What do you know about Banking Ombudsman? - Banking Info for Exams

Banking Ombudsman

Banking Ombudsman is a quasi-judicial authority, which functions under India’s Banking Ombudsman Scheme 2006. It was created by Government of India with a purpose to deal with the complaints of customers of the banks related to various services rendered by the banks.
Banking Ombudsman Scheme is a mechanism created by the RBI to address the complaints raised by bank customers. It is run by the RBI directly to ensure customer protection in the banking industry.
All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.

Appointment & Tenure

• Earlier RBI used to appoint reputed persons from banking, finance, management, legal etc. sectors as Banking Ombudsmen (BO).
• But now RBI has reserved this BO post for its own Chief General Managers and General Managers.
• Tenure: 3 years at a time.
• Reappointment: yes possible.

When a customer can approach the Ombudsman?

A customer can file a complaint before the Banking Ombudsman if the bank doesn’t gives a reply to the customer within a period of one month or the bank rejects the complaint, or if the complainant is not satisfied with the reply by the bank.

Following are some of the service deficiencies by banks to customers 

• 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 for charging 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

You can’t approach BO in following situations

• Matter is higher than Rs.10 lakh.
• If the matter is pending before any other court, tribunal, forum then you cannot approach BO.
• If any other court, tribunal, forum has already passed an order on the same matter.
• You cannot approach BO for frivolous or vexatious complaints (e.g. AC or water cooler was off when I went to the branch. Someone jumped the queue but security guard did nothing….)

Punishment

• Banking Ombudsman (BO) can order the Bank to compensate the actual money loss OR Rs.10 lakh (whichever is lower).
• In case of Credit card related cases, BO can order the bank to pay additional fines (upto Rs.1 lakh) for the mental harassment caused to the customer.