The Banking Ombudsman Scheme was introduced in India in 1995 by the Reserve Bank of India to provide customers an avenue to file complaints against banks and seek redressal. The 2006 scheme expanded the scope of complaints covered to include internet banking and introduced the position of Banking Ombudsman to hear complaints. A customer can file a complaint with the local Banking Ombudsman if the bank fails to address issues related to services like ATM transactions, loans, accounts within timeframes. The case study describes how a customer approached the Banking Ombudsman after the bank made multiple errors in recording his personal details, failed to address them properly and caused him distress, for which the bank was fined.

1. Banking Ombudsman 2006 a complex process for customer
Sushmita Audichya
MBA (Finance)
3rd
Semester
Introduction
The Banking Ombudsman Scheme was introduced under Section 35 A of the Banking Regulation
Act, 1949 by RBI with effect from 1995.The Banking Ombudsman Scheme was first introduced in
India in 1995 and it was revised in 2002. Current Banking Ombudsman Scheme introduced
in 2006.The Banking Ombudsman Scheme 2006 of Reserve Bank of India has come into effect from 1st
January 2006. The prime objective of this Scheme is to improve/strengthens the relationship between
Banker and Customer by providing quick and inexpensive redressal of customer complaints relating to
deficiencies in Banking Services. If a customer is not satisfied with redressal of his grievance, after
exhausting all the available avenues in the Bank, may approach the Banking Ombudsman, who will sort
out and facilitate speedy settlement of the grievances. This will cover the complaints regarding ATM
transactions, debit and credit cards, deduction of service charges etc. It was last amended in February
2009, to cover problems due to internet banking. This Scheme cover all banks- PSU Banks, Rural and
Cooperative Banks.
Who is Banking Ombudsman?
Banking Ombudsman is a person who hears customer’s complaints against banks. In India, RBI started
this scheme in 1995.
 Vision
To be a visible and creditable system of dispute resolution mechanism for common persons
utilizing banking services.
 Goals
 To ensure the redressal of grievances of users of banking services in an inexpensive
expeditious and fair manner that will provide impetus to improved customers services in
the banking sector on a continuous basis.

2.  To provide feedback/suggestions to the Reserve Bank of India towards framing
appropriate and timely guidelines to banks to improve the level of customer service and to
strengthen their internal grievance redressal systems.
 To enhance the awareness of the Banking Ombudsman Scheme.
 To facilitate quick and fair redressal of grievances through use of IT systems,
comprehensive and easily accessible database and enhanced capabilities of staff through
training.
Appointment and Tenure
The RBI on recommendation by its Governor may appoint one or more officials for this post. The
minimum age to be considered shall be 55 years. The person selected will be appointed for a period of 3
years which could be further extended for a period not exceeding 2 years and subject to age limit of 65
years.
Types of Complaints
 Any excessive delay or non-payment of collection of cheques, drafts, bills etc
 Without any sufficient cause non acceptance of small denomination notes.
 Charging any commission for acceptance of small denomination notes.
 Any delay in payment of inward remittances or non-payment of inward remittances.
 If any banking organization refuses to accept taxes or any delaying in accepting taxes.
 Any delay in issuing government securities.
 Refusal to issue or redemption of government securities.
 Without any sufficient reason, forced lose the deposit accounts by bankers.
 If any banker refuse to close the accounts.
 If any banker deliberately delaying in closing the accounts.
 Non compliance of the provisions of Banking Codes and Standard Board of India.
 If any banker commits non- observance of RBI’s guidelines or instructions or any violation of the
directives issued by the Reserve Bank in relation to the banking or other services.
 Without any sufficient cause, non acceptance of coins tendered or charging of commission in
respect thereof.
 Delay or failure in issue of drafts, pay orders or banker’s cheques.
 Performance of work is not as per prescribed working hours.
 Delay or failure in providing any bank facility.
 Complaints file by Non-Resident Indians having accounts in India in relation to their remittance
from abroad, deposits and other banking related matters.
 Without any reason refusal to open deposit accounts.
 Without adequate prior notice to the customer, charges levied by the banker.

3.  Any violation of guidelines or instructions of RBI on ATM/Debit Card/Credit Card operations.
 Non-disbursement or delay in disbursement of pension.
A customer can also file complaint on the following grounds of deficiency in service with respect to loans
and advances:
 The Banking Ombudsman may also deal with such other matter as may be specified by the
Reserve Bank from time to time.
 Without any valid reason non- acceptance of application of loans.
 Any violation of the provisions of the fair practices code for lenders as adopted by the bank or
Code of Bank’s Commitment to Customers, as the case may be.
 Any type of violation of the instructions, guidelines, recommendations of the RBI.
 If any non-observance of Reserve Bank Directives on interest rates.
 Any delays in sanction of loan applications.
When Customer can file complaint
 If reply is not received from the bank within a period of one month after concerned bank has
received complaint representation.
 If bank rejects the complaint.
 If complainant is not satisfied with bank’s reply.
 Banking Ombudsman does not charge any fee for filing and resolving customer’s complaints.
 If any loss suffered by complainant then complainant is limited to the amount arising directly out
of the act or omission of the bank or Rs 10 lakhs whichever is lower.
Procedure for filling complaint
A. Any person who has grievance against bank on any one or more of the grounds mentioned in
Clause 8 of the Scheme may, himself or through his authorized representative, make a complaint
to the Banking Ombudsman within whose jurisdiction the branch or office of the bank complained
against is located.
Provided that a complaint arising out of the operations of credit cards, shall be filed before the
Banking Ombudsman within whose territorial jurisdiction the billing address of the card holder is
located and not the place where the bank concerned or the credit card processing unit is located.
B. (1) The complaint in writing shall be duly signed by the complainant or his authorized
representative and it should also contain the following:
 The name and address of the complainant.
 The name and address of branch or the office of the bank against which the complaint is
made.
 The facts giving rise to complaint.
 The nature and extent of the loss caused to the complainant/

4.  The relief sought for.
(2) The complainant should file along with the complaint, copies of the documents, if any, which
he proposes to rely upon and a declaration that the complaint is maintainable.
(3) A complainant made through electronic means shall also be accepted by the Banking
Ombudsman and a print out of such complaint shall be taken on the record of the Banking Ombudsman.
(4) The Banking Ombudsman shall also entertain complaints covered by this scheme received by
Central Government or Reserve Bank and forwarded to him for disposal.
C. No complaint to the Banking Ombudsman shall lie unless:-
(1) The complainant had, before making a complaint to the Banking Ombudsman, made a written
representation to the bank and the bank had rejected the complaint or complainant had not
received any reply within a period of one month after bank received his representation or the
complainant is not satisfied with the reply given to him by the bank.
(2) The complaint is made not later than one year after the complainant has received the reply of
the bank to his representation or, where no reply is received, not later than one year and one
month after the date of the representation to the bank.
(3) The complaint is not in respect of the same subject matter which was settled or dealt with on
merits by the Banking Ombudsman in any previous proceedings whether or not received from
the same complainant or along with one or more complainants or one or more of the parties
concerned with the subject matter.
(4) The complaint does not pertain to 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 order
has been passed by any such court, tribunal, arbitrator or forum.
(5) The complaint is not frivolous or vexatious in nature.
(6) The complaint is made before the expiry of the period of limitation prescribed under the
Indian Limitation Act, 1963 for such claims.
Case Study
Mr. K, who had a current account and a credit card account with his bank, was very surprised to receive
a credit card statement with a wrong name on it. The statement was clearly his, as the account number
and all the transaction details were correct. However, the name on the statement appeared to have
been made up and not a genuine name at all.

5. After making a number of phone calls to the bank, Mr. K was eventually told that the name change had
come about because of a “system error”. The bank sent him a cheque for 25 Euro for his out of pocket
expenses in having to pursue the matter. Although the name on the cheque was closer to his own name
than the name on the statement had been- it was still not right.
Given this further error, Mr. K remained most concerned about what was happening in his account.
When he pursued the matter further
When he pursued the matter further, he discovered that the bank’s record of his occupation stated that
he was a “professional shoplifter.” Mr. K then brought his complaint in front of Banking Ombudsman.
It soon becomes clear that the alterations to Mr. K’s details on his credit card account had not come
about as a result of a system error, as the bank had told them. The changes had been made
deliberately, by a member of bank’s staff.
The bank had compounded the problem by failing to get Mr. K’s name right when it sent him a cheque. It
had also taken several months to amend his name on his credit reference history. The overall effect of
all this was that Mr. K was caused a significant degree of distress and inconvenience. The bank had to
pay 500 Euro as compensation to Mr. K.