Amended Banking Ombudsman Scheme 2017

Updated on 09.07.2017 to include amended Ombudsman scheme vide RBI notification CEPD. PRS. No. 6317 /13.01.01/2016-17 dated June 16, 2017. The amendments in the scheme shall come into force from July 1, 2017.

A banking ombudsman is essentially an independent arbitrator who will fairly resolve the complaints/disputes in bank service.  The scheme virtually covers all banking transaction-related grievances except credit decisions of the banks.  Quote some of the grounds for complaints/deficiencies by a customer against bank services can be credit card complaints, internet banking, deficiencies in providing promised services by both bank and its sales agents, levying service charges such as levying foreclosure charges/pre-payment penalties on all floating rate home loans/all floating rate loans or levying SMS charges on actual usage basis or levying penal charges on non-maintenance of minimum balances in inoperative accounts, on disbursement or delay in disbursement of pension, non-adherence to Fair Practices Code (BCSBI) adopted by individual banks etc.

The complaints may also be related to non-adherence to prescribed working hours, refusal to accept or delay in accepting, payments towards taxes, refusal to issue/delay in issuing or failure to service or delay in servicing, or redemption of government securities, refusal to close or delay in the closing of accounts, deficiencies arising out of the sale of insurance/ mutual fund/ other third party investment products by banks etc. Under the amended Scheme, a customer would also be able to lodge a complaint against the bank for its non-adherence to RBI instructions about Mobile Banking/ Electronic Banking services in India, viz. delay or failure to effect online payment / Fund Transfer, unauthorized electronic payment / Fund Transfer, etc. The complaint can be related to non-acceptance of loan applications without furnishing valid reasons to the applicant and delays in sanction, disbursement, or non-observance of prescribed schedule for disposal of loan applications, non-observance of RBI directives on interest rates; on engagement of recovery agents by bank, wrong reporting of credit information to  Credit  Information Bureau, delay or failure to review and correct the credit status on account of wrongly reported credit information to   Credit Information Bureau. etc.

GROUNDS OF COMPLAINT (including those on the grounds of complaints listed in Clause 8 of the Banking Ombudsman Scheme, 2006).

(1) Any person may file a complaint with the Banking Ombudsman having jurisdiction on any one of the following grounds alleging deficiency in banking including internet banking or other services.

(a). non-payment or inordinate delay in the payment or collection of cheques, drafts, bills, etc.;

(b). non-acceptance, without sufficient cause, of small denomination notes tendered for any purpose, and for charging of commission in respect thereof;

(c). non-acceptance, without sufficient cause, of coins tendered and for charging of commission in respect thereof;

(d). non-payment or delay in payment of inward remittances;

(e). failure to issue or delay in issue of drafts, pay orders, or bankers’ cheques

(f). non-adherence to prescribed working hours;

(g). failure to provide or delay in providing a banking facility (other than loans and advances) promised in writing by a bank or its direct selling agents;

(h). delays, non-credit of proceeds to parties’ accounts, non-payment of deposit or non-observance of the Reserve Bank directives, if any, applicable to rate of interest on deposits in any savings, current or other account maintained with a bank;

(i). complaints from Non-Resident Indians having accounts in India about

their remittances from abroad, deposits, and other bank-related matters;

(j). refusal to open deposit accounts without any valid reason for refusal;

(k). levying of charges without adequate prior notice to the customer;

(k). levying of charges without adequate prior notice to the customer;

(l). non-adherence to the instructions of Reserve Bank on ATM /Debit Card and Prepaid Card operations in India by the bank or its subsidiaries on any of the  following;

1. Account debited but cash not dispensed by ATMs
2. Account debited more than once for one withdrawal in ATMs or POS transaction

iii. Less/Excess amount of cash dispensed by ATMs

1. Debit in an account without use of the card or details of the card
2. Use of stolen/cloned cards
3. Others

(m). non-adherence by the bank or its subsidiaries to the instructions of the Reserve Bank on credit card operations on any of the following:

(n). non-adherence to the instructions of the Reserve Bank about Mobile Banking / Electronic Banking services in India by the bank on any of the following:

1. delay or failure to effect online payment / Fund Transfer,
2. unauthorized electronic payment / Fund Transfer,

(o). 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 about its employees);

(p). refusal to accept or delay in accepting payment towards taxes, as required by Reserve Bank/Government;

(q). refusal to issue or delay in issuing, or failure to service or delay in servicing or redemption of Government securities;

(r). forced closure of deposit accounts without due notice or sufficient reason;

(t). non-adherence to the fair practices code as adopted by the bank;

(u). non-adherence to the provisions of the Code of Bank’s Commitments to Customers issued by the Banking Codes and Standards Board of India and as

adopted by the bank ;

(v). non-observance of Reserve Bank guidelines on engagement of recovery agents by banks;

(w). non-adherence to Reserve Bank guidelines on para-banking activities like the sale of insurance /mutual fund /other third-party investment products by banks about the following:

1. improper, unsuitable sale of third-party financial products
2. non-transparency /lack of adequate transparency in sale

iii. non-disclosure of grievance redressal mechanism available

1. delay or refusal to facilitate after-sales service by banks

(x). any other matter relating to the violation of the directives issued by the

Reserve Bank about banking or other services.

2. Any one of the following grounds alleging deficiency in banking service in respect of loans and advances may be filed with the Banking Ombudsman having jurisdiction:

(a) non-observance of Reserve Bank Directives on interest rates;

(b) Delays in sanction, disbursement, or non-observance of prescribed schedule for disposal of loan applications;

(c) Non-acceptance of application for loans without furnishing valid reasons to the app reasons to the applicant; and

(d) non-adherence to the provisions of the fair practices code for lenders as adopted by the bank or Code of Bank’s Commitment to Customers, as the case may be;

(f) Non-observance of any other direction or instruction of the Reserve Bank as may be specified by the Reserve Bank for this purpose from time to time

(3) The Banking Ombudsman may also deal with such other matters as may be specified by the Reserve Bank from time to time on this behalf.

Non-entertainment of complaints:

The Banking Ombudsman is not entertaining any complaint unless (a) the complainant had, before making a complaint to the Banking Ombudsman, made a written representation to the bank and the bank had rejected the complaint or the complainant had not received any reply within one month after the bank received his representation or the complainant is not satisfied with the reply given to him by the bank; (b) the 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.

The limits of compensation:

The Banking Ombudsman does not have the power to pass an award directing payment of an amount that is more than the actual loss suffered by the complainant as a direct consequence of the act of omission or commission of the bank, or ten lakh (one million) rupees whichever is lower. In the latest amendment, the pecuniary jurisdiction of the Banking Ombudsman to pass an Award has been increased from existing rupees one million to rupees two million. Compensation not exceeding rupees one lakh (100,000) can also be awarded by the Banking Ombudsman to the complainant for loss of time, expenses incurred as also, harassment, and mental anguish suffered by the complainant.

Appeal: The procedure for complaints settled by agreement under the Scheme has also been revised. The appeal has now been allowed for the complaints closed under Clause 13 (c) of the existing Scheme relating to rejection which was not available earlier. The appellate authority for the Banking Ombudsman Scheme is the Deputy Governor of the Reserve Bank of India.

The Reserve Bank of India introduced the Banking Ombudsman Scheme (BOS) in India on June 14, 1995.          The scheme provides a speedy and inexpensive platform to resolve the complaints of bank customers relating to deficiency in banking service. There are 15 offices of Banking Ombudsmen across the country. The customers of Commercial Banks, Regional Rural Banks, and Scheduled Primary Co-Operative Banks, may file a complaint with the Banking Ombudsman of their jurisdiction alleging deficiency in banking services. Reserve Bank of India operates the Ombudsmen Scheme free of cost to make it accessible to all.

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