- What is Banking Ombudsman (BO)?
- Appointment & Tenure
- Procedure for getting justice?
- Reforms and Issues
- Location of Offices
- Mock questions
- He hears customers’ complaints against banks.
- BO was first setup in UK.
- In India, RBI started this scheme in 1995.
- Earlier RBI used to appoint reputed persons from banking, finance, management, legal etc. sectors as Banking Ombudsmen (BO).
- But now RBI has reserved this BO post for its own Chief General Managers and General Managers.
- Tenure: 3 years at a time.
- Reappointment: yes possible.
- Banking Ombudsman (BO) Scheme applies to whole of India (including Jammu and Kashmir).
Banking Ombdusmen have jurisdiction over
- All commercial banks (scheduled and non scheduled, public and private)
- Regional rural banks
- scheduled primary co-operative banks
- NBFCs (BO’s Jurisdiction limited to “loan” part.)
- Banking Ombudsman is not a replacement of Consumer forum/courts. He merely supplements them.
- Banking Ombudsman deals with matters less than or equal to Rs.10 lakhs.
- Here are some examples situation where BO can help you:
- Demand draft, cheques, pay orders etc. not issued on time. (or not paid on time)
- Credit card related complaints (e.g. bank putting hidden charges. Your credit card was stolen but bank did not disable it even after you called them.)
- You asked the bank to close your account / credit card but they are not doing it.
- Bank refuses to open your account without giving valid reasons.
- Bank closes down your account without valid reasons.
- Government / your company deposited salary / pension in your account but the bank is not releasing it on time.
- Bank is taking out money from your account in pretext of some flimsy charges.
- Branch office notice board says “10.30 to 5” but staff refuses to provide you service after 3.30PM.
- NRIs having bank account in India and facing problems about remittances etc. (e.g. he deposited money from America, but his parents are not given money on time.)
- Your loan application is not processed in time.
- Your loan application is rejected without valid reasons.
- You loan application is accepted but money is not released in time. (and still bank is charging interest on it!)
- Bank doesn’t follow RBI guidelines regarding loan-recovery agents (e.g. bank hires some criminals to bully and harass you.)
- Bank doesn’t follow RBI guidelines regarding loan interest rates.
- You’re unhappy with the bank for xyz reason. But you cannot directly approach BO.
- First you’ve to give written complaint to the concerned bank that “I’ve so and so problem.”
- and IF the bank doesn’t deal with your complaint within one month, then you can approach BO.
- On the other hand, you cannot approach BO if the matter is older than 1 year.
- You don’t need lawyer to approach BO.
- You don’t need to pay any fees/ stamp papers for approaching BO.
You can’t approach BO in following situations
- Matter is higher than Rs.10 lakh.
- If the matter is pending before any other court, tribunal, forum then you cannot approach BO.
- If any other court, tribunal, forum has already passed an order on the same matter.
- You cannot approach BO for frivolous or vexatious complaints (e.g. AC or water cooler was off when I went to the branch. Someone jumped the queue but security guard did nothing….)
- Upon receiving your complaint, first Banking Ombudsman will try to solve the matter via settlement /arbitration (=try to achieve a compromise, conciliation or amicable solution between bank and its customer.)
- This has to be done within one month after receiving complaint.
- But if either party (customer/bank) is not accept this (compromise/negotiation/settlement) then after 1 month, Banking Ombudsman will have to pass “order”.
- Now, he’ll ask both parties to present their case/documents etc. And he’ll pass the order accordingly.
- Two things can happen
- He rejects your complaint (=bank is not guilty). OR
- He finds the bank guilty and orders punishment.
- Banking Ombudsman (BO) can order the Bank to compensate the actual money loss OR Rs.10 lakh (whichever is lower).
- In case of Credit card related cases, BO can order the bank to pay additional fines (upto Rs.1 lakh) for the mental harassment caused to the customer.
- If either party (Bank / Customer) is unhappy with Ombudsman’s order, then they can approach the Appellate authority (=Deputy Governor of RBI.)
- If you’re the customer, you can directly approach him.
- But if you’re the “Bank”, then you can approach him only after getting permission from your Chairman/CMD/MD or CEO. (This ensures Bank’s lower staff doesn’t automatically go for frivolous appeals against every order).
- Banking Ombudsman scheme was originally started in 1995.
- But in subsequent years, RBI made many reforms in it, some of them are:
|Reputed persons from law, finance, banking, Management, administration etc. can become BO.||Only RBI’s own officers can become BO. (=outsiders not allowed for this post.)|
|Banks provided Money+Staff for Ombudsman’s office in their area.||RBI itself gives the money and staff to Ombudsman.|
|He only accepted paper complaints.||Accepts Paper + online complaints.|
|—||Regional Rural Banks put under jurisdiction of Ombudsman.|
|—||Ombudsman can look into internet-banking related complaints.|
|—||Banks are required to display salient features of the scheme for common knowledge of public. (e.g. posters in the branch office.)|
- According to RBI’s scheme, Ombudsman can also look into internet banking related matters.
- But Ombudsmen across the country often wash away their hands and ask the victim to wait for police investigation to finish.
- And on the other hand, Banks donot take responsibility saying “net banking frauds as most of them happen due to customers’ negligence and cyber-crime.”
- So ultimately customer has to depend on the police to get justice.
- A Committee formed by RBI has recommended that instead of having only 15 Banking ombudsman across country, have one BO appointed for every bank.
- The upper limit (of Rs.10 lakh) should be increased.
- Banking Ombudsman has total 15 offices throughout India
- Those who’re preparing for IBPS/SBI PO should prepare this table for MCQs, others need not worry much.
||Gujarat + UT of Diu, Daman, Haveli|
||HP+Punjab+part of Haryana|
||All north Eastern states minus Sikkim|
||UP (some areas excluded though)|
||Delhi+J&K+part of UP+Part of Haryana|
Q1. Which of the following falls under the jurisdiction of Banking Ombudsman
- Regional Rural Banks
- Scheduled commercial banks
- Non Scheduled primary co-operative banks
- Only 1 and 3
- Only 2 and 3
- Only 1 and 2
- All of them.
Q2. Find correct statements
- BO is selected and appointed by Finance ministry.
- BO’s staff and office expenditure are charged on the consolidated fund of India.
- Only 1
- Only 2
Q3. Find incorrect statement
- If the promises made by a sales agent, are not kept by the bank, you cannot approach BO.
- If the matter involves loss of more than Rs.10 lakhs, you cannot approach BO.
- The appellate authority for BO is High court of the concerned State.
- There is one separate BO for Union Territories of India.
- Only 2
- 2 and 4
- 1,3 and 4
- All of them.
Q4. Which of the following are included in the purview of BO?
- Net banking
- Credit cards
- ATM cards
- Harassment by Loan recovery agents
- Only 2 and 3
- Only 1, 2 and 3
- Only 2,3 and 4
- All of them.