Author Name:   moumita mallick

This article explains banking ombudsmen scheme in the form of short questions . This scheme deals with speedy and inexpensive redressal for customers having complaints against the services provided by the banks without intervention of the court

Banking Ombudsman Scheme

Banking Ombudsman is a quasi judicial authority functioning under India’s Banking Ombudsman Scheme 2006, and the authority was created pursuant to a decision made 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. The current scheme became operative from 1 January 2006, and replaced and superseded the banking Ombudsman Scheme 2002.

Introduction
An ombudsman is a person who has been appointed to look into complaints about an organization2. 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.

Few Basic Questions-
1. What is the Banking Ombudsman Scheme?
The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank customers for resolution of complaints relating to certain services rendered by banks. The Banking Ombudsman Scheme is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995.

2. Who is a Banking Ombudsman?
The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking services.

3. How many Banking Ombudsmen have been appointed and where are they located?
As on date, fifteen Banking Ombudsmen have been appointed with their offices located mostly in state capitals.

4. Which are the banks covered under the Banking Ombudsman Scheme, 2006?
All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.

5. What are the grounds of complaints?
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;

· 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 ;

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

· refusal to open deposit accounts without any valid reason for refusal;

· 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;

· non-disbursement or delay in disbursement of pension (to the extent the grievance can be attributed to the action on the part of the bank concerned, but not with regard to its employees);

· refusal to accept or delay in accepting payment towards taxes, as 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-adherence to the fair practices code as adopted by the bank or 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 ;

· non-observance of Reserve Bank guidelines on engagement of recovery agents by banks; and
· any other matter relating to the violation of the directives issued by the Reserve Bank in relation to banking or other services.

A customer can also lodge a complaint on the following grounds of deficiency in service with respect to loans and advances
· 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
· 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;
· 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.
· The Banking Ombudsman may also deal with such other matter as may be specified by the Reserve Bank from time to time.

6. When can one file a complaint?
One can file a complaint before the Banking Ombudsman if the reply is not received from the bank within a period of one month after the bank concerned has received one s representation, or the bank rejects the complaint, or if the complainant is not satisfied with the reply given by the bank.

7. When will one s complaint not be considered by the Ombudsman ?
One’s complaint will not be considered if:
a. One has not approached his bank for redressal of his grievance first.
b. 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.
c. 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.
d. Frivolous or vexatious.
e. The institution complained against is not covered under the scheme.
f. The subject matter of the complaint is not within the ambit of the Banking Ombudsman.
g. If the complaint is for the same subject matter that was settled through the office of the Banking Ombudsman in any previous proceedings.

8. What is the procedure for filing the complaint before the Banking Ombudsman?
One can file a complaint with the Banking Ombudsman simply by writing on a plain paper. One can also file it online or by sending an email to the Banking Ombudsman attaching the form available in the RBI website

9. Where can one lodge his/her complaint?
One may lodge his/ her complaint at the office of the Banking ombusman under whose jurisdiction, the bank branch complained against is situated.
For complaints relating to credit cards and other types of services with centralized operations, complaints may be filed before the Banking Ombudsman within whose territorial jurisdiction the billing address of the customer is located.

10.Can a complaint be filed by one s authorized representative?
Yes. The complainant can be filed by one s authorized representative (other than an advocate).

11. Is there any cost involved in filing complaints with Banking Ombudsman?
No. The Banking Ombudsman does not charge any fee for filing and resolving customers’ complaints.

12. Is there any limit on the amount of compensation as specified in an award?
The amount, if any, to be paid by the bank to the complainant by way of compensation for any loss suffered by the complainant is limited to the amount arising directly out of the act or omission of the bank or Rs 10 lakhs, whichever is lower.

13. Can compensation be claimed for mental agony and harassment?
The Banking Ombudsman may award compensation not exceeding Rs 1 lakh to the complainant only in the case of complaints relating to credit card operations for mental agony and harassment. The Banking Ombudsman will take into account the loss of the complainant s time, expenses incurred by the complainant, harassment and mental anguish suffered by the complainant while passing such award.

14. What details are required in the application?
The complaint should have the name and address of the complainant, the name and address of the branch or office of the bank against which the complaint is made, facts giving rise to the complaint supported by documents, if any, the nature and extent of the loss caused to the complainant, the relief sought from the Banking Ombudsman and a declaration about the compliance of conditions which are required to be complied with by the complainant.

15. What happens after a complaint is received by the Banking Ombudsman?
The Banking Ombudsman endeavours to promote, through conciliation or mediation, a settlement of the complaint by agreement between the complaint and the bank named in the complaint.
If the terms of settlement (offered by the bank) are acceptable to one in full and final settlement of one s complaint, the Banking Ombudsman will pass an order as per the terms of settlement which becomes binding on the bank and the complainant.

16. Can the Banking Ombudsman reject a complaint at any stage?
Yes. The Banking Ombudsman may reject a complaint at any stage if it appears to him that a complaint made to him is:
· not on the grounds of complaint referred to above
· compensation sought from the Banking Ombudsman is beyond Rs 10 lakh .
· requires consideration of elaborate documentary and verbal evidence and the proceedings before the Banking Ombudsman are not appropriate for adjudication of such complaint
· without any sufficient cause
· that it is not pursued by the complainant with reasonable diligence
· in the opinion of the Banking Ombudsman there is no loss or damage or inconvenience caused to the complainant.

17. What happens if the complaint is not settled by agreement?
If a complaint is not settled by an agreement within a period of one month, the Banking Ombudsman proceeds further to pass an award. Before passing an award, the Banking Ombudsman provides reasonable opportunity to the complainant and the bank, to present their case.
It is up to the complainant to accept the award in full and final settlement of your complaint or to reject it.

18. Is there any further recourse available if one rejects the Banking Ombudsman’s decision?
If one is not satisfied with the decision passed by the Banking Ombudsman, one can approach the appellate authority against the Banking Ombudsmen’s decision. Appellate Authority is vested with a Deputy Governor of the RBI.
One can also explore any other recourse and/or remedies available to him/her as per the law.
The bank also has the option to file an appeal before the appellate authority under the scheme.

19. Is there any time limit for filing an appeal?
If one is aggrieved by the decision, one may, within 30 days of the date of receipt of the award, appeal against the award before the appellate authority. The appellate authority may, if he/ she is satisfied that the applicant had sufficient cause for not making an application for appeal within time, also allow a further period not exceeding 30 days.

20. How does the appellate authority deal with the appeal?
The appellate authority may
i. dismiss the appeal; or
ii. allow the appeal and set aside the award; or
iii. send the matter to the Banking Ombudsman for fresh disposal in accordance with such directions as the appellate authority may consider necessary or proper; or
iv. modify the award and pass such directions as may be necessary to give effect to the modified award; or
v. pass any other order as it may deem fit.

Cases Concerning the Banking Services:

Following are the cases, through which it can be ascertained that what the grievances have been handled by the Banking Ombudsman Scheme:
1. Failure to issue bank guarantee. The bank was alleged to have failed to issue bank guarantee despite sufficient security and the complainant suffered financial loss. It was held that the non-issuance of bank guarantee despite security deposit with the bank would amount to deficiency in service and the complainant was held entitled to interest on that security amount.

2. Failure to confirm remittance. In one of the cases, the complainant's son remitted an amount from abroad to be credited to his NRI account with appellant bank. The remittance was not confirmed till a long time. Appellant bank pleaded that non-confirmation was due to failure of computers. The issue is whether this delay on the part of the bank amounted to deficiency in service. The Commission in appeal observed that bank officials could have verified vouchers and cheques received by post or confirmation and could have given correct reply within a reasonable time. It was held that failure of the bank to confirm remittance received from outside country within a reasonable period amounts to deficiency in service.

3. Deficiency in services. In most of the cases against the banks, the costumers have alleged the deficiency in services provided by the banks.
a. Issues of cash credit facility. The appellant had the cash credit facility from 1994 with respondent bank and also he had issued two cheques of which one was en-cashed and the other was dishonored. Respondent bank averred that appellant had overdrawn account. It was held that when there was credit in favour of the complainant, dishonour of the cheque issued by the complainant could not be said to be bonafide. Respondent bank was held guilty of deficiency of service and appellant was held entitled for compensation.

b. Issues of discounting agreement. Further in the case of Corporation Bank & Anr v. Navin J. Shah, the Respondent was an exporter. Under discounting agreement, he entrusted documents relating to export and bills of exchange with appellant bank to negotiate the same through a foreign bank. Respondent alleged that the bank had failed to collect money in foreign currency indicated in documents but instead collected in local currency, hence there was deficiency in service on the part of the appellant bank and hence a claim for damages was made. In appeal, the Commission held that there was no deficiency of service on the part of the bank as the appellant bank, acting for an on behalf of the respondent, had negotiated the documents as provided under agreement. However the conversion of local currency in U.S. dollar became difficult on account of policy of Sudan Government. It was observed that all that was required to be done under terms of the agreement and under contract had been done by the two banks.

d. Non-payment of premium. In Manohar Singh Chouhan & Ors Vs. Central Bank of India, the complainants have purchased a tractor after taking loan from the respondent bank. The respondent bank did not remit the premium amount to the insurance company with which the complainants have insured their tractor as a result of which the loss suffered when the tractor met with an accident could not be recovered from the insurance company. The issue for consideration is whether non- payment of premium amount by the bank amounted to deficiency in service. It was held that when hire purchase agreement between the bank and buyer of vehicle with the help of bank loan did not contain a condition creating obligation on the part of the bank to remit premium for insurance policy, complainant buyer of vehicle could not hold bank guilty of deficiency in service.

e. Absence of security. In a case concerning the security at the banking premises, cash was snatched from the hands of the complainant at the gate of the respondent bank. The appellant alleges that the absence of security on the gate and the non-provision of steps like siren/alarm system etc. amounts to deficiency in service on the part of the respondent bank. The State Commission held that the non-provision of security on the gate of the bank on the date of occurrence viz. snatching of cash in bank premises cannot be held to be amounting to deficiency in service hired by complainant

Banking Ombudsman Scheme- How Different From the Schemes of 1995 And 2002

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.

Power to Arbitrate

The powers of the Banking Ombudsman have been widened to include the powers to arbitrate between inter-bank disputes and bank-customer disputes. The ombudsmen, thus, can address disputes pertaining to regional rural banks in addition to commercial banks and scheduled primary co-operative bank.

Achievements
During the year 2010-11, the complaints received against member banks were quite reduced to 573 as compared to 750 complaints in the previous year. This is according to the Banking Codes and Standards Board of India indicative of greater awareness among bank customers. The table given below explains the type of complaints filed in recent years.

On the contrary, the number of complaints against banking services has been on rise in Northeast India. The Banking Ombudsman for Northeast India has received 708 numbers of complaints till June 2012.

Conclusion
Banks being the institutions of financial importance in every part of the world, the resolution of the complaints relating to their conduct is also an essential attribute of consumer satisfaction. Therefore the ombudsman or the officer for dealing with consumer complaints regarding the banks has been appointed by an authority in various nations. The Ombudsman scheme is a boon and a very important channel for redressal of grievances by the general public against banks and banking services. It is framed in such a manner that it does not oust the jurisdiction of other courts, and hence, aggrieved people do not hesitate in using the bankingombudsman as a primary forum for resolution of disputes regarding banks. The hallmark of the banking ombudsman probably is that it is in position to do justice in an individual case, in the sense it is not bound by the precedents and in certain circumstances, can ignore technicalities and legal rules of evidence while resolving disputes between aggrieved customer and the bank. Apart from above BO?s offices have also started outreach activities for creating awareness among customers like interface with banks, organizing awareness camps, participation in exhibitions, responding to readers? queries in newspapers, broadcasting advertisements through AIR and Doordarshan and many others. So far the achievements of BOS have been remarkable however there is a lot to achieve.

As number of complaint received are though significant and are handled but total consumer awareness needs to grow in order to the get total satisfaction of consumer and also BOS needs to handle complaints efficiently and promptly in order to not deny a consumer justice as its delayed is denied. Bank Ombudsman is limited to twenty seven grounds on which a customer can file a complaint against a bank and there is a dire need to expand the scope of ombudsman in the changing IT environment.

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