Project Report

On

“THE BANKING OMBUDSMAN”

Bachelor of Commerce

Banking & Insurance

Semester – V

Submitted By

FREDDY SAVIO D’SOUZA

Roll No. 45

BIRLA COLLEGE OF ARTS, SCIENCE & COMMERCE

Murbad Road Kalyan (W)

UNIVERSITY OF MUMBAI

(2009-2010)
 Project on

“THE BANKING OMBUDSMAN”

Bachelor of Commerce

Banking & Insurance

Semester – V

(2009-2010)

Submitted

In partial fulfillment of requirement for the Award of Degree of

Bachelor of Commerce (Banking & Insurance)

By

FREDDY SAVIO D’SOUZA

Roll No. 45

BIRLA COLLEGE OF ARTS, SCIENCE & COMMERCE

Murbad Road Kalyan (W)

BIRLA COLLEGE OF ARTS, SCIENCE, & COMMERCE, KALYAN

(Conducted by Kalyan Citizens’ Education Society)

(Affiliated by University of Mumbai)

BACHELOR OF BANKING AND INSURANCE

CERTIFICATE

This is to certify that MR. FREDDY SAVIO D’SOUZA of T.Y.B.Com.

Banking & Insurance (V Semester) has successfully completed the project
on “THE BANKING OMBUDSMAN”, under the guidance of
MS. HEMA TAHILRAMANI.

Project Guide Principal

Course Co-ordinator

Internal Examiner

External Examiner
 TO WHOM IT MAY CONCERN

This is to certify that Mr. Freddy Savio D’souza, Student of Birla

College, Kalyan (West), pursuing Bachelor of Commerce (Banking
& Insurance), fifth semester, had visited our bank situated at Kalyan.
He had successfully completed his Project on “The Banking
Ombudsman”. We wish him best luck for his future.

Akshai Kumar,
Asst. Manager,
IDBI Bank Ltd.
Kalyan

Nivara Complex, Opposite Mahalakshmi Temple, Tilak Chowk, Kalyan (West), Thane 421301.
Tel.: 91-0251-2203327. Fax: 91-0521-2201738
IDBI Tower, WTC, Complex, Cuffe Parade, Mumbai 400 005. Website: www.idbi.com
 DECLARATION

I, MR. FREDDY SAVIO D’SOUZA, student of T.Y.B.Com (Banking &

Insurance) Semester V (2009-2010) hereby declare that I have completed the
project on “BANKING OMBUDSMAN”.

I further declare that the information contained in this project report is

genuine, true & fair to the best of my knowledge.

Signature of Student
(Mr. Freddy Savio D’souza)
 ACKNOWLEDGEMENT

Its gives me immense pleasure to present this project on

“THE BANKING OMBUDSMAN”

It is the most pleasant part of any project to express gratitude towards all those
who helped me out to complete this project.

My deepest thanks to my project guide Prof. Hema Tahilramani for guiding and
correcting various documents of mine with attention and care. She has taken pain
to go through the project and make necessary correction as and when needed.

I equally wish to extend my appreciation and thanks to Mrs. Bhanu Vasudevan

the Assistant General Manager of the Banking Ombudsman who provide me
valuable information as the guidance of my project.

I thank Mr. Anil Narkende the Branch Manager of IDBI Bank, Kalyan Branch
for being instrumental in the completion of the project with his complete guidance.

I would be failing in my duty if I do not mention here the tremendous cooperation

and support I received from my family members in the completion of this book.

I would also like to thank to all those who supported me directly or indirectly in
completing this project.
 INDEX

Ch. No. Content Page No.

Executive Summary

Preface

1. Introduction to Banking 01-09

Types of Banks

Grievance Redressal

2. Introduction to Banking Ombudsman 10-19

Duties, & Functions

Types of Ombudsman

3. Banking Ombudsman Scheme 20-33

4. The Consumer Protection Act, 1986 34-40

5. Banking Ombudsman Scheme, 2006 41-56

6. Difference Between Banking Ombudsman Scheme 57-64

1995, 2002 & 2006

7. Policy for Grievance Redressal in IDBI Bank 65-70

Case Study 71-73

Conclusion 74

Bibliography

Wibliography

Annexure ‘A’

Annexure ‘B’
 EXECUTIVE SUMMARY

The aim of this project is to introduce the reader to the topic of “THE BANKING
OMBUDSMAN”. The project also deals with the policy adopted by the RBI and
the excess of case laws.

The ability of the banking industry to achieve the socio-economic objectives and
in the process bringing more and more customers into its fold will ultimately
depend on the satisfaction of the customers. Banks have a strong belief that a
satisfied customer is the foremost factor in developing our business.

This project is focused in understanding the essentiality of the Banking

Ombudsman in regards to the public interest and the interest of the banking
policies to enable resolution of complaints related to deficiency in banking
services.

Sensing the need for a easy, expeditious and inexpensive mechanism for redressal
of unresolved grievances of customers, the RBI initially formulated the Scheme of
Ombudsman, 1995, which became operational in June 1995, providing an
institutional and legal framework to bank customers to resolve all their complaint
The scheme is applicable to all scheduled commercial banks having business in
India and scheduled primary co-operative banks except Regional Rural Banks.
Fifteen offices of Banking Ombudsman at important centres were set up to cover
the entire country.

The Banking Ombudsman offers customers the opportunity to resolve disputes

with their banks without needing to resort to the Courts.
 PREFACE

OBJECTIVES

 To present Banking Ombudsman Scheme & how does it works.

 To present the services of the Banking Ombudsman offered to the customer.

 To show how the Banking Ombudsman deals with customer complaints.

 To explain the duties, functions & powers of the Ombudsman.

METHODLOGY

The methodology includes the information of the features of the Ombudsman in

the form of primary data that had been received from the Branch Managers of the
banks and the officers of the RBI. It also includes the information’s from the
related books & the related websites.
INTRODUCTION
The basic services a bank provides are checking accounts, which can be used like
money to make payments and purchase goods and services; savings accounts and
time deposits that can be used to save money for future use; loans that consumers
and businesses can use to purchase goods and services; and basic cash
management services such as check cashing and foreign currency exchange. Four
types of banks specialize in offering these basic banking services: commercial
banks, savings and loan associations, savings banks, and credit unions.

A broader definition of a bank is any financial institution that receives, collects,

transfers, pays, exchanges, lends, invests, or safeguards money for its customers.
This broader definition includes many other financial institutions that are not
usually thought of as banks but which nevertheless provide one or more of these
broadly defined banking services. These institutions include finance companies,
investment companies, investment banks, insurance companies, pension funds,
security brokers and dealers, mortgage companies, and real estate investment
trusts.

Banking services are extremely important in a free market economy such as that
found in Canada and the United States. Banking services serve two primary
purposes. First, by supplying customers with the basic mediums-of-exchange
(cash, checking accounts, and credit cards), banks play a key role in the way goods
and services are purchased. Without these familiar methods of payment, goods
could only be exchanged by barter (trading one good for another), which is
extremely time-consuming and inefficient. Second, by accepting money deposits
from savers and then lending the money to borrowers, banks encourage the flow of
money to productive use and investments. This in turn allows the economy to
grow. Without this flow, savings would sit idle in someone’s safe or pocket,
money would not be available to borrow, people would not be able to purchase
cars or houses, and businesses would not be able to build the new factories the
economy needs to produce more goods and grow. Enabling the flow of money
from savers to investors is called financial intermediation, and it is extremely
important to a free market economy.

Banking institutions include commercial banks, savings and loan associations

(SLAs), savings banks, and credit unions. The major differences between these
types of banks involve how they are owned and how they manage their assets and
liabilities. Assets of banks are typically cash, loans, securities (bonds, but not
stocks), and property in which the bank has invested. Liabilities are primarily the
deposits received from the bank’s customers. They are known as liabilities
because they are still owned by, and can be withdrawn by, the depositors of the
financial institution.
TYPES OF BANKS
There are various types of banks which operate in our country to meet the
financial requirements of different categories of people engaged in agriculture,
business, profession, etc. On the basis of functions, the banking institutions in
India may be divided into the following types:

TYPES OF BANKS

CENTRAL DEVELOPMENT SPECIALIZED

BANKS BANKS BANKS

COMMERCIAL BANKS CO-OPERATIVE BANKS

Public Sector Banks Primary Credit Societies

Private Sectors Banks Central Co-operative Banks
Foreign Banks State Co-operative Banks
1. Central Banks
A bank which is entrusted with the functions of guiding and regulating the
banking system of a country is known as its Central bank. Such a bank does not
deal with the general public. It acts essentially as Government’s banker; maintain
deposit accounts of all other banks and advances money to other banks, when
needed. The Central Bank provides guidance to other banks whenever they face
any problem. It is therefore known as the banker’s bank. It advises the
Government on monetary and credit policies and decides on the interest rates for
bank deposits and bank loans. Another important function of the Central Bank is
the issuance of currency notes, regulating their circulation in the country by
different methods. No other bank than the Central Bank can issue currency.

2. Commercial Banks
Commercial Banks are banking institutions that accept deposits and grant short-
term loans and advances to their customers. In addition to giving short-term loans,
commercial banks also give medium-term and long-term loan to business
enterprises. Commercial banks are of three types:

 Public Sector Banks

These are banks where majority stake is held by the Government of India or
Reserve Bank of India. Examples of public sector banks are: State Bank of India,
Corporation Bank, Bank of Baroda and Dena Bank, etc

 Private Sectors Banks

In case of private sector banks majority of share capital of the bank is held by
private individuals. These banks are registered as companies with limited liability.
For example: The Jammu and Kashmir Bank Ltd., Bank of Rajasthan Ltd.,
Development Credit Bank Ltd, Lord Krishna Bank Ltd., Bharat Overseas Bank
Ltd., Global Trust Bank, Vysya Bank, etc.
  Foreign Banks

These banks are registered and have their headquarters in a foreign country but
operate their branches in our country. Some of the foreign banks operating in our
country are Hong Kong and Shanghai Banking Corporation (HSBC), Citibank,
American Express Bank, Standard & Chartered Bank, Grindlay’s Bank, etc. The
number of foreign banks operating in our country has increased since the financial
sector reforms of 1991.

3. Development Banks
Business often requires medium and long-term capital for purchase of machinery
and equipment, for using latest technology, or for expansion and modernization.
Such financial assistance is provided by Development Banks. They also undertake
other development measures like Public Sector Banks comprise 19 nationalized
banks and State Bank of India and its 7 associate banks. Industrial Finance
Corporation of India (IFCI) and State Financial Corporation’s (SFCs) are
examples of development banks in India.

4. Co-Operative Banks
People who come together to jointly serve their common interest often form a co-
operative society under the Co-operative Societies Act. When a co-operative
society engages itself in banking business it is called a Co-operative Bank. The
society has to obtain a license from the Reserve Bank of India before starting
banking business. Any co-operative bank as a society is to function under the
overall supervision of the Registrar, Co-operative Societies of the State. As
regards banking business, the society must follow the guidelines set and issued by
the Reserve Bank of India. There are three types of co-operative banks operating
in our country:
  Primary Credit Societies

These are formed at the village or town level with borrower and non-borrower
members residing in one locality. The operations of each society are restricted to a
small area so that the members know each other and are able to watch over the
activities of all members to prevent frauds.

 Central Co-operative Banks

These banks operate at the district level having some of the primary credit
societies belonging to the same district as their members. These banks provide
loans to their members (i.e., primary credit societies) and function as a link
between the primary credit societies and state co-operative banks.

 State Co-operative Banks

These are the apex (highest level) co-operative banks in all the states of the
country. They mobilize funds and help in its proper channelization among various
sectors. The money reaches the individual borrowers from the state co-operative
banks through the central co-operative banks and the primary credit societies.

5. Specialized Banks
There are some banks, which cater to the requirements and provide overall support
for setting up business in specific areas of activity. EXIM Bank, SIDBI and
NABARD are examples of such banks. They engage themselves in some specific
area or activity and thus, are called specialized banks.

 Export Import Bank of India (EXIM Bank)

If you want to set up a business for exporting products abroad or importing

products from foreign countries for sale in our country, EXIM bank can provide
you the required support and assistance. The bank grants loans to exporters and
importers and also provides information about the international market.
  Small Industries Development Bank of India (SIDBI)

If you want to establish a small-scale business unit or industry, loan on easy terms
can be available through SIDBI. It also finances modernization of small-scale
industrial units, use of new technology and market activities. The aim and focus of
SIDBI is to promote, finance and develop small-scale industries.

 National Bank for Agricultural and Rural Development

(NABARD)

It is a central institution for financing agricultural and rural sectors. If a person is

engaged in agriculture or other activities like handloom weaving, fishing, etc.
NABARD can provide credit, both short-term and long-term, through regional
rural banks. It provides financial assistance, especially, to co-operative credit, in
the field of agriculture, small scale industries, cottages and village industries in
rural areas.
POLICY FOR THE GRIEVANCES REDRESSAL OF THE
CUSTOMER COMPLAINTS
In the present scenario of competitive banking, excellence in customer service is
the most important tool for sustained business growth. Customer complaints are
part of the business life of any corporate entity. This is more so for banks because
banks are service organizations. As a service organization, customer service and
customer satisfaction should be the prime concern of any bank. The bank believes
that providing prompt and efficient service is essential not only to attract new
customers, but also to retain existing ones. This policy document aims at
minimizing instances of customer complaints and grievances through proper
service delivery and review mechanism and to ensure prompt redressal of
customer complaints and grievances. The review mechanism should help in
identifying shortcomings in product features and service delivery. Customer
dissatisfaction would spoil bank’s name and image. The Bank’s policy on
grievance redressal follows the under noted principles:

 Customers be treated fairly at all times

 Complaints raised by customers are dealt with courtesy and on time

 Customers are fully informed of avenues to escalate their

complaints/grievances within the organization and their rights to
alternative remedy, if they are not fully satisfied with the response of the
bank to their complaints.

 Bank will treat all complaints efficiently and fairly as they can damage
the bank’s reputation and business if handled otherwise.

 The Bank employees must work in good faith and without prejudice to
the interests of the customer.
In order to make bank’s redressal mechanism more meaningful and effective, a
structured system needs to be built up towards such end. Such system would
ensure that the redressal sought is just and fair and is within the given frame-work
of rules and regulation. The policy document would be made available at all
branches. All employees of the Bank should be made aware about the Complaint
handling process

 The customer complaint arises due to:

 The attitudinal aspects in dealing with customers

 Inadequacy of the functions/arrangements made available to the

customers or gaps in standards of services expected and actual services
rendered.

 The customer is having full right to register his complaint if he is not

satisfied with the services provided by the bank. He can give his
complaint in writing, orally or over telephone. If customer’s complaint is
not resolved within given time or if he is not satisfied with the solution
provided by the bank, he can approach Banking Ombudsman with his
complaint or other legal avenues available for grievance redressal.
INTRODUCTION
An ombudsman is a person who has been appointed to look into complaints about
an organization. Using an ombudsman is a way of trying to resolve a complaint
without going to court. Banking Ombudsman is a quasi judicial authority
functioning under India’s Banking Ombudsman Scheme, and the authority was
created pursuant to the a decision by the Government of India to enable resolution
of complaints of customers of banks relating to certain services rendered by the
banks. The Banking Ombudsman Scheme was first introduced in India in 1995,
and was revised in 2002 and 2006. In the wake of the failure in the efficient
services of the banks, the RBI brought a scheme for the prompt, efficient and
courteous services and also to protect the rights of the customers.

The Banking Ombudsman is an official authority to investigate the complaint from

the customers and address the complaint and thereby bring the solution among the
aggrieved parties. So the Banking Ombudsman plays the role of a mediator and
serves the purpose of reconciliation. The Banking Ombudsman has been defined
under clause 4 of the Banking Ombudsman Scheme, 2006.

APPOINTMENT & TENNURE

The 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 to
carry out the functions entrusted to them by or under the Scheme.

The appointment of Banking Ombudsman under the above Clause may be made
for a period not exceeding three years at a time.
CHARACTERISTICS OF BANKING OMBUDSMAN

 The Banking Ombudsman is a quasi judicial authority. It has power to

summon both the parties - bank and its customer, to facilitate resolution
of complaint through mediation.

 All Scheduled Commercial Banks, Regional Rural Banks and Scheduled

Primary Co-operative Banks are covered under the Scheme.

 The Banking Ombudsman has power to consider complaints from Non-

Resident Indians having accounts in India in relation to their remittances
from abroad, deposits and other bank-related matters.

 The Banking Ombudsman does not charge any fee for resolving
customers’ complaints.

Complaint can be made before a Banking Ombudsman on the same subject

matter for which any proceedings before any court, tribunal or arbitrator or any
other forum is pending or a decree or award or a final order, has already been
passed by any such competent court, tribunal, arbitrator or forum.

DUTIES & FUNCTIONS OF OMBUDSMAN

 The Ombudsman shall enquire into and investigate in accordance with the
provisions of the Act, and take action or steps as may be prescribed by the
Act and concerning-

 Practices and actions by persons, enterprises and other private

institutions where complaints allege that violations of fundamental
rights and freedoms have taken place.
  All instances or matters of alleged or suspected corruption and the
misappropriation of public moneys or other public property by
officials.

 Without derogating from the provisions, any request or complaint in

respect of instances or matters referred to in that provisions, may include
any instance or matter in respect of which the Ombudsman has reason to
suspect-

 That the provisions of any law or under the authority of the State or by
any person in its employment, or that any practice is so followed, in a
manner which is not in the public interest.

 That the powers, duties or functions which vest in the State or, body or
institution, or any person in its employment are exercised or
performed in an irregular manner.

 That moneys forming part of the funds of the State or body or institution,
or received or held by or on behalf of the State or body or institution are
being or have been dealt with an irregular manner.

 Any person wishing to lay any instance or matter referred to in provisions

before the Ombudsman shall do so in such manner as the Ombudsman
may determine or allow.

 The Ombudsman shall not be required to investigate any instance or

matter referred to in the provisions which has been laid before him or her
under the provisions when the grounds on account of which the inquiry is
desired is in the opinion of the Ombudsman.

The provisions shall not apply in respect of any decision taken in or in connection
with any civil or criminal case by a court of law.
TYPES OF OMBUDSMAN

TYPES OF OMBUDSMAN

Banking Ombudsman S.E.B.I. Ombudsman

Electricity Ombudsman Telecom Ombudsman

Income Tax Ombudsman Insurance Ombudsman

 Banking Ombudsman

The Reserve Bank of India (RBI) first introduced the Banking Ombudsman
Scheme In1995, which has been revised in 2002 and 2005. The latest revised
Scheme has come into force from 1st Jan 2006.

 S.E.B.I. Ombudsman

The Securities Exchange Board of India (SEBI) under section 30 read with sub-
section (1) of section 11 of the SEBI Act, 1992, has framed the SEBI
(Ombudsman) Regulations, 2003, which were notified on 21st August 2003. The
Regulations provided for the establishment of the office of Ombudsman to redress
the Grievance of investors in securities and connected matters. The listed
companies and registered stock intermediaries have to disclose the name address
and other particulars of ombudsman in their for the benefit of the investors.
  Electricity Ombudsman

The Electricity Regulatory Commission, under section 181 read with sub-section
(5) of section 42 of the Electricity Act, 2003, issues guidelines for establishment
of forum and Ombudsman for redressal of grievances of Electricity consumers.
The Delhi Regulatory Commission (DERC) vide its Notification dated 11th March,
2006 has issued DERC (Guidelines for establishment of Forum of redressal of
grievance of the consumer and Ombudsman) Regulations, 2003. It may be noted
that the Ombudsman is the APPELLATE Authority under the Electricity Act
2003, and the DERC Regulations, 2003 and therefore an electricity consumer has
to first approach the Consumer Grievance Redressal Forum established under the
DERC Regulations, 2003.

 Telecom Ombudsman

The Telecom Regulatory Authority of India Act, 1997, empowers the Telecom
Regulatory Authority of India Act 1997, empowers the Telecom Regulatory
Authority of India (TRAI) to make the recommendations on laying down the
standards of quality of services to be provided by the services providers and
conduct the interest of the periodical surveys of Telecom services so as to protect
the interest of the consumers. The telecom operators frequently threaten to
disconnects the phones and with draw the numbers given t o subscribers if the
deadline for payment is missed by a day or there is miscalculation of the tiniest
amount. The TRAI is, however, neither empowered to look into the grievances of
individual customers nor take action against the operators who do not meet quality
of standards As there is no specialized body to redress the grievance of telecom
customers, they have to approach consumer forum setup under THE Consumer
Protection Act, 1986, or civil courts for Resolutions adjudication of disputes.
  Income Tax Ombudsman

The government is considering creating an office of Income Tax Ombudsman to

protect individual taxpayer’s right. The Ombudsman will identify issues that
increase the compliance burden or create problems for taxpayers and bring those
issues to the attention of the ministry of Finance. The Ombudsman will make
appropriate legislative proposal where necessary and send periodical reports to the
Department of Revenue, suggesting appropriate action. It is proposed to initially
setup offices of Ombudsman at Delhi, Mumbai, Kolkata and Chennai.

 Insurance Ombudsman

The Government of India, Minister of Finance, Department of Economics Affairs,

Insurance Division under section 114 (1) of Insurance Act, 1938, has framed the
“Redressal of Public Grievance Rules, 1998”, for appointment of Insurance
Ombudsman, which comes into force with effect from 11th November 1998. The
Insurance Ombudsman has started functioning from 1999, to provide for efficient,
cost effective and impartial settlement of claims and grievance of any person
against a Life r General Insurance in Public and private sector. The meaning of
expression ‘any other person’ is wider than ‘consumer’ and therefore, even third
party having grievance with respect to an Insurance contract can approach the
Ombudsman.
GROUNDS OF CUSTOMERS COMPLAINTS CONSIDERED
BY BANKING OMBUDSMAN
The Banking Ombudsman can receive and consider any complaint relating to the
following deficiency in banking services (including internet banking):

 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 in respect
thereof;

 non-acceptance, without sufficient cause, of coins tendered and for

charging of commission in respect thereof;

 non-payment or delay in payment of inward remittances ;

 failure to issue or delay in issue of drafts, pay orders or bankers’ cheques;

 non-adherence to prescribed working hours ;

 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;

 complaints from Non-Resident Indians having accounts in India in relation

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

 levying of charges without adequate prior notice to the customer;

 non-adherence by the bank or its subsidiaries to the instructions of Reserve

Bank on ATM/Debit card operations or credit card operations;

 refusal to accept or delay in accepting payment towards taxes, as required

by Reserve Bank/Government;

 refusal to issue or delay in issuing, or failure to service or delay in servicing

or redemption of Government securities;
  forced closure of deposit accounts without due notice or without sufficient
reason;

 refusal to close or delay in closing the accounts;

 non-observance of Reserve Bank guidelines on engagement of recovery

agents by banks; and

 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;

 non-acceptance of application for loans without furnishing valid reasons to

the applicant; and

GROUNDS OF CUSTOMERS COMPLAINTS NOT .

CONSIDERED BY BANKING OMBUDSMAN
 Ones complaint will not be considered if:
 One has not approached his bank for redressal of his grievance first.
 One has not made the complaint within one year from the date one has
received the reply of the bank or if no reply is received if it is more than
one year and one month from the date of representation to the bank.
 The subject matter of the complaint is pending for disposal / has already
been dealt with at any other forum like court of law, consumer court etc.
 Frivolous or vexatious.
 The institution complained against is not covered under the scheme.
 The subject matter of the complaint is not within the ambit of the Banking
Ombudsman.
 If the complaint is for the same subject matter that was settled through the
office of the Banking Ombudsman in any previous proceedings.
PROCEDURE FOR FILING COMPLAINT
 Any person who has a grievance against a bank on any one or more of the grounds mentioned
above, may, himself or through his authorized representative (other than an advocate), make a
complaint to the Banking Ombudsman within whose jurisdiction the branch or office of the
bank complained against is located.

 Complaints arising out of the operations of credit cards, shall be filed before the Banking
Ombudsman within whose territorial jurisdiction the billing address of the card holder is
located and not the place where the bank concerned or the credit card processing unit is
located.

 The complaint shall be made in writing duly signed by the complainant or his authorized
representative and shall as far as possible be in the form and shall contain such particulars as
specified in the Scheme.

 The complainant shall file along with the complaint, copies of the documents, if any, which
he proposes to rely upon and also a declaration that the complaint is maintainable as per
clause 9(3) of the Scheme..

 A complaint can also be made through electronic means.

 The complainant shall before making a complaint to the Banking Ombudsman, make a
written representation to the bank.

 The complaint can be filed if the bank has rejected the complaint or the complainant had not
received any reply within a period of one month after the bank received his representation or
if the complainant is not satisfied with the reply given to him by the bank.

 The complaint to the Banking Ombudsman is to be 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 complaint should not be in respect of the same subject matter which was settled or dealt
with on merits by the Banking Ombudsman in any previous proceedings whether or not
received from the same complainant or along with one or more complainants or one or more
of the parties concerned with the subject matter.
 The complaint should not pertain to the same subject matter, for which any proceedings
before any court, tribunal or arbitrator or any other forum is pending or a decree or Award or
order has been passed by any such court, tribunal, arbitrator or forum.

 The complaint should not be frivolous or vexatious in nature.

 The complaint should be made before the expiry of the period of limitation prescribed under
the Indian Limitation Act, 1963 for such claims.
INTRODUCTION
The Banking Ombudsman Scheme, 1995 was notified by RBI on June 14, 1995 in
terms of the powers conferred on the Bank by Section 35A of the Banking
Regulation Act, 1949 to provide for a system of redressal of grievances against
banks. The Scheme sought to establish a system of expeditious and inexpensive
resolution of customer complaints. The Scheme is in operation since 1995 and has
been revised during the years 2002 and 2006. The Scheme is being executed by
Banking Ombudsmen appointed by Reserve Bank at 15 centers covering the entire
country. As mandated by the Banking Ombudsman Scheme, the Banking
Ombudsmen submit an Annual Report on the functioning of their offices every
year. Based on such reports, an Annual Report for the Banking Ombudsman
Scheme in a whole is prepared at Reserve Bank of India, Central Office. As is
being the practice, the Annual Report covers the last five-year period with focus
on the current year. Further, as a result of computerization of the functioning of
Banking Ombudsman Offices through the Complaint Tracking Software, detailed
analysis was possible on the information pertaining to year 2006-07. With the
decision to merge the Banking Ombudsman Offices with that of RBI offices, the
accounting period for the Banking Ombudsman Offices was changed from April
1-March 31 to July 1-June 30 to be in congruent with that of RBI offices.
Accordingly, the information analysed for the year 2006-07 pertains to the period
July 1, 2006 to June 30, 2007.

GENERAL PARTICULARS ON THE SCHEME

The word ‘Ombudsman’ in general means a ‘grievance man’, a public official who
is appointed to investigate complaints against the administration. He is to
intervene for the ordinary citizen in his dealings with the complex machinery of
the establishment. In India, any person whose grievance against a bank is not
resolved to his satisfaction by that bank within a period of one month can
approach the Banking Ombudsman if his complaint pertains to any of the matters
specified in the Scheme. Banking Ombudsmen have been authorized to look into
complaints concerning deficiency in banking service , sanction of loans and
advances in so far as they relate to non-observance of the Reserve Bank directives
on interest rates, delay in sanction or non-observance of prescribed time schedule
for disposal of loan applications or nonobservance of any other directions or
instructions of the Reserve Bank as may be specified for this purpose, from time to
time, and such other matters as may be specified by the Reserve Bank. The
Scheme envisages expeditious and satisfactory disposal of customer complaints in
a time bound manner.

The Banking Ombudsman on receipt of any complaint endeavors to promote a

settlement of the complaint by agreement between the complainant and the bank
named in the complaint through conciliation or mediation. For the purpose of
promoting a settlement of the complaint, the Banking Ombudsman has been
allowed to follow such procedures as he may consider appropriate and he is not
bound by any legal rule of evidence. 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 consider necessary, he may pass
an Award after affording the parties reasonable opportunity to present their case.
He shall be guided by the evidence placed before him by the parties, the principles
of banking law and practice, directions, instructions and guidelines issued by the
Reserve Bank from time to time and such other factors, which in his opinion are
necessary in the interest of justice.
SCOPE OF THE SCHEME
The Banking Ombudsman Scheme, 2002 covered all the Regional Rural Banks in
addition to all Commercial Banks and Scheduled Primary Co-operative Banks,
which were already covered by earlier Banking Ombudsman Scheme, 1995. There
is no change in this regard in the Banking Ombudsman Scheme, 2006.

In 2006, the Reserve Bank of India announced the revised Banking Ombudsman
Scheme with enlarged scope that included customer complaints on certain new
areas, such as, credit card complaints, deficiencies in providing the promised
services even by banks' sales agents, levying service charges without prior notice
to the customer and non adherence to the fair practices code as adopted by
individual banks. The important new grounds of complaints added include credit
card issues, failure in providing the promised facilities, non-adherence to fair
practices code, levying of excessive charges without prior notice and issues
pertaining to accepting payment towards taxes and issuing/servicing of
Government securities. The grounds of complaints have been enumerated in
Clause 8 of the Banking Ombudsman Scheme, 2006.

OPERATIONALISATION
Reserve Bank of India operationalised the Banking Ombudsman Scheme by
establishing Banking Ombudsman Offices at 15 centers all over the country. The
names, addresses and area of operation of the Banking Ombudsmen have been
given in to Annexure ‘A’. Reserve Bank frames the guidelines for operationalizing
the Scheme and supervises the running of the Scheme. It also supervises the
running of the Scheme and administrative arrangements, budget and expenditure
of the Banking Ombudsman Offices.
PERFORMANCE OF THE OFFICES OF BANKING
OMBUDSMAN
The performance of the Offices of the Banking Ombudsman was analyzed on the
aspects such as the quantum of complaints handled by them, the timeliness in
handling the issues, and appropriateness of the decisions given against the
complaints.

 Number of Complaints Received

The number of complaints received by the Banking Ombudsman Offices had

constantly increased in the last five years. There was more than threefold increase
in the number of complaints received in the year 2006-07 from the previous year
after the Banking Ombudsman Scheme, 2006 was notified. The increasing receipt
was also observed in the year 2007-08 with a 24% increase from the year 2006-07.
The average number of complaints received per Banking Ombudsman Office has
also increased from 550 in 2003-04 to 3192 in 2007-08.

Number of complaints received by the Banking Ombudsman Offices

 Period No of Offices of Complaints received Average
Banking during the year No. of
Ombudsman No. Change complaints
from per office
Previous
year
2003-04 15 8246 +53% 550
2004-05 15 10560 +28% 704
2005-06 15 31732 +200% 2115
2006-07 15 38638 +22% 2576
2007-08 15 47887 +24% 3192

The increase in the number of complaints received during the years 2005-06
and2006-07 can be attributed to new areas such as credit card complaints included
and to facilitation of complaint submission by allowing complaint submission in
any form including by online and by email allowed in the Banking Ombudsman
Scheme, 2006. Per month receipt in the number of complaints received under the
BO Scheme 2006 was more than thrice the number of complaints received under
the Banking Ombudsman Scheme, 2002.

The increase in the number of complaints received under the Banking

Ombudsman Scheme 2006 as compared to the previous scheme clearly indicates
the extent to which the scheme has benefited larger sections of the banking
customers. The comparative effects of the Banking Ombudsman Schemes 2002
and 2006 in complaint receipt are given as below:
 Number of complaints received in 2005-06 and 2006-07

Period Scheme No. of complaints

running From To Total
received
From To Total Total Per
month
01.04.2005 31.12.2005 9 BO Scheme, 9723 1080
months 2002
01.01.2006 30.06.2007 18 BO Scheme, 60647 3370
months 2006

 Disposal of Complaints

During the year 2007-08, the Banking Ombudsman Offices disposed of 49100
complaints (including from the complaints pending at the beginning of the year
and those received during the year). Of these, 21747 complaints (49%) were
settled to the satisfaction of the complainants, 15914 complaints (36%) could not
be considered under the scheme owing to several reasons like being outside the
purview of the scheme, time-barred, without sufficient cause, frivolous, pending in
other fora, etc. A sample analysis of 756 complaints that could not be considered
under the scheme disclosed that 42% of such complaints fell outside the purview
of the scheme and 23% were first resort complaints and could not be taken up by
the Banking Ombudsmen. In 11% of the complaints, deficiency of service could
not be established and the remaining 24% complaints could not be considered for
reasons like they were pending in other fora or the complaints required
consideration of elaborate documentary and oral evidence etc. Details of disposal
of complaints over the last five years are furnished in the following table:

Disposal of Complaints by Banking Ombudsman Offices

Particulars 2003-04 2004-05 2005-06 2006-07 2007-08

Total complaints 9483 12034 33363 44766 54992

dealt
with during the
year

Complaints settled 3998 5440 14931 21747 29365

to the satisfaction (42%) (45%) (45%) (49%) (53%)
of complainants (a)
Complaints that 4011 4963 12304 15914 19735
could not be (42%) (41%) (37%) (36%) (36%)
considered under
the
scheme (b)

Total number of 8009 10403 27235 37661 49100

complaints (84%) (86%) (82%) (84%) (89%)
disposed of (a+b)

Complaints under 1474 1631 6128 7105 5892

process (16%) (14%) (18%) (16%) (11%)
 Mode of Disposal of Complaints

The Banking Ombudsmen disposed of complaints, other than the complaints that
could not be considered, either by mutual settlement or by issuing an Award.
During the period reviewed, the ratio of complaints disposed by settlement to the
complaints disposed by award was around 99:1 clearly indicating the effectiveness
of the Banking Ombudsmen in arriving at mutually agreed consensus between
bankers and complainants. During the period above, only 563 awards were issued
which formed less than 2% of the total 49,253 complaints disposed of. From the
year 2006-07, the number of awards issued and the percentage of disposal through
award issuance have come down despite huge increase in the complaints received.
Details are as given table below. The fact that the Banking Ombudsmen could
dispose of more than 98% of the complaints by mutual settlement between the
complainant and the concerned banks to their satisfaction indicates that they took
appropriate decisions taking into consideration all the relevant and extant legal and
banking instructions and practice.

Mode of disposal of complaints

(Other than complaints that could not be considered)

Sr. Year No. of Disposal by Disposal by

No. complaints Award settlement
disposed No. % No. %
of
1. 2003-2004 3998 121 2.21 3877 97.78
2. 2004-2005 5440 165 3.03 5275 96.97
3. 2005-2006 14931 146 0.98 14785 99.02
4. 2006-2007 21747 84 0.39 21662 99.61
5. 2007-2008 29365 70 0.24 29295 99.76
  Analysis of Complaints:

 Analysis of Complaints dealt with - Category-Wise

The analysis of complaints received at the Banking Ombudsman offices includes

analysis of subject category of complaints and the bank-groups against which the
complaints were made. Computerization of the functioning of Banking
Ombudsman Offices through the Complaint Tracking Software has enabled
detailed analysis in this regard. The maximum number of complaints dealt with
during the last five-year period pertained to complaints regarding deposit
accounts, deficiency in servicing of loans and advances and delay in collection of
cheques/bills, etc, besides the miscellaneous complaints. The details are given in
the following table:
 Analysis of complaints dealt with - category-wise

Category 2002-03 2003-04 2004-05 2005-06 2006-07

Deposit 1789 2500 3239 6733 5803

Accounts (27%) (26%) (27%) (20%) (15%)

Loans and 1651 1226 2291 5215 5151

Advances (25%) (13%) (19%) (16%) (13%)

Collection of 908 1001 1245 3058 4058

cheques/bills (14%) (11%) (10%) (9%) (11%)

Others 2158 4756 5259 18357 23626

(34%) (50%) (44%) (55%) (61%)

Total 6506 9483 12034 33363 38638

However, during the year 2006-07, the maximum number of complaints received
pertained to credit cards at 20%. Complaints pertaining to deposit accounts, loans
and advances and remittances occupied the next three places in the number of
complaints received. The details are shown below.
Complaints received in 2007-08: Category-wise
 Complaints received in 2006-07 & 2007-08: Category-wise

Sr.No. Nature of complaint Received during

2006-07 2007-08

1. Deposit accounts 5803 5612

2. Remittances 4058 5213

3. Credit cards 7688 10129

4. Loans and advances - General 4442 5297

5. Loans and advances - Housing 709 757

6. Charges without notice 2594 3740

7. Pension 1070 1582

8. Failure on commitments made 1469 6388

9. DSAs and recovery agents 1039 3128

10. Notes and coins 130 141

11. Others 9636 5900

Total 38638 47887

  Analysis of complaints-Bank-group-wise

Group-wise, the majority of the complaints pertain to the Nationalized Banks

followed by the State Bank Group. However, over the years, the percentage of
complaints against public sector banks, including the SBI Group, showed a decline
vis-à-vis the number of complaints received against private sector banks and
foreign banks.

Break-up of complaints dealt with - Bank-group-wise

Bank 2003- 2004- 2005- 2006- 2007- Total

group 04 05 06 07 08
No. %

Nationalized 4049 5124 10137 10543 12033 45031 30

Banks

SBI Group 2779 3359 9892 11117 13532 42593 29

Private 1325 1863 6754 9036 14077 33773 23

Sector
Banks

Foreign 406 577 2997 3803 6126 14222 10

Banks

Scheduled 166 256 198 313 295 1340 1

Primary
Coop.
Banks

RRB 232 359 794 536 826 2780 2

Others 526 496 2591 3290 998 8127 5

 Total 9483 12034 33363 38638 47887 147911 100

COST DETAILS OF RUNNING THE SCHEME

The costs of the Scheme include the revenue expenditure and capital expenditure
incurred in running the Banking Ombudsman offices. The revenue expenditure
includes the establishment items like salary and allowances of the staff attached to
Banking Ombudsman offices and non-establishment items such as rent, taxes,
insurance, law charges, postage and telegram charges, printing and stationery
expenses, publicity expenses, depreciation and other miscellaneous items. The
capital expenditure items include the furniture, electrical installations,
computers/related equipments, telecommunication equipments and motor vehicle.

Cost details of Banking Ombudsman Offices

Period Total Cost No. of Cost per

(Rs. Cr) Complaints Complaint (Rs)
dealt

2003-04 7.03 9,483 7,413

2004-05 7.60 12,034 6,315

2005-06 10.16 33,363 3,045

2006-07 9.81 38,638 2,538

2007-08 12.50 47,887 2,611

THE CONSUMER PROTECTION ACT, 1986
The consumer protection Act, 1986 is the history of socio-economic legislation in
the country. It is one of the most progressive and comprehensive piece of
legislations enacted for the protection of consumers. It was enacted after in-depth
study of consumer protection laws in a number of countries and in consultation
with representatives of consumers, trade and industry and extensive discussions
within the Government.

The Aim of Consumer Protection Act (CPA) is to address the grievances of the
consumers and protecting them from the unethical practices/ behavior or unfair
trade practices of the manufacturer/ supplier. All the provisions of the Act have
come into force from 1 July 1987. The Act was amended in 1991 and 1993. To
make the Consumer Protection Act more functional and purposeful, a
comprehensive amendment was carried out in December 2002 and brought into
force from 15 March 2003. As a sequel, the Consumer Protection Rules, 1987
were also amended and notified on 5 March 2004.

Earlier though there were several legislations to protect the consumer, but the
same never proved adequate to protect consumer and compensate them for their
compliances. The act not only enhances the awareness and educate the consumer
but also provide compensation to them by summary and inexpensive proceedings.
Unlike existing laws which are punitive or preventive in nature, the provisions of
this Act are compensatory in nature. The act is intended to provide simple, speedy
and inexpensive redressal to the consumers' grievances, and relief of a specific
nature and award of compensation wherever appropriate to the consumer. It
confers upon consumers eight rights i.e.: basic needs, safety, information, choice,
representation, redress, consumer education, healthy environment. It provides
remedies to the aggrieved customer in form Replace, Remove, Refund, Redress.
CONSUMER
“Consumer” means any person who,-
Buy any goods for a consideration which has been paid or promised or partly paid
and partly promised, or under any system of deferred payment and includes any
user of such goods other than the person who buys such goods for consideration
paid or promised or partly paid or partly promised or under any system of deferred
payment when such use is made with the approval of such person, but does not
include a person who obtains such goods for resale or for any commercial purpose,
or Hires any services for a consideration which has been paid or promised or
partly paid and partly promised, or under any system of deferred payment and
includes any beneficiary of such services other than the person who hires the
services for consideration paid or promised, or partly paid and partly promised, or
under any system of deferred payment, when such services are availed of with the
approval of the first mentioned person.

COMPLAINT
“Complaint” means any allegation in writing made by a complaint that: -

 As a result of any unfair trade practice adopted by any trader, the

complainant has suffered loss or damage.

 The goods mentioned in the complaint suffer from one or more defects.

 The services mentioned in the complaint suffer from deficiency in any

respect.

A trader has charged for the goods mentioned in the complaint a price in excess of
the price fixed by or under any law for the time being in force or displayed on the
goods or any package containing such goods, with a view to obtaining any relief
provided by this Act.
Remedies Granted under the Consumer Protection Act, 1986
against unfair Trade Practices.
The District Forum / State Commission / National Commission may pass one or
more of the following orders to grant relief to the aggrieved consumer :-

1. to remove the defects pointed out by the appropriate laboratory from

goods in question;

2. to replace the goods with new goods of similar description which shall be
free from any defect;

3. to return to the complainant the price, or, as the case may be, the charges
paid by the complainant;

4. to pay such amount as may be awarded by it as compensation to the

consumer for any loss or injury suffered by the consumer due to
negligence of the opposite party;

5. to remove the defects or deficiencies in the services in question;

6. to discontinue the unfair trade practice or the restrictive trade practice or

not to repeat them;

7. not to offer the hazardous goods for sale:

8. to withdraw the hazardous goods from being offered for sale

9. to cease manufacture of hazardous goods and to desist from

offering services which are hazardous in nature;

10. to pay such sum as may be determined by it if it is of the opinion

that loss or injury has been suffered by a large number of
consumers who are not identifiable conveniently:
 11. to issue corrective advertisement to neutralize the effect of
misleading advertisement at the cost of the opposite party
responsible for issuing such misleading advertisement;

12. to provide for adequate costs to parties.

RIGHTS OF CONSUMERS

Right to
Safety
Right to Right to
be Heard Information

Right to Rights of Right to

Choice Consumers Redress

Right to Safe Right to

Environment Consumer
Right to Education
Basic Needs
Right to Safety

The right to be protected against the marketing of goods and services which are
hazardous to life and property Consumer right to safety applies to all possible
consumption patterns and to all goods and services. In the context of the new
market economy and rapid technological advances affecting the market, the right
to safety has become a pre-requisite quality in all products and services. For e.g.
some Indian products carry the ISI mark, which is a NB symbol of satisfactory
quality of a product? Similarly, the FPO and AGMARK symbolize standard
quality of food products.

Right to Information

Right to information means the right to be given the facts needed to make an
informed choice or decision about factors like quality, quantity, potency, purity
standards and price of product or service. The right to information now goes
beyond avoiding deception and protection against misleading advertising,
improper labeling and other practices. For e.g. when you buy a product or utilize a
service, you should be informed about;
a) How to consume a product.
b) The adverse health effects of its consumption.
c) Whether the ingredients used are environment- friendly or not etc.

Right to Redress

The right to seek redressal against unfair trade practices or restrictive trade
practices or unscrupulous exploitation of consumers. It is to protect consumer
interests that consumers have been given the right to obtain redress. In India, we
have a redress machinery called Consumer Courts constituted under the Consumer
Protection Act (1986), functioning at national state and district levels. But it has
not been made complete use of under due to lack of awareness of basic consumer
rights among consumers themselves. While in the developed world, right to
redress is perhaps the most commonly exercised consumer right, in developing
countries, consumers are still wary of getting involved in legal redress system.
There are consumer courts in India where any consumer can lodge a case if s/he
thinks he or she has been cheated.

Right to Consumer Education

Consumer education empowers consumers to exercise their consumer rights. It

means the right to acquire the knowledge and skill to be informed consumer
throughout life. The right to consumer education incorporates the right to the
knowledge and skills needed for linking action and influences factors which affect
consumer decisions. It is the single most powerful tool that can take consumers
from their present disadvantageous position to one of strength in the marketplace.
Consumer education is dynamic, participatory and is mostly acquired by hands-on
and practical experience.

Right to Basic Needs

This right is the right to basic goods and services which guarantee dignified living.
It includes adequate food, clothing, health care, drinking water and sanitation,
shelter, education, energy and transportation. Access to food, water and shelter are
the basis of any consumer's life. Without these fundamental amenities, life cannot
exist. The right to basic needs means that availability of articles which are the
basic need of every consumer must be ensured.
Right to Safe Environment

It means the right to a physical environment that will enhance the quality of life. It
includes protection against environmental damage. It acknowledges the need to
protect and improve the environment for future generations as well. This right
involves protection against environmental problems over which the individual
consumer has control. It acknowledges the need to protect and improve the
environment for present and future generations.

Right to Choice
The right is to be assured, wherever possible, access to a variety of products and
services at competitive prices. It means the right to have access to a variety of
products and services at competitive prices and in the case of monopolies, to have
an assurance of satisfactory quality and service at a fair price. The right to choose
has been reformulated to read: the right to basic goods and services. This is
because the unrestrained right of a minority to choose can mean for the majority a
denial of its fair share.

Right to be Heard

This means the right to be represented so that consumers’ interests receive full and
sympathetic consideration in the formulation and execution of economic policy.
This right is being broadened to include the right to be heard and represented in
the development of products and services before they are produced or set up; it
also implies a representation, not only in government policies, but also in those of
other economic powers.
THE BANKING OMBUDSMAN SCHEME, 2006
The Scheme is introduced with the object of enabling resolution of complaints
relating to certain services rendered by banks and to facilitate the satisfaction or
settlement of such complaints.

 SHORT TITLE, COMMENCEMENT, EXTENT AND

APPLICATION
1) This Scheme may be called the Banking Ombudsman Scheme, 2006.
2) It shall come into force on such date as the Reserve Bank may specify.
3) It shall extend to the whole of India.
4) The Scheme shall apply to the business in India of a bank as defined under
the Scheme.

 SUSPENSION OF THE SCHEME

1) The Reserve Bank, if it is satisfied that it is expedient so to do, may by
order suspend for such period as may be specified in the order, the
operation of all or any of the provisions of the Scheme, either generally or
in relation to any specified bank.
2) The Reserve Bank may, by order, extend from time to time, the period of
any suspension ordered as aforesaid by such period, as it thinks fit.

 DEFINITIONS
1) ‘Award’ means an award passed by the Banking Ombudsman in
accordance with the Scheme.
2) ‘Appellate Authority’ means the Deputy Governor in charge of the
Department of the Reserve Bank implementing the Scheme.
3) ‘Authorized representative’ means a person duly appointed and authorized
by a complainant to act on his behalf and represent him in the proceedings
 under the Scheme before a Banking Ombudsman for consideration of his
complaint.
4) ‘Banking Ombudsman’ means any person appointed under Clause 4 of the
Scheme.
5) ‘Bank’ means a ‘banking company’, a ‘corresponding new bank’, a
‘Regional Rural Bank’, ‘State Bank of India’ a ‘Subsidiary Bank’ as
defined in Section 5 of the Banking Regulation Act, 1949 (Act 10 of 1949),
or a ‘Primary Co-operative Bank’ as defined in clause (c) of Section 56 of
that Act and included in the Second Schedule of the Reserve Bank of India
Act, 1934 (Act 2 of 1934), having a place of business in India, whether
such bank is incorporated in India or outside India.
6) ‘Complaint’ means a representation in writing or through electronic means
containing a grievance alleging deficiency in banking service as mentioned
in clause 8 of the Scheme.
7) ‘Reserve Bank’ means the Reserve Bank of India constituted by Section 3
of the Reserve Bank of India Act, 1934 (2 of 1934).
8) ‘The scheme’ means the Banking Ombudsman Scheme, 2006.
9) ‘Secretariat’ means the office constituted as per sub-clause (1) of clause 6
of the Scheme.
10)‘Settlement’ means an agreement reached by the parties either by
conciliation or mediation under clause 11 of the Scheme.
ESTABLISHMENT OF OFFICE OF BANKING OMBUDSMAN

 APPOINTMENT & TENURE

1) The 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 to carry out the functions entrusted to them by or under the
Scheme.
2) The appointment of Banking Ombudsman under the above Clause may be
made for a period not exceeding three years at a time.

 LOCATION OF OFFICE AND TEMPORARY HEADQUARTERS

1) The office of the Banking Ombudsman shall be located at such places as
may be specified by the Reserve Bank.
2) In order to expedite disposal of complaints, the Banking Ombudsman may
hold sittings at such places within his area of jurisdiction as may be
considered necessary and proper by him in respect of a complaint or
reference before him.

 SECRETARIAT
1) The Reserve Bank shall depute such number of its officers or other staff to
the office of the Banking Ombudsman as is considered necessary to
function as the secretariat of the Banking Ombudsman.
2) The cost of the Secretariat shall be borne by the Reserve Bank.
JURISDICTION, POWERS AND DUTIES OF BANKING
OMBUDSMAN

 POWERS AND JURISDICTION

1) The Reserve Bank shall specify the territorial limits to which the authority
of each Banking Ombudsman appointed under Clause 4 of the Scheme
shall extend.
2) The Banking Ombudsman shall receive and consider complaints relating to
the deficiencies in banking or other services filed on the grounds mentioned
in clause 8 and facilitate their satisfaction or settlement by agreement or
through conciliation and mediation between the bank concerned and the
aggrieved parties or by passing an Award in accordance with the Scheme.
3) The Banking Ombudsman shall exercise general powers of superintendence
and control over his Office and shall be responsible for the conduct of
business thereat.
4) The Office of the Banking Ombudsman shall draw up an annual budget for
itself in consultation with Reserve Bank and shall exercise the powers of
expenditure within the approved budget on the lines of Reserve Bank of
India Expenditure Rules, 2005.
5) The Banking Ombudsman shall send to the Governor, Reserve Bank, a
report, as on 30th June every year, containing a general review of the
activities of his Office during the preceding financial year and shall furnish
such other information as the Reserve Bank may direct and the Reserve
Bank may, if it considers necessary in the public interest so to do, publish
the report and the information received from the Banking Ombudsman in
such consolidated form or otherwise as it deems fit.
PROCEDURE FOR REDRESSAL OF GRIEVANCE

 GROUNDS OF COMPLAINT

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 in relation

to 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;

l) Non-adherence by the bank or its subsidiaries to the instructions of Reserve
Bank on ATM/Debit card operations or credit card operations;

m) 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);

n) Refusal to accept or delay in accepting payment towards taxes, as required

by Reserve Bank/Government;

o) Refusal to issue or delay in issuing, or failure to service or delay in

servicing or redemption of Government securities;

p) Forced closure of deposit accounts without due notice or without sufficient

reason;

q) Refusal to close or delay in closing the accounts;

r) Non-adherence to the fair practices code as adopted by the bank;

s) Non-adherence to the provisions of the Code of Bank's Commitments to

Customers issued by Banking Codes and Standards Board of India and as
adopted by the bank ;

t) Non-observance of Reserve Bank guidelines on engagement of recovery

agents by banks; and

u) Any other matter relating to the violation of the directives issued by the
Reserve Bank in relation to banking or other services.

2) A complaint on 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 time

schedule for disposal of loan applications;
c) Non-acceptance of application for loans without furnishing valid 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;

e) Non-observance of Reserve Bank guidelines on engagement of recovery

agents by banks; and

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 matter as may be
specified by the Reserve Bank from time to time in this behalf.
 PROCEDURE FOR FILING COMPLAINT

1) Any person who has a grievance against a bank on any one or more of the
grounds mentioned in Clause 8 of the Scheme may, himself or through his
authorized representative (other than an advocate), make a complaint to the
Banking Ombudsman within whose jurisdiction the branch or office of the
bank complained against is located. 3Provided that a complaint arising out
of the operations of credit cards and other types of services with centralized
operations, shall be filed before the Banking Ombudsman within whose
territorial jurisdiction the billing address of the customer is located.

2) a) The complaint in writing shall be duly signed by the complainant or his

authorized representative and shall be, as far as possible, in the form
specified in Annexure ‘A’ or as near as thereto as circumstances admit,
stating clearly:

i. The name and the address of the complainant,

ii. The name and address of the branch or office of the bank against which the
complaint is made,

iii. The facts giving rise to the complaint,

iv. The nature and extent of the loss caused to the complainant, and

v. The relief sought for.

b) The complainant shall file along with the complaint, copies of the
documents, if any, which he proposes to rely upon and a declaration that
the complaint is maintainable under sub-clause (3) of this clause.

c) A complaint made through electronic means shall also be accepted by

the Banking Ombudsman and a print out of such complaint shall be
taken on the record of the Banking Ombudsman.
 d) The Banking Ombudsman shall also entertain complaints covered by
this Scheme received by Central Government or Reserve Bank and
forwarded to him for disposal.

3) No complaint to the Banking Ombudsman shall lie 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
a period of 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;

c) The complaint is not in respect of the same cause of action which was
settled or dealt with on merits by the Banking Ombudsman in any previous
proceedings whether or not received from the same complainant or along
with one or more complainants or one or more of the parties concerned
with the cause of action ;

d) The complaint does not pertain to the same cause of action, for which any
proceedings before any court, tribunal or arbitrator or any other forum is
pending or a decree or Award or order has been passed by any such court,
tribunal, arbitrator or forum;

e) The complaint is not frivolous or vexatious in nature; and

f) The complaint is made before the expiry of the period of limitation

prescribed under the Indian Limitation Act, 1963 for such claims.
 POWER TO CALL FOR INFORMATION

1) For the purpose of carrying out his duties under this Scheme, a Banking
Ombudsman may require the bank against whom the complaint is made or
any other bank concerned with the complaint to provide any information or
furnish certified copies of any document relating to the complaint which is
or is alleged to be in its possession.

Provided that in the event of the failure of a bank to comply with the requisition
without sufficient cause, the Banking Ombudsman may, if he deems fit, draw the
inference that the information if provided or copies if furnished would be
unfavorable to the bank.

2) The Banking Ombudsman shall maintain confidentiality of any information

or document that may come into his knowledge or possession in the course
of discharging his duties and shall not disclose such information or
document to any person except with the consent of the person furnishing
such information or document.

Provided that nothing in this clause shall prevent the Banking Ombudsman from
disclosing information or document furnished by a party in a complaint to the
other party or parties to the extent considered by him to be reasonably required to
comply with any legal requirement or the principles of natural justice and fair play
in the proceedings.
 SETTLEMENT OF COMPLAINT BY AGREEMENT

1) As soon as it may be practicable to do, the Banking Ombudsman shall send

a copy of the complaint to the branch or office of the bank named in the
complaint, under advice to the nodal officer referred to in sub-clause (3) of
clause 15, and endeavor to promote a settlement of the complaint by
agreement between the complainant and the bank through conciliation or
mediation.

2) For the purpose of promoting a settlement of the complaint, the Banking

Ombudsman may follow such procedure as he may consider just and proper
and he shall not be bound by any rules of evidence.

3) The proceedings before the Banking Ombudsman shall be summary in

nature.

 AWARD BY THE BANKING OMBUDSMAN

1) 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, he may, after affording the
parties a reasonable opportunity to present their case, pass an Award or
reject the complaint.

2) The Banking Ombudsman shall take into account the evidence placed
before him by the parties, the principles of banking law and practice,
directions, instructions and guidelines issued by the Reserve Bank from
time to time and such other factors which in his opinion are relevant to the
complaint.

3) The award shall state briefly the reasons for passing the award.
 4) The Award passed under sub-clause (1) shall contain the direction/s, if any,
to the bank for specific performance of its obligations and in addition to or
otherwise, the amount, if any, to be paid by the bank to the complainant by
way of compensation for any loss suffered by the complainant, arising
directly out of the act or omission of the bank.

5) Notwithstanding anything contained in sub-clause (4), the Banking

Ombudsman shall not have the power to pass an award directing payment
of an amount which 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 rupees whichever is lower.

6) In the case of complaints, arising out of credit card operations, the Banking
Ombudsman may also award compensation not exceeding Rs 1 lakh to the
complainant, taking into account the loss of the complainant's time,
expenses incurred by the complainant, harassment and mental anguish
suffered by the complainant.

7) A copy of the Award shall be sent to the complainant and the bank.

8) An award shall lapse and be of no effect unless the 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.

Provided that no such acceptance may be furnished by the complainant if he has

filed an appeal under sub. clause (1) of clause 14.

9) The bank shall, unless it has preferred an appeal under sub. clause (1) of
clause 14, within one month from the date of receipt by it of the acceptance
in writing of the Award by the complainant under sub-clause (8), comply
with the Award and intimate compliance to the Banking Ombudsman.
 REJECTION OF THE COMPLAINT

The Banking Ombudsman may reject a complaint at any stage if it appears to him
that the complaint made is;

a) Not on the grounds of complaint referred to in clause 8 or otherwise not in

accordance with sub clause (3) of clause 9; or

b) Beyond the pecuniary jurisdiction of Banking Ombudsman prescribed

under clause 12 (5) and 12 (6) or

c) Requiring consideration of elaborate documentary and oral evidence and

the proceedings before the Banking Ombudsman are not appropriate for
adjudication of such complaint; or

d) Without any sufficient cause; or

e) That it is not pursued by the complainant with reasonable diligence; or

f) In the opinion of the Banking Ombudsman there is no loss or damage or

inconvenience caused to the complainant.

 APPEAL BEFORE THE APPELLATE AUTHORITY:

1) Any person aggrieved by an Award under clause 12 or rejection of a

complaint for the reasons referred to in sub clauses (d) to (f) of clause 13,
may within 30 days of the date of receipt of communication of Award or
rejection of complaint, prefer an appeal before the Appellate Authority;

Provided that in case of appeal by a bank, the period of thirty days for filing an
appeal shall commence from the date on which the bank receives letter of
acceptance of Award by complainant under sub. clause (6) of clause 12;
Provided that the 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;

Provided further that appeal may be filed by a bank only with the previous
sanction of the Chairman or, in his absence, the Managing Director or the
Executive Director or the Chief Executive Officer or any other officer of equal
rank.”

2) The Appellate Authority shall, after giving the parties a reasonable

opportunity of being heard

a) Dismiss the appeal; or

b) Allow the appeal and set aside the Award; or

c) Remand the matter to the Banking Ombudsman for fresh disposal in

accordance with such directions as the Appellate Authority may consider
necessary or proper; or

d) Modify the Award and pass such directions as may be necessary to give
effect to the Award so modified; or

e) Pass any other order as it may deem fit.

3) The order of the Appellate Authority shall have the same effect as the
Award passed by Banking Ombudsman under clause 12 or the order
rejecting the complaint under clause 13, as the case may be.
 BANKS TO DISPLAY SALIENT FEATURES OF THE SCHEME
FOR COMMON KNOWLEDGE OF PUBLIC

1) The banks covered by the Scheme shall ensure that the purpose of the
Scheme and the contact details of the Banking Ombudsman to whom the
complaints are to be made by the aggrieved party are displayed prominently
in all the offices and branches of the bank in such manner that a person
visiting the office or branch has adequate information of the Scheme.

2) The banks covered by the Scheme shall ensure that a copy of the Scheme is
available with the designated officer of the bank for perusal in the office
premises of the bank, if anyone, desires to do so and notice about the
availability of the Scheme with such designated officer shall be displayed
along with the notice under sub-clause (1) of this clause and shall place a
copy of the Scheme on their websites.

3) The banks covered by the Scheme shall appoint Nodal Officers at their
Regional/Zonal Offices and inform the respective Office of the Banking
Ombudsman under whose jurisdiction the Regional/Zonal Office falls. The
Nodal Officer so appointed shall be responsible for representing the bank
and furnishing information to the Banking Ombudsman in respect of
complaints filed against the bank. Wherever more than one zone/region of a
bank are falling within the jurisdiction of a Banking Ombudsman, one of
the Nodal Officers shall be designated as the 'Principal Nodal Officer' for
such zones or regions.
REMOVAL OF DIFFICULTIES
If any difficulty arises in giving effect to the provisions of this Scheme, the
Reserve Bank may make such provisions not inconsistent with the Banking
Regulation Act, 1949 or the Scheme, as it appears to it to be necessary or
expedient for removing the difficulty.

APPLICATION OF THE BANKING OMBUDSMAN SCHEMES,

1995 AND 2002
The adjudication of pending complaints and execution of the Awards already
passed, before coming into force of the Banking Ombudsman Scheme, 2006, shall
continue to be governed by the provisions of the respective Banking Ombudsman
Schemes and instructions of the Reserve Bank issued there under.
DIFFERENCE BETWEEN BANKING OMBUDSMAN SCHEME
1995, 2002 & 2006
The Ombudsman’s task is to provide citizens with a means of redress for
maladministration. By performing this role, the Ombudsman helps, first, to relieve
the burdens of litigation by promoting friendly settlement and making
recommendations to avoid the need for proceedings in courts; and second, to
promote the effective implementation of citizen's rights. The Ombudsman is
impartial and has a conciliatory approach.

In India, any person whose grievances against a bank are not resolved to his
satisfaction by that bank within a period of two months then he can approach the
Banking Ombudsman for redressal. This is however subject to the complaint
pertaining to any of the matters specified in the Banking Ombudsman Scheme.

Reserve Bank of India (RBI) which assumes the role similar to that of quasi-legal
machinery as it is established by a competent authority to provide for an additional
but optional legal remedy for effective, expeditious and inexpensive redressal of
customer grievances. Towards effective compliance of this optional legal remedy
it introduced the Banking Ombudsmen Scheme in 1995 and got it further amended
in 2002 and in 2006.

The Reserve Bank of India notified the revised Banking Ombudsman Scheme,
2006 which came into effect from January 1, 2006. The new scheme widens its
scope thereby to include customer complaints on certain areas like credit card
complaints, deficiencies in providing the promised services even by banks’ sales
agents, levying service charges without prior notice to the customer and non-
adherence to the fair practices code as adopted by the individual banks. It is made
applicable to all commercial banks, regional rural banks and scheduled primary
cooperative banks whose principal place of business is in India.
The Revised Scheme with well-equipped staff is wholly funded by the Reserve
Bank of India. This new scheme allows the complainants to file a complaint in any
form, including online and the bank customers are entitled to file an appeal with
the Reserve Bank of India. It provides a forum for bank customers for redressal of
their common complaints against banks. On the basis of the new Banking
Ombudsman Scheme, 2006 the customers are also privileged to complain about
non-payment or any inordinate delay in payments or collection of cheques towards
bills or remittances by banks, as also non acceptance of small denomination notes
and coins or charging of commission for acceptance of small denomination notes
and coins by banks. The Banking Ombudsmen currently have their offices in 15
centers covering the entire country.
Is the New Banking Ombudsman Scheme 2006 differs from its
previous schemes?
The vision behind the emergence of Banking Institution is to evolve into a strong,
sound and globally competitive financial system, providing integrated services to
customers from all segments, leveraging on technology and human resources,
adopting the best accounting and ethical practices and fulfilling corporate and
social responsibilities towards all stakeholders. As a part of this vision, the RBI
lodged various Ombudsman schemes till today which forms a part of our
discussion.

Yes, the new scheme 2006 differs from its previous schemes. The extent and
scope of the scheme, 2006 is much wider than its earlier schemes of 1995 and
2002. Because the new scheme introduces for the first time;

 Includes complaints relating to credit cards, deficiencies in providing the

promised services by banks and its marketing agents, levying of service
charges without prior notice to the customers and non-compliance of fair
practice codes by the banks;
 Facilitates the submission of complaints through online;
 Establishes an appellate authority to facilitate appeals against the awards
rendered by the Banking Ombudsmen instead of filing with the Review
Authority for review of such awards.

The extent and scope of the new Scheme is wider than the earlier Scheme of 2002.
The new Scheme also provides for online submission of complaints. The new
Scheme additionally provides for the institution of an 'appellate authority' for
providing scope for appeal against an award passed by the Ombudsman both by
the bank as well as the complainant.
In exercise of the powers conferred by Section 35A of the Banking Regulation
Act, 1949 and in partial modification of its Notification dated December 26, 2005,
Reserve Bank of India hereby amends the Banking Ombudsman Scheme 2006 to
the extent specified in the Annex hereto. The Reserve Bank hereby directs that all
commercial banks, regional rural banks and scheduled primary co-operative banks
shall comply with the Banking Ombudsman Scheme, 2006 as amended hereby.
The amendments in the Scheme shall come into force from January 1, 2006.

AMENDMENT PASSED BY RBI FOR THE CHANGES IN

BANKING OMBUDSMAN SCHEME, 2006:

Amendment 1:

RBI expands Scope of Banking Ombudsman Scheme; Includes Fair

Banking Practices.

Date: 26 Dec 2005

The Reserve Bank of India today announced the revised Banking Ombudsman
Scheme with enlarged scope to include customer complaints on certain new areas,
such as, credit card complaints, deficiencies in providing the promised services
even by banks' sales agents, levying service charges without prior notice to the
customer and non adherence to the fair practices code as adopted by individual
banks. Applicable to all commercial banks, regional rural banks and scheduled
primary cooperative banks having business in India, the revised scheme will come
into effect from January 1, 2006.

In order to increase its effectiveness, the revised Banking Ombudsman Scheme

will be fully staffed and funded by the Reserve Bank instead of the banks. Under
the revised Banking Ombudsman Scheme, the complainants will be able to file
their complaints in any form, including online. The bank customers would also be
able to appeal to the Reserve Bank against the awards given by the Banking
Ombudsmen.

The new scheme provides a forum to bank customers to seek redressal of their
most common complaints against banks, including those relating to credit cards,
service charges, promises given by the sales agents of banks, but not kept by
banks, as also, delays in delivery of bank services. The bank customers would now
be able to complain about non-payment or any inordinate delay in payments or
collection of cheques towards bills or remittances by banks, as also non-
acceptance of small denomination notes and coins or charging of commission for
acceptance of small denomination notes and coins by banks.

The Reserve Bank had first introduced the Banking Ombudsman Scheme in 1995
to provide expeditious and inexpensive forum to bank customers for resolution of
their complaints relating to deficiency in banking services. The Scheme was
revised in 2002 mainly to cover Regional Rural Banks and to permit review of the
Banking Ombudsmen’s awards against banks by the Reserve Bank. The Banking
Ombudsmen currently have their offices in 15 centers.

The Reserve Bank is also in an advanced stage of setting up an independent

Banking Codes and Standards Board of India to ensure that comprehensive code
of conduct for fair treatment to customers are formulated by banks and adhered to.
The Reserve Bank of India had announced setting up of the Board in its Annual
Policy for 2005-2006 announced by the Governor, Dr Y V Reddy in April 2005.
Amendment 2:

Customers can now appeal against the Banking Ombudsman's Decision.

Date: 24 May 2007

Bank customers can now appeal against the decision of the Banking Ombudsman
where he has rejected the customer's complaint relating to matters falling within
the grounds of complaints specified under the scheme. The Reserve Bank of India
has amended the Banking Ombudsman Scheme, 2006 to enable the customers to
appeal against the Banking Ombudsman's decision. The amendments are available
on the RBI website. Before the scheme was amended, the bank customers could
appeal only against the awards given by the Banking Ombudsman. The appellate
authority for the Banking Ombudsman Scheme is the Deputy Governor of Reserve
Bank of India.

It may be recalled that in the Annual Policy for 2007-2008, the Reserve Bank had
announced that based on customer feedback, it would amend the Banking
Ombudsman Scheme, 2006 to extend the appeal option also to the decisions of the
Banking Ombudsman.

Originally introduced in 1995, the Banking Ombudsman Scheme enables speedy

and cost effective resolution of complaints of bank customers relating to
deficiency in bank services. The Scheme now covers all Scheduled Commercial
Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks. The
customers can also now complain to the Banking Ombudsman against deficiency
in almost any banking services, including credit cards, after exhausting the
channel available with the bank concerned for resolving their complaints. The
Reserve Bank has appointed 15 Banking Ombudsmen who are located mostly in
State Capitals under the Scheme. The Banking Ombudsman tries to resolve the
complaint through conciliation or mediation and even passes an award if it is not
resolved through such settlement.
Amendment 3:

RBI amends Banking Ombudsman Scheme: includes complaints

relating to Internet Banking and Non-adherence to BCSBI Code.

Date: 05 Feb 2009

The Reserve Bank of India has widened the scope of its Banking Ombudsman
Scheme 2006, to include deficiencies arising out of internet banking. Under the
amended Scheme, a customer would also be able to lodge a complaint against the
bank for its non-adherence to the provisions of the fair practices code for lenders
or the Code of Bank's Commitment to Customers issued by the Banking Codes
and Standards Board of India

(BCSBI). The BCSBI is an independent and autonomous watchdog set up by the

Reserve Bank to monitor and ensure that the codes and standards adopted by the
banks for rendering banking services are adhered to in true spirit.

As per the amended Scheme, the Banking Ombudsman can award compensation
not exceeding Rupees one lakh to the complainant in the case of complaints
arising out of credit card operations, taking into account the loss of the
complainant's time, expenses incurred by him as also, harassment and mental
anguish suffered. Further, non-observance of the Reserve Bank's guidelines on
engagement of recovery agents by banks has also been brought specifically under
the purview of the Scheme.

Any customer who has a grievance against a bank can complain to the Banking
Ombudsman in whose jurisdiction the branch of the bank complained against is
located. Some banks have centralized certain transactions, like housing loans,
credit cards, etc. If there are complaints regarding such transactions, complaints
would have to be made to the Banking Ombudsman in the State in which the bank
customer receives the bill.
In addition, the Reserve Bank has simplified the format for lodging complaint to
the Banking Ombudsman. Though the complainant need not lodge his complaint
in a specific format, the Scheme now provides for an easy-to-fill format for
lodging complaints, in case complainants prefer to use it. The jurisdictions of the
Banking Ombudsman at Kanpur, New Delhi, Chandigarh, Chennai and
Thiruvananthapuram have been rationalized to include/exclude certain areas
taking into account the geographical proximity of those areas to the Office of the
Banking Ombudsman.

The amended Scheme however, does not include certain banking transactions,
such as, failure to honour bank guarantee or letter of credit, etc. Complaints on
these areas of banking services are insignificant in number.
INTRODUCTION
In the present scenario of competitive banking, excellence in customer service is
the most important tool for sustained business growth. Customer complaints are
part of the business life of any corporate entity. This is more so for banks because
banks are service organizations. As a service organization, customer service and
customer satisfaction should be the prime concern of any bank. The bank believes
that providing prompt and efficient service is essential not only to attract new
customers, but also to retain existing ones. This policy document aims at
minimizing instances of customer complaints and grievances through proper
service delivery and review mechanism and to ensure prompt redressal of
customer complaints and grievances. The review mechanism should help in
identifying shortcomings in product features and service delivery. Customer
dissatisfaction would spoil bank’s name and image. The Bank’s policy on
grievance redressal follows the under noted principles.

 Customers be treated fairly at all times

 Complaints raised by customers are dealt with courtesy and on time

 Customers are fully informed of avenues to escalate their

complaints/grievances within the organization and their rights to
alternative remedy, if they are not fully satisfied with the response of the
bank to their complaints.

 Bank will treat all complaints efficiently and fairly as they can damage the
bank’s reputation and business if handled otherwise.

 The Bank employees must work in good faith and without prejudice to
the interests of the customer.

In order to make bank’s redressal mechanism more meaningful and effective, a

structured system needs to be built up towards such end. Such system would
ensure that the redressal sought is just and fair and is within the given frame-work
of rules and regulation. The policy document would be made available at all
branches. All employees of the Bank should be made aware about the Complaint
handling process.

The customer is having full right to register his complaint if he is not satisfied with
the services provided by the bank. He can give his complaint in writing, orally or
over telephone. If customer’s complaint is not resolved within given time or if he
is not satisfied with the solution provided by the bank, he can approach Banking
Ombudsman with his complaint or other legal avenues available for grievance
redressal.

INTERNAL MACHINERY TO HANDLE CUSTOMER

COMPLAINTS/ GRIEVANCES

 Customer Service Committee of the Board

This sub-committee of the Board would be responsible for formulation of a

Comprehensive Deposit Policy incorporating the issues such as the treatment of
death of a depositor for operations of his account, the product approval process
and the annual survey of depositor satisfaction and the tri-enniel audit of such
services. The Committee would also examine any other issues having a bearing on
the quality of customer service rendered. This Committee would also review the
functioning of Standing Committee on Customer Service. The Customer Service
Committee of the Board is responsible for the rendering of customer service to the
individual, both as a depositor and also as a borrower. The Committee is,
therefore, responsible for examining loan policies and service issues for the
individual as a borrower also.
  Standing Committee on Customer Service

The Standing Committee on Customer Service will be chaired by the Managing

Director/ Executive Director of the Bank. Besides two to three senior executives
of the bank, the committee would also have two to three eminent non-executives
drawn from the public as members. The committee would have the following
functions.

 Evaluate feed-back on quality of customer service received from various

quarters. The committee would also review comments/feed-back on
customer service and implementation of commitments in the Code of
Bank’s Commitments to Customers received from BCSBI.

 The Committee would be responsible to ensure that all regulatory

instructions regarding customer service are followed by the bank.
Towards this, the committee would obtain necessary feed-back from
zonal/regional managers/ functional heads.

 The committee also would consider unresolved complaints/grievances

referred to it by functional heads responsible for redressal and offer their
advice.

 The committee would submit report on its performance to the customer

service committee of the board at quarterly intervals.
 Nodal Officer and other designated officials to handle complaints
and grievances

Bank would appoint a Nodal Officer who will be responsible for the
implementation of customer service and complaint handling for the entire bank.
The bank may also appoint such other officials as it deems necessary.

To enable the customers to voice their grievances or offer suggestions for

improvement in customer service, “Customer Day” is observed at all the offices of
the Bank across the organization covering branches, Regional / Zonal Offices and
Head Office, on 15th of every month ( next day, if 15th is a holiday or half day).

In case of any complaint, the matter may be first brought to the notice of
concerned Branch Manager for immediate redressal. If the complaint is not
redressed to the satisfaction of the customer, the matter may be taken up with the
Regional Manager / Zonal Manager concerned. The Bank has also nominated
concerned Regional Manager as Nodal Officer for handling the complaint
grievances in respect of the branches under their jurisdiction. If the complainant
still feels unsatisfied with the responses received, he/she can address the complaint
to the bank’s Nodal Officer at Head Office designated to deal with customers’

complaints / grievance giving full details of the case.

MANDATORY DISPLAY REQUIREMENTS

It is mandatory for the bank to provide;

 Appropriate arrangement for receiving complaints and suggestions.

 The name, address and contact number of Nodal Officer(s)
 Contact details of Banking Ombudsman of the area
 Code of bank’s commitments to customers/Fair Practice code
RESOLUTION OF GRIEVANCES
Branch Manager is responsible for the resolution of complaints/grievances in
respect of customer’s service by the branch. He would be responsible for ensuring
closure of all complaints received at the branches. It is his foremost duty to see
that the complaint should be resolved completely to the customer’s satisfaction
and if the customer is not satisfied, then he should be provided with alternate
avenues to escalate the issue. If the branch manager feels that it is not possible at
his level to solve the problem he can refer the case to Regional or Zonal Office for
guidance. Similarly, if Regional or Zonal office finds that they are not able to
solve the problem such cases may be referred to the Nodal Officer.

Complaints relating to non-compliance with the Code may be referred to the Code
Compliance officers, who shall ensure speedy disposal of all such complaints.

TIME FRAME
Complaint has to be seen in the right perspective because they indirectly reveal a
weak spot in the working of the bank. Complaint received should be analyzed
from all possible angles. The first level of receiving complaints is at the branch.
Branch Head should try to resolve the complaint within 8 working days. In case
the customer does not receive a revert / response within 8 working days from the
branch, he can escalate the complaint to the Nodal Officer, who shall strive to
revert / answer the complaint within a period of 15 working days. If the customer
does not receive a satisfactory response from the Bank within a period of one
month, he may be provided information about how he can take his complaint
further i.e. to the Ombudsman.

Communication of Bank’s stand on any issue to the customer is a vital

requirement. Complaints received, which would require some time for
examination of issues involved, should invariably be acknowledged promptly.
INTERACTION WITH CUSTOMERS
The Bank recognizes that customer’s expectation/requirement/grievances can be
better appreciated through personal interaction with customers by Bank’s staff.
Structured customer meets, say once in a month will give a message to the
customers that the bank cares for them and values their feedback/suggestions for
improvement in customer service. Many of the complaints arise on account of lack
of awareness among customers about bank services and such interactions will help
the customers appreciate banking services better. As for the bank the feedback
from customers would be valuable input for revising its product and services to
meet customer requirements.

SENSITIZING OPERATING STAFF ON HANDLING

COMPLAINTS
Staff should be properly trained for handling complaints. We are dealing with
people and hence difference of opinion and areas of friction can arise. With an
open mind and a smile on the face we should be able to win the customer’s
confidence. It would be the responsibility of the Nodal Officer to ensure that
internal machinery for handling complaints/grievances operates smoothly and
efficiently at all levels. He should give feedback on training needs of staff at
various levels to the HR Dept.
 COMPENDIUM OF CASE HANDLED BY THE BANKING
OMBUDSMAN OFFICE

SUBJECT: Refusal to Close the Account

The complainant, Mr.XYZ was holding a current account with ABC Bank. On
11.09.1990, following a raid conducted on his premises by the Income Tax Dept.,
jewellery, FDRs, chequebooks, passbooks pertaining to his bank accounts with
various banks including that with ABC Bank were seized. The credit balance in
his current account with ABC Bank at the time of seizure of the documents was
Rs.44,769.10. He stated that it had taken thirteen years for the Income Tax Dept.
to finalize his case and to exonerate him. The Income Tax Dept. did not to return
the chequebook and passbook seized by them, as they were not traceable. The
complainant had approached the ABC Bank for withdrawing the amount lying in
his current account but the bank refused to allow him to withdraw the amount
without chequebook and the passbook. The Income Tax Dept. by its letter No.
GIR No.V- 715 dated 11.09.2003 addressed to ABC Bank certified that during
search operations conducted in the premises of Mr.XYZ on 11.09.1990, the
department had seized a chequebook in respect of current account No.929 in the
name of Mr.XYZ showing a credit balance of Rs.44,647.10 as on the date of
seizure adding that the chequebook and passbook were not readily traceable and
the department had no objection in allowing operations in the account by the
complainant.
DECISION
When the complainant had approached the bank on 12.09.2003 for refund of the
amount lying to his credit, the bank had refused to allow him to withdraw the
amount. Article 90 of the Limitation Act clearly mentions that limitation would
start running from the date of demand. The complaint filed with the office of the
Banking Ombudsman is not barred by limitation and is maintainable in law. It is a
general rule that the party who affirms any proposition shall prove it. It is also a
general rule that the onus lies upon the party who seeks to support his case by a
particular fact to prove it. If this basic principle of law of evidence is applied, it is
for the bank to prove conclusively as to when and how the account was closed and
to produce the documents supporting such payment and closure, which ought to
have been in its custody. It may also be pertinent to note that the Asst. Director of
Income Tax [Inv.] had served an order under Sec.132 [3] of the Income Tax on the
branch manager directing him not to part with the funds lying to the credit of the
complainant in current account No.929. When the bank asserts that the account
was closed it is for the bank to bring proof of such closure and it cannot excuse
itself stating that records were destroyed or its tapes were not readable. The
submission that the bank had permitted closure when there was prohibitory order
against it is not credible as in the normal course there is no chance of any bank
allowing operations in an account when there is a prohibitory order in force. All
the facts and circumstances of the case point out to an irrefutable conclusion that
there was no chance that the complainant could have received the refund of the
current deposit prior to 2003. Therefore it was decided to direct the bank that it
should refund to the complainant Rs.44,647.10 which was lying to his credit as on
11.09.1990 when the passbook and chequebook were seized by Income Tax
authorities.
ANALYSIS OF THE CASE
This case is about a customer Mr.XYZ, who is a current account holder with the
ABC Bank. Mr.XYZ was having a balance of Rs.44,647/- in his current account
when the income tax department conducted a raid in his premises. While the
investigations the income tax department confiscated his passbook, chequebook,
FDR’s and other document of all the banks including the ABC Bank. After
thirteen years the income tax department was not able to trace his documents. So
he decided to withdraw his balance amount and close the account, but the the bank
refused to close the account without the cheque book and the passbook.

Mr.XYZ was able to prove his statement by providing the letter from the income
tax department mentioning that Mr.XYZ’s passbook having a balance of
Rs. 44,647/- as on 11.09.1990 was misplaced by them. The bank refused to refund
of the amount lying to his credit even after showing the evidence to them.

Therefore the customer approached the Banking Ombudsman to complaint the

ignorance of the bank and to get his account closed. As soon as the complaint was
lodged to the Banking Ombudsman he founded that the evidence provided by the
complainant was true. So the Banking Ombudsman directed the bank to refund the
complainant the amount of Rs. 44,467/- that was lying to his credit since
11.09.1990 as per the passbook.
Though the Banking Ombudsman Scheme was introduced in the year 1995, with a
view to do away with the banking customer complaints, the scheme was amended
in subsequent years of 2002 and 2006. But the banks do not seem to have adopted
the norms for their efficient functioning, that is the reason behind the increasing
consumer cases against the banks, which are governed under the scheme.

In the system of Banking Ombudsman, the results are delivered very soon, the
procedures are fair together with cost, and proportionate to the nature of the issues
involved. The system deals with cases at reasonable speed, is understandable to
those who use it, is responsive to the needs of those who use it, and provides as
much certainty as the nature of particular cases allows. This is true because over
the past five years nearly 36000 complaints are being resolved by the Banking
Ombudsman under this Banking Ombudsman Scheme. Though the Banking
Ombudsman is eligible enough to deliver the bank customer complaints at the
earliest yet the Consumer Redressal Forum/Commission is being taken resort of
by most of the bank customers for their redressal of grievances with the bank. The
reason is they are well popular among the common public which is lacking with
the banking ombudsman and its working. Definitely the Scheme needs popularity
in the society for its more appropriateness and effectiveness so that the aggrieved
bank customer with the services of the bank prefers to knock the door of the
banking ombudsman for redressal. The scheme should provide more powers and
levy more duties on the banking ombudsman so that they can easily be
approachable by the aggrieved bank customer.
 Annual Report by the Reserve Bank of India – Banking Ombudsman
Scheme 2007-2008.

 Booklet of “The Banking Ombudsman Scheme 2006”.

 RBI Journals.
 http://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=159
 http://www.rbi.org.in/Scripts/PublicationsView.aspx?id=11113#2
 http://www.nos.org/Secbuscour/25.pdf
 http://www.indbank.com/ombudsman.htm
 http://www.ucobank.com/ombudsman.htm
 ANNEXURE

Annexure ‘A’

FORM OF COMPLAINT (TO BE LODGED) WITH THE

BANKING OMBUDSMAN

(FOR OFFICE USE ONLY)

Complaint No. ………of year.… Date ……………………..

(TO BE FILLED UP BY THE COMPLAINANT)

To
The Banking Ombudsman
(*Territorial jurisdiction,
Place of BO’s office……)

Dear Sir,

Sub: Complaint against ……………………. (Name of the bank’s branch) of

…………………………………………………………………………………
(Name of the Bank)
Being aggrieved the complainant named herein has submitted a complaint with the
above referred bank. Details of the complaint are as under:
1. NAME OF THE COMPLAINANT …………………………………………...…
2. FULL ADDRESS OF THE COMPLAINANT ……………………
………………………………………………………………………………………
PIN CODE ……………….. PHONE NO. / FAX NO.……………………..…
3. COMPLAINT AGAINST (NAME AND FULL ADDRESS OF THE
BRANCH/ BANK) …………………………………………………………………
PIN CODE ……………………. PHONE NO. / FAX NO.…….….…………….
4. PARTICULARS OF BANK ACCOUNT
(Please state nature of account viz. Savings bank/current/cash credit/term
deposit/loan account etc. related to the subject matter of the complaint being
made) ………………………………………………………………………………
5. (a) DATE OF REPRESENTATION BY THE COMPLAINANT TO THE
BANK ……………………….
(Please enclose three copies of the representation)
(b) Whether any reminder was sent by the complainant? YES /NO (If yes,
please enclose three copies of the reminder)
6. SUBJECT MATTER OF THE COMPLAINT (Please refer to Clause 8 of the
Scheme) …………………………………………………………………………….
………………………………………………………………………………………
7. DETAILS OF THE COMPLAINT
(If space is not sufficient Please enclose separate sheet)
………………………………………………………………………………………
………………………………………………………………………………………
8. (a) Whether any reply (Within a period of one month after the bank concerned
received the representation) has been received? YES / NO
(If yes, please enclose ‘three copies’ of the bank’s reply)
(b) Whether the representation has been rejected? YES/ NO
(If yes, please enclose ‘three copies’ of the bank’s letter)
(c) Whether the complainant has received any other final decision of the bank?
YES/ NO
(If yes, please enclose ‘three copies’ of the bank’s letter conveying its final
decision)
9. NATURE OF RELIEF SOUGHT FROM THE BANKING OMBUDSMAN
………………………………………………………………………………………
(Please enclose ‘three copies’ of documentary proof, if any, in support of your
claim)
10. NATURE AND EXTENT OF MONETARY LOSS, IF ANY, CLAIMED BY
THE COMPLAINANT BY WAY OF COMPENSATION Rs. …...……………….
(Please enclose documentary proof, if any, to show that such loss is actual loss
caused as a direct consequence of alleged omission or commission of the bank)
11. LIST OF DOCUMENTS ENCLOSED (Please enclose ‘three copies’ of all the
documents) ………….…………………………………….………………………..
………………………………………………………………………………………
12. DECLARATION
1. I/ We, the complainant/s herein declare that:
(a) The information furnished herein above is true and correct; and
(b) I/ We have not concealed or misrepresented any fact stated in aforesaid
columns and the documents submitted herewith.
2. The complaint is filed before expiry of period of one year reckoned in
accordance with the provisions of Clause 9(3) (a) and (b) of the Scheme. 29
3. (a) The subject matter of the present complaint has never been brought before
the Office of the Banking Ombudsman by me/ or by any one of us or by any of the
parties concerned with the subject matter to the best of my/ our knowledge.
(b) The subject matter of the present complaint is not in respect of the same
which was settled through the Office of the Banking Ombudsman in any previous
proceedings.
(c) The subject matter of the present complaint has not been decided by any
forum/court/arbitrator.
4. I/We authorize the bank to disclose any such information/ documents furnished
by us to the Banking Ombudsman and disclosure whereof in the opinion of the
Banking Ombudsman is necessary and is required for redressal of any other
complaint or our complaint.
5. I/We have noted the contents of the Banking Ombudsman Scheme, 2006.
Yours faithfully,
(Signature of Complainant)

NOMINATION – (If the complainant wants to nominate his representative to

appear and make submissions on his behalf before the Banking Ombudsman or to
the Office of the Banking Ombudsman, the following declaration should be
submitted.) 30 I/We the above named complainant/s hereby nominate
Shri/Smt……………………………………who is not an Advocate and whose
address is ……………………………………………………………………………
as my/our REPRESENTATIVE in all proceedings of this complaint and confirm
that any statement, acceptance or rejection made by him/her shall be binding on
me/us. He/She has signed below in my presence.

ACCEPTED

(Signature of Representative)

(Signature of Complainant)
 Annexure ‘B’

Addresses and Area of Operation of Banking Ombudsman

Sl. Address of the Office Area of Operation Telephone No. / Fax No.
No. of Banking
Ombudsman

1. C/o Reserve Bank of Gujarat, Union Tel. No.6582357/6586718

India Territories of Dadra
Fax No.079-6583325
La Gajjar Chambers, and Nagar Haveli,
Ashram Road, Daman and Diu
Ahmedabad-380 009

2. C/o Reserve Bank of Karnataka Tel. No.2210771/2275629

India
Fax No.080-2244047
10/3/8, Nrupathunga
Road,
Bangalore-560 001

3. C/o Reserve Bank of Madhya Pradesh & Tel. No.573772/573776

India Chattisgarh
Fax No.0755-573779
Hoshangabad Road,
Post Box No.32,
Bhopal-462 011

4. C/o Reserve Bank of Orissa Tel. No. 418007/418008

India
Fax No.0674-418006
Pt. Jawaharlal Nehru
Marg,
Bhubaneswar-751 001
5. C/o Reserve Bank of West Bengal and Tel. No.2206222/2205580
India Sikkim
Fax No.033-2205899
15, Netaji Subhas
Road Kolkata-
700 001

6. C/o Reserve Bank of Himachal Pradesh, Tel No.709589/721011

India Punjab and Union
Fax No.0172-721880
New Office Building, Territory of
Sector-17, Central Chandigarh
Vista
Chandigarh-160 017

7. Kuralagam Building Tamil Nadu, Union Tel. No.5341645/5341619

(3rd Floor) Territories of
Fax No.044-5341607
Esplanade Pondicherry and
N.S.C. Bose Road, Andaman and
Chennai-600 108 Nikcobar Islands

8. C/o Reserve Bank of Assam, Arunachal Tel. No.542556/540445

India Pradesh, Manipur,
Fax No.0361-540445
Station Road, Meghalaya, Mizoram,
Pan Bazaar Nagaland & Tripura
Guwahati – 781 001

9. C/o Reserve Bank of Andhra Pradesh Tel No.3210013/3243970

India
Annexe Building, Fax No.040-3210014
Ground Floor
Saifabad, Hyderabad-
500 004
10. C/o Reserve Bank of Uttar Pradesh Te. No.361191/310593
India excluding District of
Fax No.0512-362553
M.G. Road, Ghaziabad &
Post Box No.82, Uttaranchal
Kanpur-208 001

11. C/o Reserve Bank of Maharashtra and Goa Tel No.4924607/4960893

India
Fax No.022-4960912
Garment House,
Ground Floor
Dr. Annie Besant
Road, Worli,
Mumbai-400 018

12. Jeevan Bharati Delhi, Haryana, Tel No.3725445/3710882

Building Jammu and Kashmir
Fax No.011-3725218
Tower No.1, 7th Floor, and Ghaziabad district
124 Connaught Circus of Uttar Pradesh
New Delhi-110 011

13. ‘Biscomaun Towers’ Bihar & Jharkhand Tel. No. C/o 236453(NCC)
2nd Floor, West
Fax No.0612-2206308
Gandhi Maidan
Patna-800 001

14. C/o Reserve Bank of Kerala and Union Tel. No.332723/329676

India Territory of
Fax No.0471-321625
Bakery Junction Lakshadweep
Thiruvanathapuram-
695 033