Banking Awareness: 20 Important Points About Bank Ombudsman

Dear Reader, for bank exams you should have sufficient knowledge about bank roles and functions. As you know, “Bank Ombudsman” is an important position in the banking sector. Below you will find 20 important points regarding that role.

  1. The Banking Ombudsman (BO) Scheme enables an expeditious and inexpensive forum to bank customers for resolution of complaints relating to certain services rendered by banks.
  2. This scheme comes under “Section 35 A” of the “Banking Regulation Act, 1949” by RBI with effect from 1995.
  3. The Banking Ombudsman is a senior official appointed by the Reserve Bank of India.
  4. The Banking Ombudsman redresses customer’s complaints against deficiency in certain banking services.
  5. The introduction of Banking Ombudsman Scheme in India was during 1995. Then the Scheme came into force on January 1, 2006.
  6. The Tenure of Bank Ombudsman is 3 years at a time.
  7. The banks covered under the Banking Ombudsmen Scheme, 2006 are as follows.
  • All commercial banks (scheduled and non-scheduled, public and private)
  • Regional rural banks
  • scheduled primary co-operative banks
  1. Banking Ombudsman deals with matters less than or equal to Rs.10 lakhs.
  2. The Banking Ombudsman is a quasi-judicial authority. He has the power to summon both the parties – bank and its customer, to facilitate resolution of the complaint through mediation.
  3. As of now, 15 Banking Ombudsmen have been appointed with their offices located mostly in the State Capitals.
  4. Banking Ombudsman (BO) Scheme applies to the whole of India (including Jammu and Kashmir).
  5. Complaints to banking ombudsman will be related to the following.
  • Demand draft, cheques, pay orders, etc. not issued on time. (or not paid on time)
  • Bank closes down your account without valid reasons.
  • You asked the bank to close your account/ credit card, but they are not doing it.
  • Credit card related complaints (e.g. hidden charges. Your credit card was stolen, but the bank did not disable it even after you called them.)
  • Bank refuses to open your account without giving valid reasons.
  • Your loan application is not processed in time.
  • Your loan application is rejected without valid reasons.
  • Bank doesn’t follow RBI guidelines regarding loan interest rates.
  • Your loan application is accepted, but money is not released in time.
  • Bank doesn’t follow RBI guidelines regarding loan recovery agents.
  1. Procedures to approach BO:
  • If you have any complaints with the bank, you cannot directly address BO. First, you have to write a complaint to the concerned bank about your issue. If the particular bank doesn’t take any action within one month, then you have to approach BO.
  • You cannot approach BO if the matter is older than 1 year.
  • You don’t require any lawyer to approach BO.
  • You don’t need to pay any fees/ stamp papers for approaching BO.
  1. Procedure for filing the complaint before BO:
    You can file a complaint with the Banking Ombudsman simply by writing on plain paper. One can also register it online (at “click here to go to Banking Ombudsman scheme” or by sending an email to the Banking Ombudsman.)
  2. The complaint should have the following.
  • 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.
  • The facts related 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.
  1. After receiving the complaint, Banking Ombudsman will try to solve the matter via settlement /arbitration within one month after receipt of the complaint. But if either party (customer/bank) does not accept this (compromise/negotiation/settlement) then after 1 month, Banking Ombudsman will have to pass “order”.
  2. Banking Ombudsman (BO) can order the Bank to compensate the actual money loss OR Rs.10 lakhs (whichever is lower). In the case of credit card related cases, BO can order the bank to pay additional fines (up to Rs.1 lakh) for the mental harassment caused to the customer.
  3. The Banking Ombudsman may reject a complaint at any stage if it appears to him that a complaint made to him is not beyond Rs.10 lakhs or if it requires consideration of elaborate documentary or in the opinion of the Banking Ombudsman there is no loss or damage or inconvenience caused to the complainant, etc.
  4. If the complainant is not satisfied with the order passed by the Banking Ombudsman, he can approach the appellate authority against the Banking Ombudsmen’s decision.
  5. The appellate authority is the Deputy Governor of the Reserve Bank of India.

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