related websites.
CHAPTER: - 1
INTRODUTION TO BANKING OMBUDSMAN
INTRODUCTION
An ombudsman is a person who has been appointed to look into complaints about
an organization. Using an ombudsman is a way of trying to resolve a complaint
without going to court. Banking Ombudsman is a quasi judicial authority
functioning under Indias Banking Ombudsman Scheme, and the authority was
created pursuant to the a decision by the Government of India to enable resolution
of complaints of customers of banks relating to certain services rendered by the
banks. The Banking Ombudsman Scheme was first introduced in India in 1995,
and was revised in 2002 and 2006. In the wake of the failure in the efficient
services of the banks, the RBI brought a scheme for the prompt, efficient and
courteous services and also to protect the rights of the customers.
The Banking Ombudsman is an official authority to investigate the complaint from
the customers and address the complaint and thereby bring the solution among the
aggrieved parties. So the Banking Ombudsman plays the role of a mediator and
serves the purpose of reconciliation. The Banking Ombudsman has been defined
under clause 4 of the Banking Ombudsman Scheme, 2006.
The Banking Ombudsman has power to consider complaints from NonResident Indians having accounts in India in relation to their remittances
from abroad, deposits and other bank-related matters.
The Banking Ombudsman does not charge any fee for resolving
customers complaints.
Complaint can be made before a Banking Ombudsman on the same subject
matter for which any proceedings before any court, tribunal or arbitrator or any
other forum is pending or a decree or award or a final order, has already been
passed by any such competent court, tribunal, arbitrator or forum.
That moneys forming part of the funds of the State or body or institution,
or received or held by or on behalf of the State or body or institution are
being or have been dealt with an irregular manner.
TYPES OF OMBUDSMAN
TYPES OF OMBUDSMAN
Banking Ombudsman
S.E.B.I. Ombudsman
Electricity Ombudsman
Telecom Ombudsman
Insurance Ombudsman
Banking Ombudsman
The Reserve Bank of India (RBI) first introduced the Banking Ombudsman
Scheme In1995, which has been revised in 2002 and 2005. The latest revised
st
S.E.B.I. Ombudsman
The Securities Exchange Board of India (SEBI) under section 30 read with subsection (1) of section 11 of the SEBI Act, 1992, has framed the SEBI
st
Electricity Ombudsman
The Electricity Regulatory Commission, under section 181 read with sub-section
(5) of section 42 of the Electricity Act, 2003, issues guidelines for establishment of
forum and Ombudsman for redressal of grievances of Electricity consumers. The
Delhi Regulatory Commission (DERC) vide its Notification dated 11
th
March,
Telecom Ombudsman
The Telecom Regulatory Authority of India Act, 1997, empowers the Telecom
Regulatory Authority of India Act 1997, empowers the Telecom Regulatory
Authority of India (TRAI) to make the recommendations on laying down the
standards of quality of services to be provided by the services providers and
conduct the interest of the periodical surveys of Telecom services so as to protect
the interest of the consumers. The telecom operators frequently threaten to
disconnects the phones and with draw the numbers given t o subscribers if the
deadline for payment is missed by a day or there is miscalculation of the tiniest
amount. The TRAI is, however, neither empowered to look into the grievances of
individual customers nor take action against the operators who do not meet quality
of standards As there is no specialized body to redress the grievance of telecom
customers, they have to approach consumer forum setup under THE Consumer
Protection Act, 1986, or civil courts for Resolutions adjudication of disputes.
Insurance Ombudsman
The Government of India, Minister of Finance, Department of Economics Affairs,
Insurance Division under section 114 (1) of Insurance Act, 1938, has framed the
Redressal of Public Grievance Rules, 1998, for appointment of Insurance
th
Ombudsman, which comes into force with effect from 11 November 1998. The
Insurance Ombudsman has started functioning from 1999, to provide for efficient,
cost effective and impartial settlement of claims and grievance of any person
against a Life r General Insurance in Public and private sector. The meaning of
expression any other person is wider than consumer and therefore, even third
party having grievance with respect to an Insurance contract can approach the
Ombudsman.
GROUNDS
CHAPTER: - 2
INTRODUTION TO BANKING OMBUDSMAN
SCHEME
INTRODUCTION
The Banking Ombudsman Scheme, 1995 was notified by RBI on June 14, 1995 in
terms of the powers conferred on the Bank by Section 35A of the Banking
Regulation Act, 1949 to provide for a system of redressal of grievances against
banks. The Scheme sought to establish a system of expeditious and inexpensive
resolution of customer complaints. The Scheme is in operation since 1995 and has
been revised during the years 2002 and 2006. The Scheme is being executed by
Banking Ombudsmen appointed by Reserve Bank at 15 centers covering the entire
country. As mandated by the Banking Ombudsman Scheme, the Banking
Ombudsmen submit an Annual Report on the functioning of their offices every
year. Based on such reports, an Annual Report for the Banking Ombudsman
Scheme in a whole is prepared at Reserve Bank of India, Central Office. As is
being the practice, the Annual Report covers the last five-year period with focus
on the current year. Further, as a result of computerization of the functioning of
Banking Ombudsman Offices through the Complaint Tracking Software, detailed
analysis was possible on the information pertaining to year 2006-07. With the
decision to merge the Banking Ombudsman Offices with that of RBI offices, the
accounting period for the Banking Ombudsman Offices was changed from April 1March 31 to July 1-June 30 to be in congruent with that of RBI offices.
Accordingly, the information analysed for the year 2006-07 pertains to the period
July 1, 2006 to June 30, 2007.
The word Ombudsman in general means a grievance man, a public official who
is appointed to investigate complaints against the administration. He is to
intervene for the ordinary citizen in his dealings with the complex machinery of
the establishment. In India, any person whose grievance against a bank is not
resolved to his satisfaction by that bank within a period of one month can
approach the Banking Ombudsman if his complaint pertains to any of the matters
specified in the Scheme. Banking Ombudsmen have been authorized to look into
complaints concerning deficiency in banking service , sanction of loans and
advances in so far as they relate to non-observance of the Reserve Bank directives
on interest rates, delay in sanction or non-observance of prescribed time schedule
for disposal of loan applications or nonobservance of any other directions or
instructions of the Reserve Bank as may be specified for this purpose, from time to
time, and such other matters as may be specified by the Reserve Bank. The
Scheme envisages expeditious and satisfactory disposal of customer complaints in
a time bound manner.
The Banking Ombudsman on receipt of any complaint endeavors to promote a
settlement of the complaint by agreement between the complainant and the bank
named in the complaint through conciliation or mediation. For the purpose of
promoting a settlement of the complaint, the Banking Ombudsman has been
allowed to follow such procedures as he may consider appropriate and he is not
bound by any legal rule of evidence. If a complaint is not settled by agreement
within a period of one month from the date of receipt of the complaint or such
further period as the Banking Ombudsman may consider necessary, he may pass
an Award after affording the parties reasonable opportunity to present their case.
He shall be guided by the evidence placed before him by the parties, the principles
of banking law and practice, directions, instructions and guidelines issued by the
Reserve Bank from time to time and such other factors, which in his opinion are
necessary in the interest of justice.
OPERATIONALISATION
Reserve Bank of India operationalised the Banking Ombudsman Scheme by
establishing Banking Ombudsman Offices at 15 centers all over the country. The
names, addresses and area of operation of the Banking Ombudsmen have been
given in to Annexure A. Reserve Bank frames the guidelines for operationalizing
the Scheme and supervises the running of the Scheme. It also supervises the
running of the Scheme and administrative arrangements, budget and expenditure
of the Banking Ombudsman Offices.
PERFORMANCE
OF
THE
OFFICES
OF
BANKING
OMBUDSMAN
The performance of the Offices of the Banking Ombudsman was analyzed on the
aspects such as the quantum of complaints handled by them, the timeliness in
handling the issues, and appropriateness of the decisions given against the
complaints.
Change
from
No. of
complaints
per office
Previous
year
2003-04
15
8246
+53%
550
2004-05
15
10560
+28%
704
2005-06
15
31732
+200%
2115
2006-07
15
38638
+22%
2576
2007-08
15
47887
+24%
3192
The increase in the number of complaints received during the years 2005-06
and2006-07 can be attributed to new areas such as credit card complaints
included and to facilitation of complaint submission by allowing complaint
submission in any form including by online and by email allowed in the
Banking Ombudsman Scheme, 2006. Per month receipt in the number of
complaints received under the BO Scheme 2006 was more than thrice the
number of complaints received under the Banking Ombudsman Scheme, 2002.
The increase in the number of complaints received under the Banking
Ombudsman Scheme 2006 as compared to the previous scheme clearly indicates
the extent to which the scheme has benefited larger sections of the banking
customers. The comparative effects of the Banking Ombudsman Schemes 2002
and 2006 in complaint receipt are given as below:
Scheme
No. of complaints
running
From To Total
received
From
To
Total
Total
Per
month
01.04.2005 31.12.2005
9
months
01.01.2006 30.06.2007
18
months
BO Scheme,
9723
1080
60647
3370
2002
BO Scheme,
2006
Disposal of Complaints
During the year 2007-08, the Banking Ombudsman Offices disposed of 49100
complaints (including from the complaints pending at the beginning of the year
and those received during the year). Of these, 21747 complaints (49%) were
settled to the satisfaction of the complainants, 15914 complaints (36%) could not
be considered under the scheme owing to several reasons like being outside the
purview of the scheme, time-barred, without sufficient cause, frivolous, pending in
other fora, etc. A sample analysis of 756 complaints that could not be considered
under the scheme disclosed that 42% of such complaints fell outside the purview
of the scheme and 23% were first resort complaints and could not be taken up by
the Banking Ombudsmen. In 11% of the complaints, deficiency of service could
not be established and the remaining 24% complaints could not be considered for
reasons like they were pending in other fora or the complaints required
Particulars
2003-04
2004-05
2005-06
2006-07
2007-08
Total complaints
9483
12034
33363
44766
54992
Complaints settled
3998
5440
14931
21747
29365
to the satisfaction
(42%)
(45%)
(45%)
(49%)
(53%)
Complaints that
4011
4963
12304
15914
19735
could not be
(42%)
(41%)
(37%)
(36%)
(36%)
Total number of
8009
10403
27235
37661
49100
complaints
(84%)
(86%)
(82%)
(84%)
(89%)
Complaints under
1474
1631
6128
7105
5892
process
(16%)
(14%)
(18%)
(16%)
(11%)
dealt
with during the
year
of complainants (a)
considered under
the
scheme (b)
disposed of (a+b)
The Banking Ombudsmen disposed of complaints, other than the complaints that
could not be considered, either by mutual settlement or by issuing an Award.
During the period reviewed, the ratio of complaints disposed by settlement to the
complaints disposed by award was around 99:1 clearly indicating the effectiveness
of the Banking Ombudsmen in arriving at mutually agreed consensus between
bankers and complainants. During the period above, only 563 awards were issued
which formed less than 2% of the total 49,253 complaints disposed of. From the
year 2006-07, the number of awards issued and the percentage of disposal through
award issuance have come down despite huge increase in the complaints received.
Details are as given table below. The fact that the Banking Ombudsmen could
dispose of more than 98% of the complaints by mutual settlement between the
complainant and the concerned banks to their satisfaction indicates that they took
appropriate decisions taking into consideration all the relevant and extant legal and
banking instructions and practice.
Year
No.
No. of
Disposal by
Disposal by
complaints
Award
settlement
disposed
No.
No.
of
1.
2003-2004
3998
121
2.21
3877
97.78
2.
2004-2005
5440
165
3.03
5275
96.97
3.
2005-2006
14931
146
0.98
14785
99.02
4.
2006-2007
21747
84
0.39
21662
99.61
5.
2007-2008
29365
70
0.24
29295
99.76
Analysis of Complaints:
Analysis of Complaints dealt with - Category-Wise
The analysis of complaints received at the Banking Ombudsman offices includes
analysis of subject category of complaints and the bank-groups against which the
complaints were made. Computerization of the functioning of Banking
Ombudsman Offices through the Complaint Tracking Software has enabled
detailed analysis in this regard. The maximum number of complaints dealt with
during the last five-year period pertained to complaints regarding deposit
accounts, deficiency in servicing of loans and advances and delay in collection of
cheques/bills, etc, besides the miscellaneous complaints. The details are given in
the following table:
Category
2002-03
2003-04
2004-05
2005-06
2006-07
Deposit
1789
2500
3239
6733
5803
Accounts
(27%)
(26%)
(27%)
(20%)
(15%)
Loans and
1651
1226
2291
5215
5151
Advances
(25%)
(13%)
(19%)
(16%)
(13%)
Collection of
908
1001
1245
3058
4058
cheques/bills
(14%)
(11%)
(10%)
(9%)
(11%)
Others
2158
4756
5259
18357
23626
(34%)
(50%)
(44%)
(55%)
(61%)
6506
9483
12034
33363
38638
Total
However, during the year 2006-07, the maximum number of complaints received
pertained to credit cards at 20%. Complaints pertaining to deposit accounts, loans
and advances and remittances occupied the next three places in the number of
complaints received. The details are shown below.
Sr.No.
Nature of complaint
Received during
2006-07
2007-08
1.
Deposit accounts
5803
5612
2.
Remittances
4058
5213
3.
Credit cards
7688
10129
4.
4442
5297
5.
709
757
6.
2594
3740
7.
Pension
1070
1582
8.
1469
6388
9.
1039
3128
10.
130
141
11.
Others
9636
5900
Total
38638
47887
Analysis of complaints-Bank-group-wise
Group-wise, the majority of the complaints pertain to the Nationalized Banks
followed by the State Bank Group. However, over the years, the percentage of
complaints against public sector banks, including the SBI Group, showed a decline
vis--vis the number of complaints received against private sector banks and
foreign banks.
Bank
group
200304
200405
200506
200607
200708
Total
No.
Nationalized
Banks
4049
5124
10137
10543
12033
45031
30
SBI Group
2779
3359
9892
11117
13532
42593
29
Private
Sector
Banks
1325
1863
6754
9036
14077
33773
23
Foreign
Banks
406
577
2997
3803
6126
14222
10
Scheduled
Primary
Coop.
Banks
166
256
198
313
295
1340
RRB
232
359
794
536
826
2780
Others
526
496
2591
3290
998
8127
9483
12034
33363
38638
147911
100
Total
47887
Period
Total Cost
No. of
(Rs. Cr)
Complaints
Cost per
Complaint (Rs)
dealt
2003-04
7.03
9,483
7,413
2004-05
7.60
12,034
6,315
2005-06
10.16
33,363
3,045
2006-07
9.81
38,638
2,538
2007-08
12.50
47,887
2,611
CHAPTER: - 3
CONSUMER PROTECTION ACT 1986
THE CONSUMER PROTECTION ACT, 1986
The consumer protection Act, 1986 is the history of socio-economic legislation in
the country. It is one of the most progressive and comprehensive piece of
legislations enacted for the protection of consumers. It was enacted after in-depth
study of consumer protection laws in a number of countries and in consultation
with representatives of consumers, trade and industry and extensive discussions
within the Government.
The Aim of Consumer Protection Act (CPA) is to address the grievances of the
consumers and protecting them from the unethical practices/ behavior or unfair
trade practices of the manufacturer/ supplier. All the provisions of the Act have
come into force from 1 July 1987. The Act was amended in 1991 and 1993. To
make the Consumer Protection Act more functional and purposeful, a
comprehensive amendment was carried out in December 2002 and brought into
force from 15 March 2003. As a sequel, the Consumer Protection Rules, 1987
were also amended and notified on 5 March 2004.
Earlier though there were several legislations to protect the consumer, but the
same never proved adequate to protect consumer and compensate them for their
compliances. The act not only enhances the awareness and educate the consumer
but also provide compensation to them by summary and inexpensive proceedings.
Unlike existing laws which are punitive or preventive in nature, the provisions of
this Act are compensatory in nature. The act is intended to provide simple, speedy
and inexpensive redressal to the consumers' grievances, and relief of a specific
nature and award of compensation wherever appropriate to the consumer. It
confers upon consumers eight rights i.e.: basic needs, safety, information, choice,
representation, redress, consumer education, healthy environment. It provides
remedies to the aggrieved customer in form Replace, Remove, Refund, Redress.
CONSUMER
Consumer means any person who,Buy any goods for a consideration which has been paid or promised or partly paid
and partly promised, or under any system of deferred payment and includes any
user of such goods other than the person who buys such goods for consideration
paid or promised or partly paid or partly promised or under any system of deferred
payment when such use is made with the approval of such person, but does not
include a person who obtains such goods for resale or for any commercial purpose,
or Hires any services for a consideration which has been paid or promised or
partly paid and partly promised, or under any system of deferred payment and
includes any beneficiary of such services other than the person who hires the
services for consideration paid or promised, or partly paid and partly promised, or
under any system of deferred payment, when such services are availed of with the
approval of the first mentioned person.
COMPLAINT
Complaint means any allegation in writing made by a complaint that: As a result of any unfair trade practice adopted by any trader, the
complainant has suffered loss or damage.
The goods mentioned in the complaint suffer from one or more defects.
The services mentioned in the complaint suffer from deficiency in any
respect.
A trader has charged for the goods mentioned in the complaint a price in excess of
the price fixed by or under any law for the time being in force or displayed on the
goods or any package containing such goods, with a view to obtaining any relief
provided by this Act.
RIGHTS OF CONSUMERS
Right to
Safety
Right to
Right to
be Heard
Information
Right to
Rights of
Right to
Choice
Consumers
Redress
Right to Safe
Environment
Education
Basic Needs
CHAPTER: - 4
BANKING OMBUDSMAN SCHEME 2006
SHORT
TITLE,
COMMENCEMENT,
EXTENT
AND
APPLICATION
1) This Scheme may be called the Banking Ombudsman Scheme, 2006.
2) It shall come into force on such date as the Reserve Bank may specify.
3) It shall extend to the whole of India.
4) The Scheme shall apply to the business in India of a bank as defined under
the Scheme.
SECRETARIAT
1) The Reserve Bank shall depute such number of its officers or other staff to
the office of the Banking Ombudsman as is considered necessary to
function as the secretariat of the Banking Ombudsman.
2) The cost of the Secretariat shall be borne by the Reserve Bank.
4) The Award passed under sub-clause (1) shall contain the direction/s, if any,
to the bank for specific performance of its obligations and in addition to or
otherwise, the amount, if any, to be paid by the bank to the complainant by
way of compensation for any loss suffered by the complainant, arising
directly out of the act or omission of the bank.
5) Notwithstanding anything contained in sub-clause (4), the Banking
Ombudsman shall not have the power to pass an award directing payment
of an amount which is more than the actual loss suffered by the
complainant as a direct consequence of the act of omission or commission
of the bank, or ten lakh rupees whichever is lower.
6) In the case of complaints, arising out of credit card operations, the Banking
Ombudsman may also award compensation not exceeding Rs 1 lakh to the
complainant, taking into account the loss of the complainant's time,
expenses incurred by the complainant, harassment and mental anguish
suffered by the complainant.
7) A copy of the Award shall be sent to the complainant and the bank.
8) An award shall lapse and be of no effect unless the complainant furnishes to
the bank concerned within a period of 30 days from the date of receipt of
copy of the Award, a letter of acceptance of the Award in full and final
settlement of his claim.
Provided that no such acceptance may be furnished by the complainant if he has
filed an appeal under sub. clause (1) of clause 14.
9) The bank shall, unless it has preferred an appeal under sub. clause (1) of
clause 14, within one month from the date of receipt by it of the acceptance
in writing of the Award by the complainant under sub-clause (8), comply
with the Award and intimate compliance to the Banking Ombudsman.
Provided that the Appellate Authority may, if he is satisfied that the applicant had
sufficient cause for not making the appeal within time, allow a further period not
exceeding 30 days;
Provided further that appeal may be filed by a bank only with the previous
sanction of the Chairman or, in his absence, the Managing Director or the
Executive Director or the Chief Executive Officer or any other officer of equal
rank.
2) The Appellate Authority shall, after giving the parties a reasonable
opportunity of being heard
a) Dismiss the appeal; or
b) Allow the appeal and set aside the Award; or
c) Remand the matter to the Banking Ombudsman for fresh disposal in
accordance with such directions as the Appellate Authority may consider
necessary or proper; or
d) Modify the Award and pass such directions as may be necessary to give
effect to the Award so modified; or
e) Pass any other order as it may deem fit.
3) The order of the Appellate Authority shall have the same effect as the
Award passed by Banking Ombudsman under clause 12 or the order
rejecting the complaint under clause 13, as the case may be.
REMOVAL OF DIFFICULTIES
If any difficulty arises in giving effect to the provisions of this Scheme, the
Reserve Bank may make such provisions not inconsistent with the Banking
Regulation Act, 1949 or the Scheme, as it appears to it to be necessary or
expedient for removing the difficulty.
CHAPTER: - 5
DIFFERENCE BETWEEN BANKING OMBUDSMAN
SCHEME 1995, 2002 & 2006
applicable to all commercial banks, regional rural banks and scheduled primary
cooperative banks whose principal place of business is in India.
The Revised Scheme with well-equipped staff is wholly funded by the Reserve
Bank of India. This new scheme allows the complainants to file a complaint in any
form, including online and the bank customers are entitled to file an appeal with
the Reserve Bank of India. It provides a forum for bank customers for redressal of
their common complaints against banks. On the basis of the new Banking
Ombudsman Scheme, 2006 the customers are also privileged to complain about
non-payment or any inordinate delay in payments or collection of cheques towards
bills or remittances by banks, as also non acceptance of small denomination notes
and coins or charging of commission for acceptance of small denomination notes
and coins by banks. The Banking Ombudsmen currently have their offices in 15
centers covering the entire country.
Is the New Banking Ombudsman Scheme 2006 differs from its previous
schemes?
The vision behind the emergence of Banking Institution is to evolve into a strong,
sound and globally competitive financial system, providing integrated services to
customers from all segments, leveraging on technology and human resources,
adopting the best accounting and ethical practices and fulfilling corporate and
social responsibilities towards all stakeholders. As a part of this vision, the RBI
lodged various Ombudsman schemes till today which forms a part of our
discussion.
Yes, the new scheme 2006 differs from its previous schemes. The extent and scope
of the scheme, 2006 is much wider than its earlier schemes of 1995 and 2002.
Because the new scheme introduces for the first time;
Includes complaints relating to credit cards, deficiencies in providing the
promised services by banks and its marketing agents, levying of service
charges without prior notice to the customers and non-compliance of fair
practice codes by the banks;
Facilitates the submission of complaints through online;
Establishes an appellate authority to facilitate appeals against the awards
rendered by the Banking Ombudsmen instead of filing with the Review
Authority for review of such awards.
The extent and scope of the new Scheme is wider than the earlier Scheme of 2002.
The new Scheme also provides for online submission of complaints. The new
Scheme additionally provides for the institution of an 'appellate authority' for
providing scope for appeal against an award passed by the Ombudsman both by
the bank as well as the complainant.
able to appeal to the Reserve Bank against the awards given by the Banking
Ombudsmen.
The new scheme provides a forum to bank customers to seek redressal of their
most common complaints against banks, including those relating to credit cards,
service charges, promises given by the sales agents of banks, but not kept by
banks, as also, delays in delivery of bank services. The bank customers would now
be able to complain about non-payment or any inordinate delay in payments or
collection of cheques towards bills or remittances by banks, as also nonacceptance of small denomination notes and coins or charging of commission for
acceptance of small denomination notes and coins by banks.
The Reserve Bank had first introduced the Banking Ombudsman Scheme in 1995
to provide expeditious and inexpensive forum to bank customers for resolution of
their complaints relating to deficiency in banking services. The Scheme was
revised in 2002 mainly to cover Regional Rural Banks and to permit review of the
Banking Ombudsmens awards against banks by the Reserve Bank. The Banking
Ombudsmen currently have their offices in 15 centers.
The Reserve Bank is also in an advanced stage of setting up an independent
Banking Codes and Standards Board of India to ensure that comprehensive code
of conduct for fair treatment to customers are formulated by banks and adhered to.
The Reserve Bank of India had announced setting up of the Board in its Annual
Policy for 2005-2006 announced by the Governor, Dr Y V Reddy in April 2005.
Amendment 2:
Customers can now appeal against the Banking Ombudsman's Decision.
Date: 24 May 2007
Bank customers can now appeal against the decision of the Banking Ombudsman
where he has rejected the customer's complaint relating to matters falling within
the grounds of complaints specified under the scheme. The Reserve Bank of India
has amended the Banking Ombudsman Scheme, 2006 to enable the customers to
appeal against the Banking Ombudsman's decision. The amendments are available
on the RBI website. Before the scheme was amended, the bank customers could
appeal only against the awards given by the Banking Ombudsman. The appellate
authority for the Banking Ombudsman Scheme is the Deputy Governor of Reserve
Bank of India.
It may be recalled that in the Annual Policy for 2007-2008, the Reserve Bank had
announced that based on customer feedback, it would amend the Banking
Ombudsman Scheme, 2006 to extend the appeal option also to the decisions of the
Banking Ombudsman.
Originally introduced in 1995, the Banking Ombudsman Scheme enables speedy
and cost effective resolution of complaints of bank customers relating to
deficiency in bank services. The Scheme now covers all Scheduled Commercial
Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks. The
customers can also now complain to the Banking Ombudsman against deficiency
in almost any banking services, including credit cards, after exhausting the channel
available with the bank concerned for resolving their complaints. The Reserve
Bank has appointed 15 Banking Ombudsmen who are located mostly in State
Capitals under the Scheme. The Banking Ombudsman tries to resolve the
complaint through conciliation or mediation and even passes an award if it is not
resolved through such settlement.
Amendment 3:
RBI amends Banking Ombudsman Scheme: includes complaints
relating to Internet Banking and Non-adherence to BCSBI Code.
Date: 05 Feb 2009
The Reserve Bank of India has widened the scope of its Banking Ombudsman
Scheme 2006, to include deficiencies arising out of internet banking. Under the
amended Scheme, a customer would also be able to lodge a complaint against the
bank for its non-adherence to the provisions of the fair practices code for lenders
or the Code of Bank's Commitment to Customers issued by the Banking Codes
and Standards Board of India
(BCSBI). The BCSBI is an independent and autonomous watchdog set up by the
Reserve Bank to monitor and ensure that the codes and standards adopted by the
banks for rendering banking services are adhered to in true spirit.
As per the amended Scheme, the Banking Ombudsman can award compensation
not exceeding Rupees one lakh to the complainant in the case of complaints
arising out of credit card operations, taking into account the loss of the
complainant's time, expenses incurred by him as also, harassment and mental
anguish suffered. Further, non-observance of the Reserve Bank's guidelines on
engagement of recovery agents by banks has also been brought specifically under
the purview of the Scheme.
Any customer who has a grievance against a bank can complain to the Banking
Ombudsman in whose jurisdiction the branch of the bank complained against is
located. Some banks have centralized certain transactions, like housing loans,
credit cards, etc. If there are complaints regarding such transactions, complaints
would have to be made to the Banking Ombudsman in the State in which the bank
customer receives the bill.
In addition, the Reserve Bank has simplified the format for lodging complaint to
the Banking Ombudsman. Though the complainant need not lodge his complaint
in a specific format, the Scheme now provides for an easy-to-fill format for
lodging complaints, in case complainants prefer to use it. The jurisdictions of the
Banking Ombudsman at Kanpur, New Delhi, Chandigarh, Chennai and
Thiruvananthapuram have been rationalized to include/exclude certain areas
taking into account the geographical proximity of those areas to the Office of the
Banking Ombudsman.
The amended Scheme however, does not include certain banking transactions,
such as, failure to honour bank guarantee or letter of credit, etc. Complaints on
these areas of banking services are insignificant in number.
CHAPTER: - 6
CASE STUDY
DECISION
When the complainant had approached the bank on 12.09.2003 for refund of the
amount lying to his credit, the bank had refused to allow him to withdraw the
amount. Article 90 of the Limitation Act clearly mentions that limitation would
start running from the date of demand. The complaint filed with the office of the
Banking Ombudsman is not barred by limitation and is maintainable in law. It is a
general rule that the party who affirms any proposition shall prove it. It is also a
general rule that the onus lies upon the party who seeks to support his case by a
particular fact to prove it. If this basic principle of law of evidence is applied, it is
for the bank to prove conclusively as to when and how the account was closed and
to produce the documents supporting such payment and closure, which ought to
have been in its custody. It may also be pertinent to note that the Asst. Director of
Income Tax [Inv.] had served an order under Sec.132 [3] of the Income Tax on the
branch manager directing him not to part with the funds lying to the credit of the
complainant in current account No.929. When the bank asserts that the account
was closed it is for the bank to bring proof of such closure and it cannot excuse
itself stating that records were destroyed or its tapes were not readable. The
submission that the bank had permitted closure when there was prohibitory order
against it is not credible as in the normal course there is no chance of any bank
allowing operations in an account when there is a prohibitory order in force. All
the facts and circumstances of the case point out to an irrefutable conclusion that
there was no chance that the complainant could have received the refund of the
current deposit prior to 2003. Therefore it was decided to direct the bank that it
should refund to the complainant Rs.44,647.10 which was lying to his credit as on
11.09.1990 when the passbook and chequebook were seized by Income Tax
authorities.
Though the Banking Ombudsman Scheme was introduced in the year 1995, with a
view to do away with the banking customer complaints, the scheme was amended
in subsequent years of 2002 and 2006. But the banks do not seem to have adopted
the norms for their efficient functioning, that is the reason behind the increasing
consumer cases against the banks, which are governed under the scheme.
In the system of Banking Ombudsman, the results are delivered very soon, the
procedures are fair together with cost, and proportionate to the nature of the issues
involved. The system deals with cases at reasonable speed, is understandable to
those who use it, is responsive to the needs of those who use it, and provides as
much certainty as the nature of particular cases allows. This is true because over
the past five years nearly 36000 complaints are being resolved by the Banking
Ombudsman under this Banking Ombudsman Scheme. Though the Banking
Ombudsman is eligible enough to deliver the bank customer complaints at the
earliest yet the Consumer Redressal Forum/Commission is being taken resort of
by most of the bank customers for their redressal of grievances with the bank. The
reason is they are well popular among the common public which is lacking with
the banking ombudsman and its working. Definitely the Scheme needs popularity
in the society for its more appropriateness and effectiveness so that the aggrieved
bank customer with the services of the bank prefers to knock the door of the
banking ombudsman for redressal. The scheme should provide more powers and
levy more duties on the banking ombudsman so that they can easily be
approachable by the aggrieved bank customer.
http://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=159
http://www.rbi.org.in/Scripts/PublicationsView.aspx?id=11113#2
http://www.nos.org/Secbuscour/25.pdf
http://www.indbank.com/ombudsman.htm
http://www.ucobank.com/ombudsman.htm