Sunday, March 8, 2015

Banking Ombudsman

Ombudsman is an official appointed to investigate individual's complaints against a company or organization, especially a public authority (Google definition of 'Ombudsman').

To facilitate customer complaints resolution process, RBI introduced this fast and inexpensive (no fee to avail this facility) Ombudsman Scheme in 1995 under Section 35A of Banking Regulation Act, 1949. In this scheme, RBI appoints the Banking Ombudsman, generally a senior official, to redress customer complaints against deficiency in certain banking services provided by a bank.

Banks covered under this scheme
  • Scheduled Commercial Banks (SCBs)
  • Regional Rural Banks (RRBs)
  • Scheduled Primary Co-operative Banks

Banking Ombudsmen and their location
Currently, total 15 Banking Ombudsmen have been appointed by RBI, and their offices are located mostly in the state capitals -

Allahabad, Bengaluru, Bhopal, Bhubaneshwar, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Kolkata, Mumbai, Delhi, Patna, Thiruvanthapuram

Legal power of Ombudsman
Banking Ombudsman is a quasi-judicial authority, who has legal power to summon both the parties - Bank and its customer, to facilitate the resolution of complaint through mediation.

Banking Ombudsman Scheme, 2006
The latest scheme is Banking Ombudsman Scheme, 2006, which has wider extent and scope than its previous versions, like online submission of complaints is possible. Also, if customer is not satisfied with the resolution provided by Ombudsman, he can approach the Appellate authority, i.e., Deputy Governor of RBI.

Complaint process
A customer can file a complaint before the Ombudsman, only after the followings -
  • If he has not received any reply from the bank within a period of 1 month after the bank has received his complaint (meaning, customer has to complain to the bank first, then Ombudsman)
  • If the bank rejects  the complaint of the customer
  • If the customer is not satisfied with the reply from the bank
He can file a complaint by writing on a plain paper, or online, or email to the Banking Ombudsman (under whose jurisdiction the bank branch is)

Note that, Banking Ombudsman is not meant to replace the traditional Consumer Courts or Forums, but the scheme only supplements them. Also note that this scheme deals with complaints of max. Rs. 10 lakh disputes.

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Happy learning!

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