The Banking Ombudsman Scheme was implemented by the RBI to redress the complaints of customers on certain types of banking services provided by banks and to facilitate the settlement of those complaints.
The scheme was introduced under the Banking Regulation Act of 1949 by RBI with effect from 1995. Later it was legally refined and modified through the introduction of regulations under Banking Ombudsman Scheme 2006. The latest revision was made in 2017.
Who is the Banking Ombudsman?
The Banking Ombudsman actually is a senior official appointed by the RBI to redress customer complaints against pitfalls in the stipulated banking services covered by the Banking Ombudsman Scheme 2006 (modifications were made in 2017).
As on end April 2018, twenty Banking Ombudsmen have been appointed with their offices located mostly in state capitals.
Institutions covered under the Banking Ombudsman Scheme
All Scheduled Commercial Banks, Regional Rural Banks (RRBs) and Scheduled Primary Co-operative Banks (UCBs) are covered under the Scheme.
Areas of customer redressal available with the Ombudsman mechanism
The RBI has listed around 25 areas where the customers can raise complaints with the Banking Ombudsman. Some of them are:
- Non-payment/ inordinate delay in the payment or collection of cheques, drafts, bills etc.;
- Non-payment/delay in payment of inward remittances;
- Failure/delay to issue drafts, pay orders or bankers’ cheques;
- Non-adherence to prescribed working hours;
- Refusal to open deposit accounts without any valid reason for refusal;
- Levying of charges without adequate prior notice to the customer;
- Refusal/delay in closing the accounts;
- Non-observance of Reserve Bank guidelines on engagement of recovery agents by banks;
Procedure for making complaint with Banking Ombudsman
A bank customer can file a complaint with the Banking Ombudsman simply by writing on a plain paper or through online. The customer can file a complaint with the Banking Ombudsman in the following grounds:
- the bank fails to provide reply to the customer’s complaint in one month
- the bank rejects the complaint,
- the complainant is not satisfied with the reply given by the bank.
Limit on the amount of compensation
As per the present regulations, the ombudsman redressal is allowed for complaints where the compensation amount for any loss suffered by the complainant is limited to Rs 20 lakh. Similarly, the Banking Ombudsman may award compensation not exceeding Rs 1 lakh to the complainant for mental agony and harassment. The Banking Ombudsman will consider the loss of the complainant’s time, expenses incurred by the complainant, harassment and mental anguish suffered by the complainant while passing the compensation.
Ombudsman Scheme for Non-Banking Financial Companies, 2018
The RBI introduced an NBFC Ombudsman scheme to redress complaints with regard to NBFCs in 2018.
The NBFC Ombudsman is a senior official appointed by the RBI to redress customer complaints against NBFCs for deficiency in certain services covered under the grounds of complaint specified under Clause 8 of the Scheme. Four NBFC Ombudsman have been appointed with their offices located at Chennai, Kolkata, New Delhi and Mumbai.