Banking Ombudsman is a quasi-judicial body established under the Banking Regulation Act, 1949 by the Reserve Bank of India (RBI) to redress the grievances of the customers regarding certain banking services. Currently, the Banking Ombudsman Scheme 2006 is in force.

Why do we need a separate quasi-judicial body when we already have the RBI and the Consumer Disputes Redressal Forums?

The Reserve Bank of India (RBI), which had been providing relief to the consumers, was flooded with complaints regarding services provided by the bank. These complaints had to be sent to the respective banks and they were asked to submit a response for the same. The banking sector was constantly under criticism, as to whether these complaints have been redressed or not.

To put an end to RBI’s sustained anxiety towards the improvement of customer services in banks, the ‘Narasimhan’ Committee on “Banking and Financial Sector Reforms” examined these critical areas and recommended the introduction of the “Banking Ombudsman Scheme 1995” as a part of Financial Sector Policy and Systems Reforms 1991-92 to 1995-96. This proposed scheme finally took shape during the next decade and came into effect in 2006.

Prime features of the Banking Ombudsman Scheme, 2006

• On the basis of an RTI response received by us, primarily a grievance against a specific bank needs to be lodged with the concerned bank branch. If the customer is not satisfied with the reply or resolution, a complaint can be lodged with the Nodal Officers/Principle Nodal Officers at Controlling Office/Head Office of the bank branch, appointed under the Banking Ombudsman Scheme, 2006. If the complaint is not redressed within a month by the Nodal Officer, the office of the Banking Ombudsman can be approached. 
• The complaint to the Banking Ombudsman under whose jurisdiction the bank branch is situated can be submitted by a handwritten application or online here or through Email.
• All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme. Non-scheduled banks which are not listed in the Second Schedule of the Reserve Bank of India Act, 1934 do not comply with the provisions of the RBI Act and hence, cannot be covered the ambit of the Banking Ombudsman Scheme.
• The Banking Ombudsman shall exercise the duty of a conciliator, mediator or arbitrator for the settlement of the complaint and pass an award to the satisfaction of the aggrieved.
• A bank not agreeing to accept the award given by the Banking Ombudsman can file a review with the reviewing authority within one month from the date of receipt of the award.

When can you file a complaint with the Banking Ombudsman?

As asserted by Clause 8 of the Banking Ombudsman Scheme 2006, a complaint can be lodged for any deficiency in banking services or for any violation of the RBI directives such as:

• Non-payment or irrational delay in the payment or collection of cheques, drafts, bills etc. and payment of inward remittances.
• Non-acceptance, without sufficient cause, of small denomination notes and coins tendered for any purpose, and for charging of commission in respect thereof.
• Failure to issue/provide or delay in issue/providing of any banking facility promised by the bank or its direct selling agent in writing such as drafts, pay orders or bankers’ cheques.
• Non-adherence to the prescribed working hours or provisions of the Code of Bank’s Commitments to Customers issued by BCSBI and as adopted by the bank or any RBI guideline/instructions/directives.
• Refusal to open deposit accounts, for any valid reason or levying charges without prior notice or refusal to close or delay in closing the accounts or forced closure of accounts without sufficient notice.
• Complaints from Non-Resident Indians having accounts in India in relation to their remittances from abroad, deposits and other bank-related matters.
• Non-disbursement or delay in disbursement of pension.
• Refusal to accept or delay in accepting payment towards taxes, as required by Reserve Bank/Government or redemption of any other Government securities.
• Non- acceptance or delay in sanction, disbursement or non-observance of prescribed time schedule of loan applications.

When can a complaint be rejected?

A complaint can be rejected on the ground that the complainant has not approached the bank first or one year has passed from the day of receipt of the reply from the bank or the complaint is pending for disposal at any other forum or any such reason.  The complaint can also be rejected if it seems to be frivolous or if the subject matter is not mentioned in Clause 8 of the scheme. More details can be found here.

Code of Bank’s Commitment to Customers

Unlike the Banking Ombudsman Scheme, the Code of Bank’s Commitment to Customers’ by Banking Codes and Standards Board of India (BCSBI) is a set of banking best practices by the banks. It does not replace or supersede the guidelines issued by the RBI but complements them. A list of DOs and DON’Ts have also been added to the code to aware consumers regarding the security measures to be taken care of while opting for digital transactions. The code promotes ‘limited liability’ concept for unauthorized electronic transactions.

The relevance of BOS 2006 & ATM Frauds

As per the RBI guidelines dated July 06, 2017,  a bank is liable to credit the amount lost by a customer via shadow reversal within ten days in cases of ATM frauds involving cloning of a customer’s debit/credit card. This liability is absolute if the customer reports unauthorised transactions within three days of being informed by the bank. The concerned bank has to carry out an internal investigation to establish the identity of the person who has withdrawn using the cloned debit cards. Once it is proved in the internal investigation that the withdrawals have not been carried out by the applicant, the amount thus credited via shadow reversal shall be cleared. (Amount credited via shadow reversal is shown as uncleared balance)

When a bank rejects this application or does not respond within 30 days, the customer has to approach the Nodal Officer of the concerned bank. When this application is either rejected by the nodal officer or there is no response from his office within 30 days, the recourse available with the customer is to approach the Ombudsman appointed by the RBI. The Ombudsman analyses the facts of the case and passed an appropriate order. An appeal against the order passes by the Ombudsman can also be filed by the customer.

In case you have been a victim of an ATM Card Fraud, the posts given below will definitely help you. Moreover, feel free to get in touch with us via contact@cyberblogindia.in.

• ATM Frauds – 5 things a victim should do!
• Money Fraudulently taken from Bank Account- What to do?
• All You Need To Know About Credit Card Fraud
• Watchout when Swiping Cards at POS machines
• Financial Cyber Crime: How the system is failing the victims