RBI notified the banking ombudsman scheme 2006 (on Dec 26, 2005), in partial modification of its banking ombudsman scheme 2002 to enlarge the extent and scope of the authority and the extent and scope of the authority and functions of the ombudsman, u/s 35 A of banking regulation Act, 1949. The scheme that came into force wef Jan 01, 2006 covers all commercial banks, regional rural banks and scheduled primary co – operative banks.

Objective: to facilitate the resolution of complaints relating to banking services through conciliation and mediation between the bank and the aggrieved parties OR by passing an award.

Who can be ombudsman: CGM / GM of RBI (not exceeding 3 years at a time). The cost is borne by RBI.

Who can file a complaint: A person himself / his authorised representative (other than an advocate) can file the complaint on paper OR through electronic media (eMail) OR forwarded by RBI or central Govt.

Jurisdiction: For credit card, the jurisdiction is with reference to ombudsman having jurisdiction over the billing address of the card holder. For other accounts, it is as per location of the branch.

Conditions: complaints can be made when:

a: the complaint was made to the bank and bank had rejected it OR no reply was received within a period of one month OR the complainant is not satisfied with the reply given by the bank;

b: period of more than one year has not lapsed after receipt of bank reply.

c : the complaint is not for issues already settled / dealt with ombudsman OR for which proceedings before court, tribunal or arbitrator or any other forum is pending or a decree or award or order has been passed;

d: the complaint is within limitation period under Indian Limitation Act 1963

Rejection of complaint by ombudsman

Rejection can be at any stage if it appears to be frivolous, vexatious, malafide ; OR without sufficient cause ; OR not  pursued by the complainant with diligence ; OR there is no loss or damage or inconvenience caused to the complainant; OR is beyond the pecuniary jurisdiction of Ombudsman.

Customer can appeal against grounds of rejection to Appellate Authority within 30 days of receipt of communication regarding rejection.

Process of redressal of grievance

By sending copy of the compliant to the bank, endeavour shall be made for a settlement by agreement through conciliation or mediation. The proceedings shall be summary in nature.

Award by the ombudsman

Where a complaint could not be settled by agreement within a period of one month from the date of receipt of the complaint, ombudsman may pass an award or reject the complaint, on the basis of evidence, the principles of banking law and practise and RBI directions and guidelines.

Award & Compensation: Award shall specify the amount of compensation, if any, to be paid by bank, not more than actual loss suffered as direct consequence of act of omission or commission of the bank OR Rs. 10 lac, whichever is lower. A copy of the award shall be sent to the complainant and the bank.

Effect of award: award shall be binding on a bank only if the complainant sends acceptance of in full and final settlement, within 30 days from the date of receipt of the award.

Implementation: customer is to send acceptance of the award within 30 days of date receipt of the award. Bank is to implement the award within one month from the date of receipt of the acceptance from the complainant and intimate compliance to the banking ombudsman.

Appeal: the customer can file an appeal to appellate authority (Dy. Governor RBI) within 30 days of date of receipt of award (which could be extended by 30 days by appellate authority).

The appeal by banks should be filed with sanction of the CMD / ED / CEO. For banks 30 days period for filling appeal begins from date of receipt of customer`s acceptance. The appellate authority may dismiss/allow the appeal; OR set abside the award; OR remand the matter to ombudsman for fresh disposal OR modify the award or pass any order as it may deem fit.

Nodal officers: the banks shall appoint nodal officers at their  RO/ ZO and inform the okmbudsman, who shall represent the bank /furnish information to the ombudsman.

Non – implementation to the ombudsman.

Non – implementation of awards

Banks are to ensure that the awards are implemented immediately. Banks are to place all the awards before the committee to enable them to address issues of systemic. Deficiencies existing in address issues of systemic deficiencies existing in banks, if any, brought out by the awards.

Further, banks are to place all the awards remaining unimplemented for more than 3 months, before the customer service committee to the board such delays in implementation without valid reasons and for initiating necessary remedial action.

Disclosure: Banks to disclose the information in its balance – sheet for non – implementation of the award.

Ground of complaint

A complaint may relate to following aspects including loans and advances alleging deficiency in banking or other services:

1. non- payment or inordinate delay in the payment or collection of cheques, drafts, bills etc.,

2. non – acceptances, of small denomination notes tendered for any purpose, and for charging of commission in respect thereof;

3. non – acceptance without sufficient cause, of coins tendered and for charging of commission in respect thereof;

4. non – payment or delay in payment of inward thereof;

5. failure or delay to issue of drafts, pay orders or banker`s cheques;

6. non- adherence to prescribed working hours ;

7. failure / delay to provide a banking facility (other than loans) promised in writing by a bank or its direct selling agents.

8. delays, non – credit of proceeds to parties` accounts, non – payment of deposit or non – observance of RBI directives , applicable to rate of interest on deposits in any savings, current or other a/c

9. delays in receipt of export proceeds, handing of export bills etc ., for exporters provided the said complaints pertain to the banks operations in India;

10. complaints from NRIs having a/c in India;

11. refusal to open deposit a/c without any valid reason ;

12. non-adherence by the bank or its subsidiaries to the instructions of RBI on ATM/Debit card operations or credit card operations;

13. non-disbursement or delay in disbursement of pension ( to the extent the grievance can be attributed to the action on the part of the bank concerned, but not with regard to its employees;

14. refusal to accept or delay in accepting payment towards taxes, as required by reserve bank / government;

15. refusal to issue or delay in issuing, or failure to service or delay in servicing or redemption of government securities;

16. forced closure of deposit a/c without due notice / sufficient reason;

17. refusal to close or delay in closing the accounts;

18. non – adherence to fair practise code as adopted by the bank;

19. Internet payments

Complaints pertaining to loans and advances

1. non – observance of RBI directives on interest rates;

2. delays in sanction, disbursement or non-observance of time schedule for disposal of loan applications;

3. non – acceptance of application without furnishing valid reasons

4. non – observance of any other direction of RBI.