The RBI has started the scheme of banking ombudsman, which can effectively interpret its rules and directives so as to bring about an amicable solution to the disputes between the bank and its customers. The customers desire quick, efficient and hassle free solutions to all their complaints and disputes with the bank, without being forced to run from pillar to post to register their grievances. This new scheme of banking ombudsman has come into existence to help customers resolve most of their complaints against the banks on the basis of the simple principle that every customer deserves a fair and speedy resolution of complaints.
In 1995, RBI established the office of banking ombudsman to address the customer service complaints of the customers, disputes arising between the customers and the bank and also between different banks. The banking ombudsman is a person of repute who is conversant with Legal provisions, Banking laws, Financial Services, public administration, or management sectors. A civil servant appointed to this post should be in the rank of Joint Secretary while a person from the banking sector should have had the experience of working as a whole time director in any public sector or equivalent position. Banking ombudsman is appointed by a committee of four persons consisting of three Deputy Governors of RBI and the Additional Secretary (Financial sector), and an official from the department of Economic Affairs, who acts as a special invitee. The appointment is for a period of three years.
Ombudsman can take into account the complaints of customers related to commercial banks, regional rural banks and scheduled co-operative banks. The complaints of the customers pertaining to Housing Finance can also be lodged before Banking Ombudsman, who has got the jurisdiction to adjudicate the grievance raised by the aggrieved.
Today, banking ombudsman has its offices in a number of states. The territorial jurisdiction of the appointed banking ombudsman is specified by RBI. The services of banking Ombudsman are offered free of cost to the complainants.
Banking Ombudsman has got the jurisdiction to entertain complaints pertaining to fixed deposits, savings and current bank accounts and other banking services.
GROUNDS OF COMPLAINT
I. A complaint on any one of the following grounds alleging deficiency in banking service may be filed with the Banking Ombudsman;
a. Non payment/inordinate delay in the payment or collection of cheques, drafts, bills etc.
b. Non acceptance, without sufficient cause, of small denomination notes tendered for any purpose and for charging of commission in respect thereof.
c. Inordinate delay in refund or non-payment of the amount deposited.
d. Non issue of drafts to customers and others.
e. Non adherence to prescribed working hours by branches.
f. Failure to honor guarantee/letter of credit commitments by banks.
g. Claims in respect of unauthorized or fraudulent withdrawals from deposit accounts or fraudulent encashment of a cheque or a bank draft etc.,
h. Complaints pertaining to the operations in any savings, current or any other account maintained with a bank.
i. Complaints from exporters in India such as delays in receipt of export proceeds, handling of export bills, collection of bills, etc.
j. Complaints from Non-Resident Indians having accounts in India.
k. Complaints pertaining to refusal to open deposit accounts without any valid reason for refusal.
l. Any other matters related to the violation of the directives issued by RBI in relation to banking services.
II. Complaints concerning loans and advances only in so far as they relate to the following may also be filed with the Banking Ombudsman having the jurisdiction :
a. Non observation of RBI Directives on interest rates.
b. Delays in sanction, disbursement or nonobservance of prescribed time schedule for disposal of loan applications.
c. No acceptance of application for loans without furnishing valid reasons to the applicant
d. Nonobservance of any other directions or instructions of RBI, as may be specified by RBI for this purpose from time to time.
III. The Banking Ombudsman may also deal with any other matter as may be specified by RBI from time to time in this behalf.
Customers of any scheduled commercial bank, regional rural bank or a foreign bank having grievance against such Banks can approach the concerned jurisdictional banking ombudsman. It is necessary for the complainant to register those complaints within a year either in person or through any authorized person other than a lawyer. If the customer after registering his/her complaint with the bank does not receive any reply from the bank within one month or his/her complaint is rejected by the bank or he/she is not satisfied with the reply from the bank, then in such a situation the complainant can file his/her complaint with the banking ombudsman.
In the office of the banking ombudsman, the complainant is required to fill a two-page form and submit the photocopies of all the documents related to the complaint. Complaints can also be sent through post. After receiving the complaint, banking Ombudsman takes up the matter with the concerned bank and resolves the matter in three stages.
• The first stage is through correspondence with the concerned bank. The ombudsman sends a copy of the complaint to the bank and gives it 30 days to reply. In the meantime the concerned bank directly contacts the customer and resolves the matter. This is considered as the closure of the matter.
• The second stage proceedings are initiated by the ombudsman only if the bank does not agree with the points raised by the complainant. The ombudsman arranges a meeting of both the parties to the dispute. If at this stage, there is no compromise or settlement in sight, then the third stage is initiated
• In the third and last stage, the ombudsman gives a chance separately to both the complainant and the bank to put forth their claims before it. After examining the relevant facts, Banking Ombudsman passes an award to compensate for the loss suffered by the complainant in case the Bank is found guilty. The award needs to be passed within six months from the first hearing. A copy of the judgment passed by the banking ombudsman is given to both the complainant and the bank. Under such circumstances, the party aggrieved by such judgement has the discretion to file a review application before competent authority.
IMPORTANCE OF EVIDENCE
It is not always that the verdict of the ombudsman is in favour of the customers, but depends upon the merits of the case and substantiation of the grounds raised in the complaint. Thus, for instance, when a complainant could not prove the date of deposit of cheque with the bank, allegations regarding cheque lapse and returning the cheque without encashment against the bank cannot be sustained. The banking ombudsman may reject those complaints that are frivolous or prime facie devoid of merits. Further, the complaint can be rejected if the trail involves complicated issues to be adjudicated. In other situation, the decision of the banking ombudsman is final and binding on both the bank and the complainant. However, Banks also have the right to appeal against the decision of banking ombudsman before RBI, where RBI resolves the matter. The complainant is free to approach the courts at any time. Once the matter is referred to the court, the office of ombudsman will not have any power to adjudicate the dispute.
THE SPIRIT OF BANKING OMBUDSMAN
Banking Ombudsman gives the verdict not only in compliance of legal provisions, but also on humanitarian grounds considering justice to be given on equity.
In a note, RBI has asked all the commercial banks to implement the awards of the ombudsman as early as possible and place it before the customer service committee so that the deficiencies in the services of the banks do not recur in the future. The customer service committee should bring to the notice of the board of directors all those awards that have not been implemented for more than three months for remedial action. With the growth of financial sector and the economy, it is felt that Non-Banking Financial Companies (NBFC) should also be brought under the purview of banking ombudsman. With relation to inter-bank disputes, certain powers under arbitration and contracts law should be vested with the banking ombudsman. Thus, by widening the area and scope of complaints that the banking ombudsman can take on, customers would be greatly benefited by seeking Redressal to most of their complaints that are common while transacting with the banks.
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