It displays the detailed concept of ombudsman

1. Veer Narmad South Gujarat University
Department of Law
Assignment 2022-2023
 Name – Anshika Agarwal 01
Ghata Sabhaya 66
Niyati Yadav 87
 Semester – 7th
 Subject – Banking Law
 Course – B.Com. L.L.B (Hons.)
 Topic – Banking Ombudsman
 Submitted to – Prof. Priti Mishra

2.  The Banking Ombudsman Scheme was introduced under section 35A of the Banking Regulation Act, 1949
by RBI.
 The Scheme is introduced in the Year 1995.
 The present Ombudsman Scheme was introduced in the year 2006.
 Further amendment in 2009
 Banking ombudsman scheme is an expeditious and inexpensive form to back customer for resolution of
complaint relating to certain services offered by banks.
 It is run by the RBI directly to ensure customer protection in the banking industry.
Introduction :-

3.  The Banking Ombudsman is a senior official appointed by the RBI.
 He has the responsibility to redress customer complaints against deficiency in certain banking
services.
 All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks
are covered under the Scheme.
 The Banking Ombudsman can receive and consider any complaint relating to number of deficiencies
related to banking operations including internet banking.
 At present 15 ombudsmen were appointed by the RBI to settle complaints and they are appointed in
state capitals.
 RBI has mentioned a large number of service deficiencies by banks to customers where the
customers can approach the Ombudsman through a complaint.
Meaning of Ombudsman:-

4.  Reserve bank may appoint one or more of its officers in the rank of chief
general manager or general manager to be known as banking ombudsmen.
 Appointment of banking ombudsman may be made for a period not
exceeding 3 years at a time
 Banking ombudsman shall send to the governer, reserve bank, a report, as
on 30th June every year
Appointment &Tenure:-

5.  Under the amended scheme, a customer would also be able to lodge a complaint against the bank for its
non-adherence to RBI instructions with regard to mobile banking/electronic banking services in India.
 As per the amendment, the pecuniary jurisdiction of the Banking Ombudsman to pass an award has
been increased from existing Rs. 10 lakh to Rs. 20 lakh.
 Compensation not exceeding Rs. 1 Lakh can also be awarded by the Banking Ombudsman for loss of
time, expenses incurred, as also harassment and mental anguish suffered by the complainant.
 The RBI extended the scope of Banking Ombudsman Scheme under which banks could not be penalized
for mis-selling third-party products like insurance and mutual funds via mobile or electronic banking.
Scope of Banking Ombudsman Scheme:-

7. Grounds on which complaints can be filed :-
 Some of the grounds on which these complaints can be filed by the aggrieved customers
 Delay or non-payment of cheques, drafts, bills etc.,
 Non-acceptance of any notes or coins of the Indian currency without giving any sufficient cause,
 Charging some amount of commission for any service mentioned in the above point which the bank
does not have the authority of,
 Non-payment or delay in payment of the inward remittances,
 Non-adherence in regards to the working hours of the banks,
 Delay or failure to provide a banking facility, earlier promised by the officials or the agents of the
bank,
 Refusing to open deposit accounts without any valid reason,

8.  Forced closure of deposit accounts without due notice or without sufficient reason;
 Delay or non-remittance of money or any other bank related matters regarding the non-resident Indians,
 Levying of any other additional charge without any previous intimation to the customers,
 Non-adherence to the instructions and guidelines given by the Reserve Bank in relation to use of ATM or
Debit cards, like – Account debited but cash not dispensed by ATMs, Less cash dispensed by the ATM
machine, Stolen cards, Account debited twice for one transaction done on the abovementioned factors,
 Non-adherence to the guidelines given by the Reserve Bank in relation to the Credit Card facilities
provided by the banks, like – Wrong billings on the card, Charging of

9.  Inappropriate approach by the recovery agents on behalf of the banks or not following the guidelines
are given by the Reserve Bank in regards to the functioning of the recovery agents.
 Any other guidelines stated by the Reserve Bank.
 Delay or refusal to accept payments towards taxes and other charges as directed by the Reserve Bank
or the government,
 Delay in issuance or refusal to issue redemption of government securities,
 Forced closure of deposit accounts without prior notice or without any specific reasons for the delay in
closure of any type of accounts held by the customer,

10.  Complaints on the grounds regarding non-observance of Reserve Bank guidelines on interest rates,
refusing to accept applications for loans without a valid reasons or not disposing of the loan
applications within the prescribed time or non-adherence to the provisions of the fair practices code
for lenders as adopted by the bank or Code of Bank’s Commitment to Customers,
 Non-adherence to any other guidelines or any other instructions given by the Reserve Bank from time
to time to the banks or their subsidiaries involved in the banking business in the country.
 Non-acceptance of application for loans without furnishing valid reasons to the applicant; and

11. Procedure to register a complaint :-
▪ Filing of the complaint
▪ The procedure to register a complaint regarding any of the banks by the customers starts from the
process of identifying the sort of deficiency of service from the list above mentioned.
▪ Who can file the complaint?
▪ The complainant may, himself or through an authorised representative make a complaint to the
Banking Ombudsman within whose jurisdiction the bank is located. It should be noted that in cases of
credit card complaints the complaint will be filed with the Banking Ombudsman within whose
territorial jurisdiction the billing address of the complainant or the customer is located.

12. Details to be provided in the complaint :-
 The complaint shall be made in writing or in electronic mode and shall be duly signed by the
complainant or his representative in a specified form which shall state the-
 name and address of the complainant,
 name and address of the branch or office of the bank against which the complaint has to be filed,
 the facts of the complaint including the quantum of loss caused to the complainant and
 the relief which is sought from the ombudsman through the complaint.
 The complainant is required to file copies of the documents if there are any, to support his claim of
the complaint and for the complaint to be maintainable under subclause (3) of the abovementioned
clause.

13. Onus on the complainant to go to the Bank first :-
▪ The complainant has the onus to go to the bank first for the redressal of his complaint, therefore, no
complaint to the ombudsman shall lie unless the complainant has approached the bank with his
complaint in a written representation and the bank has rejected his complaint or the complainant hasn’t
received any reply from the side of the bank within one month after the complaint has been received by
the bank or the customer is not satisfied with the redressal provided to him.
▪ Also, the complaint with the ombudsman has to be filed within one year from the received reply from the
bank or where no reply has been received by the bank then not later than one year and one month from
the date of representation.
▪ The complaint will not lie to the ombudsman in case if the same cause of action which was settled on
merits by the Ombudsman in any previous case has been brought to him.

14. Directions issued by the Ombudsman :-
▪ After the complaint has been filed to the ombudsman, he has the power to direct the bank, against
which the complaint has been filed to furnish any information or certified copies of any documents
relating to the complaint.
▪ The ombudsman has the responsibility to maintain the confidentiality of the information provided but is
not barred due to the above clause from disclosing any information or document considered by him to
be reasonably required to comply with any legal requirements or the principles of natural justice and
fair play in the proceedings.

15. Settlement of the complaint through Mediation/Conciliation :-
 As soon as possible the banking ombudsman shall send the copy of the complaint to the branch
office of the bank mentioned in the complaint by the complainant and initiate to promote a
settlement of the complaint by agreement between the parties through mediation or
conciliation.
What if the complaint is not settled ?
 In case if the complaint is not settled by agreement within a period of one month from the date
of receipt of the complaint or from the period which is allowed by the ombudsman, the
ombudsman after hearing the parties involved in the case, may pass an award or reject the
complaint.

16. Duties of the Banking Ombudsman while dealing
with a complaint :-
1) The Banking Ombudsman has to take into account the prevalent laws and directions, guidelines and
instructions given by the Reserve Bank from time to time.
2) The award given should accompany the reasons on which the award was given and also should contain the
directions .
3) Banking Ombudsman shall not have the power to pass an Award directing payment of an amount towards
compensation which is more than the actual loss suffered by the complainant.
4) The Banking Ombudsman may also award compensation in addition to the above but not exceeding rupees 1
million to the complainant, taking into account the loss of the complainant’s time, expenses incurred by the
complainant, harassment and mental agony suffered by the complainant.

17. Appeal :-
If one is not satisfied with the decision passed by the Banking Ombudsman, one can approach the
appellate authority against the Banking Ombudsmen’s decision. Appellate Authority is vested with a Deputy
Governor of the RBI.
The bank also has the option to file an appeal before the appellate authority under the scheme.
The time limit for filing an appeal :-
If one is aggrieved by the decision, one may, within 30 days of the date of receipt of the award, appeal
against the award before the appellate authority. The appellate authority may, if he/ she is satisfied that the
applicant had sufficient cause for not making an application for appeal within time, also allow a further
period not exceeding 30 days.

18. The appellate authority may –
dismiss the appeal; or
allow the appeal and set aside the award; or
send the matter to the Banking Ombudsman for fresh disposal in accordance with such directions as the
appellate authority may consider necessary or proper; or
modify the award and pass such directions as may be necessary to give effect to the modified award; or
pass any other order as it may deem fit.
How does the appellate authority deal with the appeal?

19. 1) An important function of Ombudsman is to protect the rights and freedoms of citizens and needless.
2) The ombudsman shall have the power to supervise the general civil administration. On this point the duty
of ombudsman is closely connected with the public administration. Because the protection of freedom,
execution of policies and other fall within the jurisdiction of public administration and whether these are
properly performed or not that requires to be examined and ombudsman does this job.
3) In many states Ombudsman supervises the general administration. It is also called general surveillance of
the functioning of the government.
4) An important function of Ombudsman is the exercise of discretionary powers. The discretionary powers
are really vast and how to use these powers depend upon the person concerned. Discretionary powers
include corruption, negligence, inefficiency, misbehavior etc.
Powers and Functions of Ombudsman :-

20. Failure to issue bank guarantee –
The bank was alleged to have failed to issue bank guarantee despite sufficient security and the complainant suffered financial
loss. It was held that the non-issuance of bank guarantee despite security deposit with the bank would amount to deficiency in
service and the complainant was held entitled to interest on that security amount.
Failure to confirm remittance –
In one of the cases, the complainant's son remitted an amount from abroad to be credited to his NRI account with appellant
bank. The remittance was not confirmed till a long time. Appellant bank pleaded that non-confirmation was due to failure of
computers.
The issue is whether this delay on the part of the bank amounted to deficiency in service.
The Commission in appeal observed that bank officials could have verified vouchers and cheques received by post or
confirmation and could have given correct reply within a reasonable time. It was held that failure of the bank to confirm
remittance received from outside country within a reasonable period amounts to deficiency in service.
Following are the cases, through which it can be ascertained that what the
grievances have been handled by the Banking Ombudsman Scheme :-

21.  https://m.rbi.org.in//Scripts/FAQView.aspx
 https://blog.ipleaders.in/banking-ombudsman-scheme/
Bibliography :-

22. Thank you :)