Banking Ombudsman Scheme Explained for JAIIB, DBF Exams 2020

Banking Ombudsman Scheme

  • Banking Ombudsman Scheme is an expeditious and inexpensive form to bank customer for resolution of complaints relating to certain services offered by banks. 
  • Created under section 35 of BR Act,1949.
  • Started in 1995
  • Revamped and amended in 2006
  • Further amendment in 2009
  • A customer can complain against bank if bank provoke fair practice code for lenders or the code of bank’s commitment to customer issued by BCSBI.
  • Banking Ombudsman offices -22 locations (Sate capital)   
  • All scheduled commercial banks, RRBs and Scheduled primary co-operative banks are covered under the scheme

 APPOINTMENT & TENURE:

  • Reserve Bank may appoint one or more of its officers in the rank of Chief General Manager or General Manager to be known as Banking Ombudsmen.
  • Appointment of Banking Ombudsman may be made for a period not exceeding 3 years at a time
  • Banking Ombudsman shall send to the Governor, Reserve Bank, a report, as on 30th June every year.

Types of complaints handled by the banking ombudsman:

  • 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 for this service
  • Non-acceptance, without sufficient cause, of coins tendered and for charging of commission for this service
  • Non-payment or delay in payment of inward remittances
  • Failure to issue or delay in issue, of drafts, pay orders or bankers’ cheques

Types of complaints handled by the banking ombudsman:

  • Refusal to open deposit accounts without any valid reason for refusal;
  • Levying of charges without adequate prior notice to the customer;
  • Refusal to accept or delay in accepting payment towards taxes, as required by Reserve Bank/Government;
  • Forced closure of deposit accounts without due notice or without sufficient reason

Types of complaints handled by the banking ombudsman:

  • Refusal to close or delay in closing the accounts;
  • Deficiency in Internet banking services
  • Any other matter relating to the violation of the directives issued by the Reserve Bank in relation to banking or other services.

Types of complaints handled by the banking ombudsman:

  • Non-adherence to the instructions of Reserve Bank on ATM /Debit Card and Prepaid Card operations in India by the bank
    i. Account debited but cash not dispensed by ATMs
    ii. Account debited more than once for one withdrawal in ATMs or for POS transaction
    iii. Less/Excess amount of cash dispensed by ATMs
    iv. Debit in account without use of the card or details of the card
    v. Use of stolen/cloned cards
    vi. Others

Types of complaints handled by the banking ombudsman:

  • Bank on credit card operations
  1. Unsolicited calls for Add-on Cards, insurance for cards etc.
  2. Charging of Annual Fees on Cards issued free for life
  3. Wrong Billing/Wrong Debits
  4. Threatening calls/ inappropriate approach of recovery by recovery agents including non-observance of Reserve Bank guidelines on engagement of recovery agents
  5. Wrong reporting of credit information to Credit Information Bureau v
  6. Delay or failure to review and correct the credit status on account of wrongly reported credit information to Credit Information Bureau.

PROCEDURE FOR FILING COMPLAINT:
Any person who has a grievance against a bank himself or through his authorised representative (other than an advocate), make a complaint to the Banking Ombudsman.

No complaint to the Banking Ombudsman shall lie:

  • Complaint is made not later than one year after the complainant has received the reply of the bank to his representation or, where no reply is received, not later than one year and one month after the date of the representation to the bank

SETTLEMENT OF COMPLAINT BY AGREEMENT:

  • Banking Ombudsman shall send a copy of the complaint to the branch or office of the bank named in the complaint
  • Endeavour to promote a settlement of the complaint by agreement between the complainant and the bank through conciliation or mediation.

AWARD BY THE BANKING OMBUDSMAN:

  • If a complaint is not settled by agreement within a period of one month from the date of receipt of the complaint or such further period as the Banking Ombudsman may allow the parties.
  • If bank pay compensation the amount will be Rs. 20 lakhs, which is lower.
  • Banking Ombudsman may award compensation not exceeding Rs. 1 Lakh loss of the complainant’s time, expenses incurred by the complainant, harassment and mental agony suffered by the complainant.
  • A copy of the Award shall be sent to the complainant and the bank
  • An award shall lapse, complainant furnishes to the bank concerned within a period of 30 days from the date of receipt of copy of the Award, a letter of acceptance of the Award in full and final settlement of his claim.

Appeal against the order passed by the banking ombudsman:

  • If any one not satisfied with decision passed by banking ombudsman, one can appeal
  • To appellate authority (Deputy Governor of RBI) within 30 days
  • Appellate Authority may, if he is satisfied that the applicant had sufficient cause for not making the appeal within time, allow a further period not exceeding 30 days

Watch the video by expert faculty to understand the Banking Ombudsman Scheme:

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