banking ombudsman project introduction

7/27/2019 Banking Ombudsman Project introduction

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Vivek College of Commerce

THE BANKING OMBUDSMAN

NAME :- PRASAD K POOJARY

CLASS :- T.Y.B.BI Roll No. 34

GUIDE :- Prof. Debjani

EXECUTIVE SUMMARY


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The aim of this project is to introduce the reader to the topic of

THEBANKINGOMBUDSMAN. The project also deals with

the policy adopted by the RBI and the excess of case laws.

The ability of the banking industry to achieve the socio-economic

objectives and in the process bringing more and more customers

into its fold will ultimately depend on the satisfaction of the

customers. Banks have a strong belief that a satisfied customer is

the foremost factor in developing our business.

This project is focused in understanding the essentiality of the

Banking Ombudsman in regards to the public interest and the

interest of the banking policies to enable resolution of complaints

related to deficiency in banking services.

Sensing the need for a easy, expeditious and inexpensive

mechanism for redressal of unresolved grievances of customers,

the RBI initially formulated the Scheme of Ombudsman, 1995,

which became operational in June 1995, providing an institutional

and legal framework to bank customers to resolve all their

complaint The scheme is applicable to all scheduled commercialbanks having business in India and scheduled primary co-

operative banks except Regional Rural Banks. Fifteen offices of

Banking Ombudsman at important centres were set up to cover

the entire country.


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The Banking Ombudsman offers customers the opportunity to

resolve disputes with their banks without needing to resort to the

Courts.

PREFACE

OBJECTIVES

To present Banking Ombudsman Scheme & how does it

works.

To present the services of the Banking Ombudsman offered

to the customer.

To show how the Banking Ombudsman deals with customer

complaints.

To explain the duties, functions & powers of the

Ombudsman.


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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.

APPOINTMENT & TENNURE

The 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 to carry out the functions entrusted to

them by or under the Scheme. The appointment of Banking

Ombudsman under the above Clause may be made for a period

not exceeding three years at a time.

CHARACTERISTICS OF BANKING OMBUDSMAN

The Banking Ombudsman is a quasi judicial authority. It has

power to summon both the parties -bank and its customer,

to facilitate resolution of complaint through mediation.

All Scheduled Commercial Banks, Regional Rural Banks and

Scheduled Primary Co-operative Banks are covered under

the Scheme.


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The Banking Ombudsman has power to consider complaints

from Non-Resident 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.


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DUTIES & FUNCTIONS OF BANKING OMBUDSMAN

The Ombudsman shall enquire into and investigate in

accordance with the provisions of the Act, and take action

or steps as may be prescribed by the Act and concerning-

Practices and actions by persons, enterprises and other

private institutions where complaints allege that violations

of fundamental rights and freedoms have taken place.

All instances or matters of alleged or suspected corruption

and them is appropriation of public moneys or other public

property by officials.

Without derogating from the provisions, any request or

complaint in respect of instances or matters referred to in

that provisions, may include any instance or matter in

respect of which the Ombudsman has reason to suspect-

That the provisions of any law or under the authority of the

State or by any person in its employment, or that any

practice is so followed, in a manner which is not in the public

interest.


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That the powers, duties or functions which vest in the State

or, body or institution, or any person in its employment are

exercised or performed in an irregular manner.

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.

Any person wishing to lay any instance or matter referred to

in provisions before the Ombudsman shall do so in such

manner as the Ombudsman may determine or allow.

The Ombudsman shall not be required to investigate any

instance or matter referred to in the provisions which hasbeen laid before him or her under the provisions when the

grounds on account of which the inquiry is desired is in the

opinion of the Ombudsman.

The provisions shall not apply in respect of any decision taken in

or in connection with any civil or criminal case by a court of law


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COMPLAINTS CONSIDERED BY BANKING OMBUDSMAN

The Banking Ombudsman can receive and consider any complaint

relating to the following deficiency in banking services (including

internet banking):

non-payment or inordinate delay in the payment or

collection of cheques, drafts, bills etc.;

non-acceptance, without sufficient cause, of small

denomination notes tendered for any purpose, and for

charging of commission in respect thereof;

non-acceptance, without sufficient cause, of coins tendered

and forcharging of commission in respect thereof;

non-payment or delay in payment of inward remittances ;

failure to issue or delay in issue of drafts, pay orders

or bankers cheques;

non-adherence to prescribed working hours ;


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failure to provide or delay in providing a banking facility

(other than loans and advances) promised in writing by a

bank or its direct selling agents;

complaints from Non-Resident Indians having accounts in

India in relation to their remittances from abroad, deposits

and other bank-related matters;

levying of charges without adequate prior notice to the

customer;

non-adherence by the bank or its subsidiaries to the

instructions of Reserve Bank on ATM/Debit card operations

or credit card operations;

refusal to accept or delay in accepting payment towards

taxes, as required by Reserve Bank/Government;

refusal to issue or delay in issuing, or failure to service or

delay in servicing or redemption of Government securities;

forced closure of deposit accounts without due notice or

without sufficient reason;

refusal to close or delay in closing the accounts;


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non-observance of Reserve Bank guidelines on engagement

of recovery agents by banks; and

non-observance of Reserve Bank Directives on interest rates;

delays in sanction, disbursement or non-observance of

prescribed time schedule for disposal of loan applications;

non-acceptance of application for loans without furnishing

valid reasons to the applicant; and

COMPLAINTS NOTCONSIDERED BY BANKING OMBUDSMAN

Ones complaint will not be considered if:

One has not approached his bank for redressal of

his grievance first.

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.


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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.

Frivolous or vexatious.

The institution complained against is not covered under the

scheme.

The subject matter of the complaint is not within the

ambit of the Banking Ombudsman.

If the complaint is for the same subject matter that was

settled through the office of the Banking Ombudsman in any

previous proceedings

The complaint should not be frivolous or vexatious in nature.

The complaint should be made before the expiry of the

period of limitation prescribed under the Indian Limitation

Act, 1963 for such claims


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CHP:-2 INTRODUCTION 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 operationsince 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 April1-March 31 to July 1-June 30 to be in congruent


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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.

GENERAL PARTICULARS ON THE SCHEME

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 atime bound manner.

The Banking Ombudsman on receipt of any complaint endeavors

to promote a settlement of the complaint by agreement between


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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 pas san

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

SCOPE OF THE SCHEME

The Banking Ombudsman Scheme, 2002 covered all the Regional

Rural Banks in addition to all Commercial Banks and Scheduled

Primary Co-operative Banks, which were already covered by

earlier Banking Ombudsman Scheme, 1995. There is no change in

this regard in the Banking Ombudsman Scheme, 2006.In 2006,

the Reserve Bank of India announced the revised BankingOmbudsman Scheme with enlarged scope that included customer

complaints on certain new areas, such as, credit card complaints,

deficiencies in providing the promised services even by banks'

sales agents, levying service charges without prior notice to the


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customer and non adherence to the fair practices code as

adopted by individual banks. The important new grounds of

complaints added include credit card issues, failure in providing

the promised facilities, non-adherence to fair practices code,

levying of excessive charges without prior notice and issues

pertaining to accepting payment towards taxes and

issuing/servicing of Government securities. The grounds of

complaints have been enumerated in Clause 8 of the

Banking Ombudsman Scheme, 2006.

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.


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Chp:-3 PERFORMANCE OF THE OFFICES OF

BANKINGOMBUDSMAN

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.

Number of Complaints Received

The number of complaints received by the Banking Ombudsman

Offices had constantly increased in the last five years. There was

more than threefold increase in the number of complaints

received in the year 2006-07from the previous year after the

Banking Ombudsman Scheme, 2006 was notified. The increasing

receipt was also observed in the year 2007-08 with a 24%

increase from the year 2006-07.The average number of

complaints received per Banking Ombudsman Office has also

increased from 550 in 2003-04 to 3192 in 2007-08.


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Number of complaints received by the Banking

Ombudsman Offices

Period No of Offices of

Banking

Ombudsman

Complaints

received during

the year

Average

No. of

Complain

tsper

office

2003-2004 15 8246 +53% 550


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2004-2005 15 10560 +28% 7042005-2006 15 31732 +200% 21152006-2007 15 38638 +22% 257602007-2008 15 47887 +24% 3192

The increase in the number of complaints received during the

years 2005-06and2006-07 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 Scheme2006 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 hasbenefited larger sections of the banking customers. The

comparative effects of the Banking Ombudsman Schemes

2002and 2006 in complaint receipt are given as below:

Number of complaints received in 2005-06 and 2006-

PERIOD SCHEME

S

RUNNIN

G

No. OF

COMPLAINTS

FROM TO TOTAL

RECEIVEDFROM TO TOTAL TOTAL PER


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MONTH01.04.2

005

31.12.2

005

9

MONTH

S

B O

SCHEME

2002

9732 1080

01.01.2

006

30.06.2

007

18

MONTH

S

B O

SCHEME

2006

606047 3370

Disposal of Complaints

During the year 2007-08, the Banking Ombudsman Offices

disposed of 49100complaints (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 for a, 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 couldnot be taken up by the Banking Ombudsmen. In11% of

the complaints, deficiency of service could not be established

and the remaining24% complaints could not be considered for

reasons like they were pending in other for a or the


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complaints required consideration of elaborate documentary

and or all evidence etc. Details of disposal of complaints over

the last five years are furnished in the following table:

Disposal of Complaints by Banking Ombudsman Offices

PARTICULARS 2003-

2004

2004-

2005

2005-

2006

2006-

2007

2007-

2008Total

complaints

dealt with

during the year

9489 12034 33363 44766 54992

Complaints

settled to the

satisfaction of

complaints (a)

3998

(42%)

5440

(45%)

14931

(45%)

21747

(49%)

29365

(53%)

Complaints

That couldnt

be consider

under the

scheme (b)

4011

(42%)

4963

(41%)

12304

(37%)

15914

(36%)

19735

(36%)

Total number

of complaints

disposed of

(a+b)

8009

(84%)

10403

(86%)

27235

(82%)

37661

(84%)

49100

(89%)

Mode of Disposal of Complaints


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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.

Mode of disposal of complaints

(Other than complaints that could not be

considered)Sr.

No.

Year No. of

Complain

ts

Disposed

Disposal By

Award

Disposal by

Settlement

No. % No. %


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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:


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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:

Analysis of complaints dealt with -category-wise

Category 2002-

2003

2003-

2004

2004-

2005

2005-

2006

2006-

2007Deposit

Amount

1789

(27%)

2500

(26%)

3239

(27%)

6733

(20%)

5803

(15%)Loans &

Advances

1651

(25%)

1226

(13%)

2291

(19%)

5215

(16%)

5151

(13%)Collection

ofCheques &

Bills

908

(14%)

1001

(11%)

1245

(10%)

3058

(9%)

4058

(11%)

Others 2158

(34%)

4756

(50%)

5299

(44%)

18357

(55%)

23626

(61%)


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Total 6506 9483 12034 33363 38638

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.


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Complaints received in 2007-08: Category-wise


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Complaints received in 2006-07 & 2007-08: Category-wise

Sr.

No.

Nature Of Complaints Received During

2006-

2007

2007-

20081 Deposits account 5803 5612

2 Remittance 4058 52133 Credit Cards 7688 101294 Loans & Advances General 4442 52975 Loans & Advances Housing 709 757

6 Charges Without Notice 2594 37407 Pension 1070 15828 Failure On commitments

made

1469 6388

9 DSAs and Recovery Agents 1039 312810 Notes & Coins 130 14111 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

Break-up of complaints dealt with -Bank-group-wise


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Bank

group

2003-

2004

200

4-

200

5

2005-

2006

2006

-

2007

2007-

2008

Total

No.

%

Nationaliz

ed Banks

4049 512

4

1013

7

1054

3

1203

3

45031 30

SBI Group 2779 335

9

9892 1111

7

1353

2

42593 29

Private

Sector

Banks

1325 186

3

6754 9036 1407

7

33773 23

Foreign

Banks

406 577 2997 3803 6126 14222 10

Scheduled

Primary

Co-

operative

Banks

166 256 198 313 295 1340 1

RRB 232 359 794 536 826 2780 2Others 526 496 2561 3290 998 8127 5Total 9483 120

34

3336

3

3863

8

4788

7

14791

1

100

COST DETAILS OF RUNNING THE SCHEME


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Chp:-4 THE BANKING OMBUDSMAN SCHEME, 2006

The Scheme is introduced with the object of enabling resolution of

complaints relating to certain services rendered by banks and to

facilitate the satisfaction or settlement of such complaints.

SHORT TITLE, COMMENCEMENT, EXTENT ANDAPPLICATION

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.

SUSPENSION OF THE SCHEME

1) The Reserve Bank, if it is satisfied that it is expedient so to

do, may by order suspend for such period as may be

specified in the order, the operation of all or any of the


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provisions of the Scheme, either generally or in relation to

any specified bank.

2) The Reserve Bank may, by order, extend from time to time,

the period of any suspension ordered as aforesaid by such

period, as it thinks fit.

CHP:-5 JURISDICTION, POWERS AND DUTIES OF

BANKINGOMBUDSMAN

POWERS AND JURISDICTION

1) The Reserve Bank shall specify the territorial limits to which

the authority of each Banking Ombudsman appointed under

Clause 4 of the Scheme shall extend.

2) The Banking Ombudsman shall receive and consider

complaints relating to the deficiencies in banking or other

services filed on the grounds mentioned in clause 8 and

facilitate their satisfaction or settlement by agreement or

through conciliation and mediation between the bank

concerned and the aggrieved parties or by passing an Awardin accordance with the Scheme.


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3) The Banking Ombudsman shall exercise general powers

of superintendence and control over his Office and shall be

responsible for the conduct of business thereat.

4) The Office of the Banking Ombudsman shall draw up an

annual budget for itself in consultation with Reserve Bank

and shall exercise the powers of expenditure within the

approved budget on the lines of Reserve Bank of India

Expenditure Rules, 2005.

5) The Banking Ombudsman shall send to the Governor,

Reserve Bank, are port, as on 30th June every year,

containing a general review of the activities of his Office

during the preceding financial year and shall furnish such

other information as the Reserve Bank may direct and the

Reserve Bank may, if it considers necessary in the public

interest so to do, publish the report and the information

received from the Banking Ombudsman in such consolidated

form or otherwise as it deems fit.

POWER TO CALL FOR INFORMATION


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1) For the purpose of carrying out his duties under this

Scheme, a Banking Ombudsman may require the bank

against whom the complaint is made or any other bank

concerned with the complaint to provide any information or

furnish certified copies of any document relating to

the complaint which is or is alleged to be in its

possession.

Provided that in the event of the failure of a bank to comply

with the requisition without sufficient cause, the

Banking Ombudsman may, if he deems fit, that the

information if provided or copies if furnished would be

unfavorable to the bank.

2)The Banking Ombudsman shall maintain confidentiality of

any information or document that may come into his

knowledge or possession in the course of discharging his

duties and shall not disclose such information or

document to any person except with the consent of

the person furnishing such information or document.

Provided that nothing in this clause shall prevent the

Banking Ombudsman from disclosing information ordocument furnished by a party in a complaint to the other

party or parties to the extent considered by him to be

reasonably required to comply with any legal requirement or


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the principles of natural justice and fair play in the

proceedings.

SETTLEMENT OF COMPLAINT BY AGREEMENT

1) As soon as it may be practicable to do, the Banking

Ombudsman shall send a copy of the complaint to

the branch or office of the bank named in the complaint,

under advice to the nodal officer referred to in sub-clause (3)

of clause 15, and endeavor to promote a

set tlement of the comp laint by agreement between

the complainant and the bank through conciliation or

mediation.

2) For the purpose of promoting a settlement of the complaint,

the Banking Ombudsman may follow such procedure as he

may consider just and proper and he shall not be bound by

any rules of evidence.

3) The proceedings before the Banking Ombudsman shall be

summary in nature.

.


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REJECTION OF THE COMPLAINT

The Banking Ombudsman may reject a complaint at any stage if it

appears to him that the complaint made is;

a) Not on the grounds of complaint referred to in clause 8

or otherwise not in accordance with sub clause (3) of

clause 9; or

b )Beyond the p ecun iary ju ri sdi ct ion o f Banking

Ombudsman prescr ibed under clause 12 (5) and 12 (6)

or

c) Requiring consideration of elaborate documentary and

oral evidence and the proceedings before the Banking

Ombudsman are not appropriate for adjudication of such

complaint; or

d)With out any suff ic ient cause; or

e) That it is not pursued by the complainant with

reasonable diligence; or


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f) In the opinion of the Banking Ombudsman there is no

loss or damage or inconvenience caused to the

complainant.

APPEAL BEFORE THE APPELLATE AUTHORITY:

1) Any person aggrieved by an Award under clause 12 or

rejection of a complaint for the reasons referred to in sub

clauses (d) to (f) of clause 13,may within 30 days of the date

of receipt of communication of Award or rejection of

complaint, prefer an appeal before the Appellate Authority;

Provided that in case of appeal by a bank, the period of

thirty days for filing an appeal shall commence from the date

on which the bank receives letter of acceptance of Award by

complainant under sub. clause (6) of clause12

BANKS TO DISPLAY SALIENT FEATURES OF THE

SCHEME FOR COMMON KNOWLEDGE OF PUBLIC

2) The banks covered by the Scheme shall ensure that the

purpose of the Scheme and the contact details of the

Banking Ombudsman to whom the complaints are to be

made by the aggrieved party are displayed prominently in all

the offices and branches of the bank in such manner that a


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person visiting the office or branch has adequate information

of the Scheme.

3) The banks covered by the Scheme shall ensure that a copy

of the Scheme is available with the designated officer of the

bank for perusal in the office premises of the bank,

if anyone, desires to do so and notice about the

availability of the Scheme with such designated officer shall

be displayed along with the notice under sub-clause (1) of

this clause and shall place a copy of the Scheme on their

websites.

4) The banks covered by the Scheme shall appoint Nodal

Officers at their Regional/Zonal Offices and inform the

respective Office of the Banking Ombudsman under whose

jurisdiction the Regional/Zonal Office falls. The Nodal Officer

so appointed shall be responsible for representing the

bank and furnishing information to the Banking

Ombudsman in respect of complaints filed against the

bank. Wherever more than one zone/region of a bank

are falling within the jurisdiction of a Banking Ombudsman,

one of the Nodal Officers shall be designated as the'Principal Nodal Officer' for such zones or regions.

REMOVAL OF DIFFICULTIES


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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

APPLICATION OF THE BANKING OMBUDSMAN

SCHEMES,1995 AND2002

The adjudication of pending complaints and execution of the

Awards already passed, before coming into force of the

Banking Ombudsman Scheme, 2006,shallcontinue to be governed

by the provisions of the respective Banking Ombudsman Schemes

and instructions of the Reserve Bank issued there under.

Chp:-6 AMDMENT PASSED BY RBI FOR THE

CHANGES INBANKENING OMBUDSMAN SCHEME, 2006:

Amendment 1:

RBI expands Scope of Banking Ombudsman Scheme;

Includes Fair Banking Practices.

Date:26 Dec 2005


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The Reserve Bank of India today announced the revised Banking

Ombudsman Scheme with enlarged scope to include customer

complaints on certain new areas, such as, credit card complaints,

deficiencies in providing the promised services even by banks'

sales agents, levying service charges without prior notice to the

customer and non adherence to the fair practices code as

adopted by individual banks. Applicable to all commercial banks,

regional rural banks and scheduled primary cooperative banks

having business in India, the revised scheme will come into effect

from January 1, 2006.

In order to increase its effectiveness, the revised Banking

Ombudsman Scheme will be fully staffed and funded by the

Reserve Bank instead of the banks. Under the revised Banking

Ombudsman Scheme, the complainants will be able to file their

complaints in any form, including online. The bank customers

would also be 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, promisesgiven 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


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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 Reserve Bank had first introduced the Banking Ombudsman

Scheme in 1995to 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'sDecision.]


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Date:24 May 2007Bank 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 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


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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 BankingOmbudsman 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


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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 mentalanguish 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 complainantneed 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


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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 the areas of banking services

are insignificant in number.

Chp:-7 Policy for grievances redressal in IDBI bank

INTRODUCTION

In the present scenario of competitive banking, excellence in

customer service is the most important tool for sustained

business growth. Customer complaints are part of the business

life of any corporate entity. This is more so for banks because

banks are service organizations. As a service organization,

customer service and customer satisfaction should be the prime


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concern of any bank. The bank believes that providing prompt

and efficient service is essential not only to attract new

customers, but also to retain existing ones. This policy document

aims at minimizing instances of customer complaints and

grievances through proper service delivery and review

mechanism and to ensure prompt redressal of customer

complaints and grievances. The review mechanism should help in

identifying shortcomings in product features and service delivery.

Customer dissatisfaction would spoil banks name and image. The

Banks policy on grievance redressal follows the under noted

principles.

Customers be treated fairly at all times Complaints raised by

customers are dealt with courtesy and on time Customers are

fully informed of avenues to escalate their complaints/grievances

within the organization and their rights to alternative remedy, if

they are not fully satisfied with the response of the bank to their

complaints.

Bank will treat all complaints efficiently and fairly as they can

damage the banks reputation and business if handled otherwise.

The Bank employees must work in good faith and without

prejudice to the interests of the customer. In order to make

banks redressal mechanism more meaningful and effective, a

structured system needs to be built up towards such end. Such


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system would ensure that the redressal sought is just and fair and

is within the given frame-work of rules and regulation. The policy

document would be made available at all branches. All employees

of the Bank should be made aware about the Complaint handling

process. The customer is having full right to register his complaint

if he is not satisfied with the services provided by the bank. He

can give his complaint in writing, orally or over telephone. If

customers complaint is not resolved within given time or if he is

not satisfied with the solution provided by the bank, he can

approach Banking Ombudsman with his complaint or other legal

avenues available for grievance redressal.

INTERNAL MACHINERY TO HANDLE

CUSTOMERCOMPLAINTS/ GRIEVANCES

Customer Service Committee of the Board

This sub-committee of the Board would be responsible for

formulation of a Comprehensive Deposit Policy incorporating the

issues such as the treatment of death of a depositor for

operations of his account, the product approval process and the

annual survey of depositor satisfaction and the tri-enniel audit of

such services. The Committee would also examine any other

issues having a bearing on the quality of customer servicerendered. This Committee would also review the functioning of

Standing Committee on Customer Service. The Customer Service

Committee of the Board is responsible for the rendering of

customer service to the individual, both as a depositor and also as


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a borrower. The Committee is, therefore, responsible for

examining loan policies and service issues for the individual as a

borrower also.

Standing Committee on Customer Service

The Standing Committee on Customer Service will be chaired by

the Managing Director/ Executive Director of the Bank. Besides

two to three senior executives of the bank, the committee would

also have two to three eminent non-executives drawn from the

public as members. The committee would have the following

functions.

Evaluate feed-back on quality of customer service received

from various quarters. The committee would also review

comments/feed-back on customer service and

implementation of commitments in the Code of Banks

Commitments to Customers received from BCSBI.

The Committee would be responsible to ensure that all

regulatory instructions regarding customer service are

followed by the bank. Towards this, the committee would

obtain necessary feed-back from zonal/regional managers/functional heads.

The committee also would consider unresolved

complaints/grievances referred to it by functional heads

responsible for redressal and offer their advice.


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The committee would submit report on its performance to

the customer service committee of the board at quarterly

intervals.

Nodal Officer and other designated officials to handlecomplaints and grievances

Bank would appoint a Nodal Officer who will be responsible

for the implementation of customer service and complaint

handling for the entire bank. The bank may also appoint

such other officials as it deems necessary. To enable the

customers to voice their grievances or offer suggestions for

improvement in customer service, Customer Day is

observed at all the offices of the Bank across the

organization covering branches, Regional / Zonal Offices and

Head Office, on 15th of every month ( next day, if 15th is a

holiday or half day).In case of any complaint, the matter may

be first brought to the notice of concerned Branch

Manager for immediate redressal. If the complaint is

not redressed to the satisfaction of the customer, the matter

may be taken up with the Regional Manager / Zonal Manager


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concerned. The Bank has also nominated concerned

Regional Manager as Nodal Officer for handling the

complaint grievances in respect of the branches under their

jurisdiction. If the complainant still feels unsatisfied with

the responses received, he/she can address the complaint to

the banks Nodal Officer at Head Office designated to deal

with customers complaints / grievance giving full details of

the case.

RESOLUTION OF GRIEVANCES

Branch Manager is responsible for the resolution of

complaints/grievances in respect of customers service by the

branch. He would be responsible for ensuring closure of all

complaints received at the branches. It is his foremost duty to see

that the complaint should be resolved completely to the

customers satisfaction and if the customer is not satisfied, then

he should be provided with alternate avenues to escalate the

issue. If the branch manager feels that it is not possible at his

level to solve the problem he can refer the case to Regional or

Zonal Office for guidance. Similarly, if Regional or Zonal office

finds that they are not able to solve the problem such cases maybe referred to the Nodal Officer.

Complaints relating to non-compliance with the Code may be

referred to the Code Compliance officers, who shall ensure

speedy disposal of all such complaints.


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TIME FRAME

Complaint has to be seen in the right perspective because they

indirectly reveal a weak spot in the working of the bank.

Complaint received should be analyzed from all possible angles.

The first level of receiving complaints is at the branch. Branch

Head should try to resolve the complaint within 8 working days. In

case the customer does not receive a revert / response within 8

working days from the branch, he can escalate the complaint to

the Nodal Officer, who shall strive to revert / answer the

complaint within a period of 15 working days. If the customer

does not receive a satisfactory response from the Bank within a

period of one month, he may be provided information about how

he can take his complaint further i.e. to the Ombudsman.

Communication of Banks stand on any issue to the customer is a

vital requirement. Complaints received, which would require some

time for examination of issues involved, should invariably be

acknowledged promptly

INTERACTION WITH CUSTOMERS

The Bank recognizes that customers

expectation/requirement/grievances can be better appreciated


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through personal interaction with customers by Banks staff.

Structured customer meets, say once in a month will give a

message to the customers that the bank cares for them and

values their feedback/suggestions for improvement in customer

service. Many of the complaints arise on account of lack of

awareness among customers about bank services and such

interactions will help the customers appreciate banking services

better. As for the bank the feedback from customers would be

valuable input for revising its product and services to meet

customer requirements.

SENSITIZING OPERATING STAFF ON

HANDLINGCOMPLAINTS

Staff should be properly trained for handling complaints. We are

dealing with people and hence difference of opinion and areas of

friction can arise. With an open mind and a smile on the face we

should be able to win the customers

confidence. It would be the responsibility of the Nodal Officer to

ensure that internal machinery for handling

complaints/grievances operates smoothly and efficiently at all

levels. He should give feedback on training needs of staff atvarious levels to the HR Dept.


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Chp:-8 COMPENDIUM OF CASE HANDLED BY THE BANKING

OMBUDSMAN OFFICE

SUBJECT: Refusal to Close the Account

The complainant, Mr.XYZ was holding a current account

with ABC Bank. On11.09.1990, following a raid conducted on his

premises by the Income Tax Dept., jewellery, FDRs, cheque

books, passbooks pertaining to his bank accounts with various

banks including that with ABC Bank were seized. The credit

balance in his current account with ABC Bank at the time of

seizure of the documents wasRs.44,769.10. He stated that it

had taken thirteen years for the Income Tax Dept. to finalize his

case and to exonerate him. The Income Tax Dept. did not to

return the cheque book and passbook seized by them, as they

were not traceable. The complainant had approached the ABC

Bank for withdrawing the amount lying in his current account but

the bank refused to allow him to withdraw the amount without

cheque book and the passbook. The Income Tax Dept. by its letter

No.GIR No.V-715 dated 11.09.2003 addressed to ABC Bank

certified that during search operations

conducted in the premises of Mr.XYZ on 11.09.1990, the

department had seized a cheque book in respect of currentaccount No.929 in the name ofMr.XYZ showing a credit

balance of Rs.44,647.10 as on the date of seizure adding that

the cheque book and passbook were not readily traceable and the


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department had no objection in allowing operations in the

account by the complainant.

DECISION

When the complainant had approached the bank on12.09.2003

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 incurrentaccount 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


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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 ason11.09.1990 when

the passbook and cheque book were seized by Income Tax

authorities

ANALYSIS OF THE CASE

This case is about a customer Mr.XYZ, who is a current account

holder with the ABC Bank. Mr.XYZ was having a balance of

Rs.44,647/-in his current account when the income tax

department conducted a raid in his premises. While the

investigations the income tax department confiscated his

passbook, cheque book, FDRs and other document of all the

banks including the ABC Bank. After thirteen years the income tax

department was not able to trace his documents. So he decided

to withdraw his balance amount and close the account, but the


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bank refused to close the account without the cheque book and

the passbook.

Mr.XYZ was able to prove his statement by providing the letterfrom the income tax department mentioning that Mr. XYZs

passbook having a balance of Rs. 44,647/-as on 11.09.1990 was

misplaced by them. The bank refused to refund of the amount

lying to his credit even after showing the evidence to them.

Therefore the customer approached the Banking Ombudsman to

complaint the ignorance of the bank and to get his accountclosed. As soon as the complaint was lodged to the Banking

Ombudsman he founded that the evidence provided by the

complainant was true. So the Banking Ombudsman directed the

bank to refund the complainant the amount of Rs. 44,467/-

that was lying to his credit since11.09.1990 as per the

passbook.

CONCLUSION

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


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increasing consumer cases against the banks, which are governed

under the scheme.

In the system of Banking Ombudsman, the results are deliveredvery 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


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BIBILOGRAPHY

Annua l Rep or t by the Reserve Bank o f I ndi a

Banking Ombudsman Scheme 2007-2008.

Booklet of The Banking Ombudsman Scheme 2006.

RBI Journals.

WEBLIOGRAPHY

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


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banking ombudsman project introduction

Documents