Banking Ombudsman

Many of us have faced frustrating situations like these with the bank officials. Probably,
for an extra levy of bank charges, inaccurate reflection of TDS in our Form 26AS and
so on. In spite of continuous follow up with the Bank Authorities, our grievances remain
unresolved.

The question is what do we do in such situations? Do we simply keep quiet and allow the
bank officials to continue charging us?

Let’s now review the customer redressal mechanism applicable to the banking industry.

If a customer is unhappy with the services provided by the Bank, the customer has
every right to complaint to the grievance cell of the Bank. In case, the Bank does not
take action, then the customer can raise the issue with the Internal Ombudsman of the
relevant bank. The RBI has also taken steps to strengthen the Internal Ombudsman
and make them more independent. However, many customers feel that even though
the Bank has a grievance system and an Internal Ombudsman, many of their
complaints remain unresolved and they will be forced to approach the external
Banking Ombudsman.

The next question is on being unhappy with the services provided by the Bank, can I
directly lodge a complaint with the Banking Ombudsman instead of raising a complaint
with the grievance cell?

The answer to it is “NO”. A customer can file a complaint with the Banking
Ombudsman only if he has not received a reply after one month from the time he has
raised a complaint with the concerned bank. Further, if he is not satisfied with the
reply given, the customer can proceed to the Banking Ombudsman

What is Banking Ombudsman?

Banking ombudsman, a quasi-judicial authority is formed with an intent to resolve the
complaints of the customers of the Bank.
Section 35A of the Banking Regulation Act, 1949 deals with Banking Ombudsman
Scheme. It came into effect in 1995 and presently the Banking Ombudsman Scheme
2006 is in operation.
The scheme covers not just scheduled Commercial Banks but also Regional Rural Banks
and Scheduled Primary Co-operative Banks. Recently, RBI also extended the concept
of Banking Ombudsman to NBFC’s as well.
What complaints can one lodge with the
Banking Ombudsman?
An unhappy customer can lodge a complaint with the Banking Ombudsman with
respect to the following banking services

 Non-payment or unreasonable delay in the payment /collection/ issue of

cheques, drafts, bills etc.;
 Non-acceptance, without sufficient cause, of small denomination notes and
coins tendered for any purpose, and for charging of commission in respect
thereof;
 Non-payment or delay in payment of inward remittances;
 Non-adherence to prescribed working hours;
 Delay/failure to provide any banking facility (other than loans and advances)
which has been promised in writing by the Bank
 Delay/ non-credit of proceeds to the respective parties’ accounts,
non-payment of deposit or non-observance of the RBI directives, with respect
to the rate of interest on bank deposits
 Complaints from NRIs having accounts in India in relation to their remittances
from abroad, deposits and other bank related matters;
 Refusal to open deposit accounts without any valid reason for this refusal;
 Levying charges without adequate prior notice to the customer;
 Non-adherence to RBI instructions on ATM / Debit Card /Prepaid Card /
Credit Card operations in India by the bank or its subsidiaries
 Non-adherence to RBI instruction with regard to Mobile Banking / Electronic
Banking service in India.
 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);
 Refusal to accept or delay in accepting payment towards taxes, as asked by
Reserve Bank/Government;
 Failure /Delay with regard to the issue, service or redemption of Government
securities;
 Forced closure of deposit accounts without any notice or without giving
sufficient reason;
 Refusal to close or delay in closing accounts;
 Not following the fair practices code as adopted by the bank;
  Non-observance of Reserve Bank guidelines on engagement of recovery agents
by banks;
 Non-adherence to RBI guidelines on allied-banking activities like sale of
insurance or mutual fund or other investment products by banks
 Any other matter relating to the violation of RBI directives

Regarding loans and advances, complaints with respect to the following areas can be
lodged:

 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;
 Not accepting application for loans without furnishing valid reasons to the
applicant; and
 Non-observance of any other direction or instruction given by the Reserve Bank
as may be specified by the RBI for this purpose from time to time.

Can my complaint be rejected by the

Ombudsman?
Yes, a complaint can be rejected by the ombudsman if:

1. The Bank has not been approached for redressal of the grievance.
2. No complaint has been made within one year from the date of receipt of the
reply of the bank or if no reply is received, and, the complaint to Banking
Ombudsman is made after the time period of one year and one month from
the date of complaint to the bank.
3. The subject matter of the complaint is pending for disposal / has already been
dealt with at another forum
4. Frivolous or vexatious complaints.
5. If the complaint has the same subject matter that was settled in the past
through the office of the Banking Ombudsman in any proceedings.

What is the procedure for filing complaint

with the Banking Ombudsman?
As the first point, there is no cost involved while filing a complaint with the Banking
ombudsman
 1. A complaint can be registered with the Banking Ombudsman online

 Visit the following address:

https://secweb.rbi.org.in/BO/precompltindex.htm

1. Following questions will be asked:

2. Have you made a written complaint to the bank? YES/ NO
3. If yes, whether 30 days are over from the date of lodging the complaint? YES /
NO
4. If the above two questions are answered YES, then the following details are
required:

o Bank Name
o Account No
o Complainant Name
o Mobile No

Once the details are filled, the website is redirected to the complaint form.

The applicable Banking Ombudsman office under whose jurisdiction the case is
applicable needs to be selected

There is also an option to upload documents as evidence against the concerned bank.

2. The complainant can be filed by an authorized representative (other than an

advocate).

Points to remember
 Limit on the amount of compensation (Award): The amount, to be paid by the
bank to the complainant (The person registering the complaint) by way of
compensation for any loss suffered by the complainant is the lower of

o Loss suffered due to any act or omission of the Bank

o ₹ 20 lakhs (₹ Two Million)
 In case of mental agony and harassment: The Banking Ombudsman may award
compensation not exceeding ₹1 lakh (₹ One Hundred Thousand) to the
complainant. While passing an award (giving compensation), the Banking
Ombudsman will consider the following factors

o Time lost by the complainant

 o Expenses incurred by the complainant
o Harassment and mental agony suffered by the complainant
 After a receipt of complaint, the Banking Ombudsman will try to settle the
complaint through conciliation (agreement) between the aggrieved parties. If a
complaint is not settled by an agreement within a period of one month, the
Ombudsman proceeds to pass an award. However, before doing so, reasonable
opportunity of being heard is given to the complainant and the Bank.
 If one is unhappy with the decision of the Banking Ombudsman, an option is
given to file an appeal with the Appellate Authority within a period of 30 days
from the date of the receipt of award. Further, if the Appellate Authority is
satisfied an extension of another 30 days may be given.