Banking Ombudsman Scheme 2002
|Any person may himself or through his authorised representative make a complaint to the bank. If the bank rejects the complaint or the complainant does not receive any reply within a month or the complainant is not satisfied with the reply given by the bank, the complainant may approach the Banking Ombudsman for redress of the grievance.|
THE CONCEPT of Ombudsman has gained importance in the U.K., Australia and New Zealand as an expeditious and cost effective customer grievance redress mechanism.
The Reserve Bank of India formulated the Banking Ombudsman Scheme in 1995 which was amended in 2002. The amended scheme came into effect from June 14, 2002. It covers commercial banks, regional rural banks and scheduled primary co-operative banks.
The objects of the scheme are (1) to resolve and settle complaints relating to banking services and (2)to resolve disputes between a bank and its constituent as well as between one bank and another bank through the process of conciliation, mediation and arbitration.
Grounds of complaint
A complaint can be made on any one of the following grounds:
(a) Non-payment/inordinate delay in payment or collection of cheques, drafts and bills; (b) non-acceptance, without sufficient cause, of small denomination notes; (c) non-issue of drafts to customers and others; (d) non-adherence to prescribed working hours by branches; (e) failure to honour guarantee/letter of credit commitment by banks; (f) claims in respect of unauthorised or fraudulent withdrawals from deposit accounts or fraudulent encashment of a cheque or a bank draft and the like; (g) complaints pertaining to operations in any savings, current or other account; (h) complaints from exporters in India; (i) complaints from non-resident Indians having accounts in India; (j )complaints pertaining to refusal to open deposit accounts without any valid reason; and (k) any other matter relating to the violation of directives issued by the RBI.
Loans and advances
Under loans and advances, the issues relate to 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, and non-observance of any other directions or instructions of the RBI.
Rules for filing complaint
Any person may himself or through his authorised representative make a complaint to the bank. If the bank rejects the complaint or the complainant does not receive any reply within a month or the complainant is not satisfied with the reply given by the bank, the complainant may approach the Banking Ombudsman for redress of the grievance subject to the following:
The complaint should be made within one year after the cause of action has arisen.
The complaint is not in respect of the same subject matter that was settled through the Office of the Banking Ombudsman in any previous proceedings.
The complaint does 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 a final order has already been passed.
The complaint is not frivolous or vexatious in nature.
Rejection of complaint
The Banking Ombudsman may reject the complaint at any stage if it appears to him that the complaint made is: frivolous, vexatious, malafide or without any sufficient cause or it is not pursued by the complainant with reasonable diligence or prima facie, there is no loss or damage or inconvenience caused to the complainant.
The Banking Ombudsman may reject a complaint at any stage if he feels that elaborate documentary and oral evidence may be required for adjudication of the complaint.His decision in this regard shall be final and binding on the complainant and the bank.
Role of arbitrator
Any dispute between a bank and its constituents or between a bank and another bank may be referred to a Banking Ombudsman for arbitration, if both the parties agree for such a reference provided that the value of the claim in such dispute does not exceed Rs. 10 lakhs
If a complaint is not settled by agreement within a 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.
The Banking Ombudsman may while passing an award direct the complainant to furnish an indemnity in favour of the bank. The indemnity can be invoked in the event of the decision of the court in a criminal proceeding or civil proceeding, or tribunal or arbitrator or any other forum, that there was no deficiency in the service of the bank.
In the event of the complainant refusing to honour the indemnity given by him the bank can approach a court of law for invoking the indemnity.
An Award shall be binding on the bank if the complainant furnishes a letter of acceptance within 15 days from the date of receipt of copy of the award. The bank shall within one month from the date of receipt of the acceptance in writing comply with the award and intimate the compliance to the Banking Ombudsman.
If in the opinion of the bank the award passed against it is:
(i) Based on wrong appreciation of facts, law, banking practice, or general directions, if any, issued by the RBI; or
(ii) Implementation of the Award is likely to create a bad precedent for the bank or banking companies, or the banking system in general; the bank may file a review application within one month from the date of receiving a copy of the award or within such further time as may be allowed by the Review Authority. The bank shall intimate its decision to file the review petition to the Banking Ombudsman within one month from the date of receipt of the copy of the award.
The Banking Ombudsman shall report to the Reserve Bank the non-compliance by any bank of an award and the Review Authority shall pass the necessary order.
If a bank fails to implement the award within the prescribed time limit, the complainant may approach the Review Authority with a prayer to pass an appropriate direction to the bank for immediate compliance of the award.
The Review Authority shall not receive any such additional or new material from any party which was not produced before the Banking Ombudsman. The Review Authority may call for the comments of the Banking Ombudsman in a review application filed before him provided he is satisfied that such comments of the Banking Ombudsman are necessary in the exigencies of the case.
The object behind the Banking Ombudsman Scheme is to make available an expeditious and cost effective grievance redressal mechanism to bank customers. Hence he will endeavour to promote a settlement through conciliation or mediation and he will not be bound by any legal rule of evidence. For full details of the scheme and FAQs the interested persons may access the RBI website www.rbi.org.in.
(Banking Ombudsman and former Chairman and Managing Director of Vijaya Bank)
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