Banking Ombudsman Scheme: Read the details here

By Stuti Mishra|Updated : January 12th, 2021

Banking Ombudsman is a senior official appointed by the RBI to redress customer complaints against pitfalls in banking services covered under Banking Ombudsman Scheme. Banking Ombudsman is a quasi-judicial authority

Banking Ombudsman Scheme

Banking Ombudsman Scheme to redress the complaints of customers on banking services provided by banks and facilitation of the settlement for those complaints.

Establishment: It was introduced under the Banking Regulation Act of 1949 by RBI. It can into effect from 1995. Later it was legally refined and modified through the introduction of regulations under Banking Ombudsman Scheme 2006. The latest amendment was done in 2019 with Ombudsman Scheme for Digital Transactions, 2019.

Fees: Banking Ombudsman do not charge any fee for filing and resolving complaints of customers.

Who is the Banking Ombudsman?

Banking Ombudsman is a senior official appointed by the RBI to redress customer complaints against pitfalls in banking services covered under Banking Ombudsman Scheme. Banking Ombudsman is a quasi-judicial authority

Offices: There are 22 Offices of Banking Ombudsman (OBOs)

Tenure: The period of appointment is not more than 3 years and can be reduced by the regulator if needed. The ombudsman is provided with the area of jurisdiction which he must control, and RBI provides him a Secretariat (office of Banking Ombudsman) which is a well-developed institution managed by various individuals.

The Appellate authority of Banking Ombudsman is vested with the Deputy Governor of the Reserve Bank of India.  


Modifications Under Banking Ombudsman Scheme

Banking Ombudsman Scheme 2017

Banking Ombudsman scheme 2017 included the following:

  • Sale of mutual funds, insurance and other Bank's third-party investment products
  • Mobile and online banking services.
  • Mutual Fund & Insurance policy

Institutions covered under the Banking Ombudsman Scheme after amendment in 2017

  • All Scheduled Commercial Banks
  • Regional Rural Banks (RRBs)
  • Scheduled Primary Co-operative Banks 
  • Some NBFCs

Grounds of Complaints under the scheme

  • Non-payment or delay: If a bank does not pay or inordinately delays payment of any Cheques; drafts; bills; inward remittances, than it is held liable under the ombudsman scheme.
  • Non acceptance or charges commission: Bank is liable if it charges commission or refuses to accept notes of small denomination; or if it refuses to accept coins tendered.
  • Delay or failure: Bank may be held responsible, if delays issue of or even fails to deliver drafts, pay orders, bankers’ cheques, and few banking facility (other than loans) which is promised in writing. It is also answerable to customers, if it delays non-credits of proceeds, non-payment of deposits.
  • Non- adherence: Customers can file complaint against the bank, if the bank does not adhere to any of the following, that is- working hours of banks which are prescribed; guidelines given by RBI in relation to the use of ATM, Debit, Prepaid card or credit card; guidelines provided by RBI in regards to electronic or mobile banking
  • Refusal or delay: The bank is also liable, if it refuses to accept or delay accepting payment related to taxes, or issue Government Securities or if it refuses or delays to close account
  • Non observance: If the banks do not observe RBI guidelines related to recovery agents or its directives related to interest rates and if the bank does not observe the time schedule for disposal of loan application, than also customer can make complaint

Grounds of Complaint Rejection

The Banking Ombudsman has the authority to reject any complain if any of the grounds is satisfied:

  • If it not in accordance with any of the grounds given in any of the clause of the Scheme.
  • If the jurisdiction under clause 12 is not appropriate especially the pecuniary.
  • If the complaint has no cause or complainant then it is not diligent about the same.
  • If in the opinion of Ombudsman, no loss or inconvenience has been suffered by complainant.

Ombudsman Scheme for Digital Transactions (OSDT)

  • The OSDT was launched on January 31, 2019 in exercise of the powers conferred under Section 18 of the Payment and Settlement Systems Act, 2007.
  • It provides a cost-free and expeditious complaint redressal mechanism for redressal of complaints pertaining to deficiency in service related to digital transactions provided by the System Participants defined under the Scheme.
  • Complaints relating to digital transactions undertaken through banks continue to be handled under the Banking Ombudsman Scheme.
  • The offices of Ombudsman for Digital Transactions (ODT) are functioning from all the existing OBOs.
  • The Scheme also provides for an Appellate mechanism to appeal against the decision of the ODT before the Appellate Authority, which is vested with the Deputy Governor in charge of CEPD.

 Extension of the NBFC-O Scheme to Non-Deposit Taking NBFCs

  • RBI had launched the NBFC-O Scheme on February 23, 2018 for deposit-taking NBFCs registered with RBI.
  • The Scheme was to be extended to remaining identified categories of NBFCs having customer interface, with assets size of ₹100 crore or above with effect from April 26, 2019.
  • The Non-Banking Financial Company - Infrastructure Finance Company (NBFC-IFC), Core Investment Company (CIC), Infrastructure Debt Fund-Non-Banking Financial Company (IDF-NBFC) and NBFCs under liquidation, are excluded from the ambit of the Scheme.
  • It is being introduced under Section 45 L of Reserve Bank of India (RBI) Act, 1934.
  • There are currently 4 NBFC ombudsman offices in Chennai, Kolkata, Mumbai and Delhi where customer complaints are monitored and resolved.

 Launch of Complaint Management System (CMS)

  • RBI Governor launched CMS on June 24, 2019.
  • CMS is a web-based single platform software for consumers, RBI users at Ombudsman offices, CEPCs, CEPD and regulated entity users for enabling end-to-end complaints management.
  • It can be availed both from web and mobile.
  • It has replaced the Complaint Tracking System which was launched in the year 2006 and was limited only to BOS as the other Schemes were launched recently.
  • It provides real time status of complaints at pan-India level and has advance management information dashboards which will improve efficiency reducing the turnaround time.
  • It also has a comprehensive e-learning based consumer education material to enhance awareness related to financial services and consumer rights.

 Awareness Initiatives

  • During 2018-19, the Reserve Bank conducted country-wide awareness campaigns through print and electronic media on various topics such as fictitious offers, BSBD Accounts, banking facilities for senior citizens and differently abled persons and safe digital banking.
  • The Reserve Bank’s SMS handle ‘RBISAY’ was also extensively used for sending text messages on such topics across India.
  • An IVRS was made available to the public for obtaining information on these and other awareness initiatives of the Reserve Bank.
  • Offices of BO also conducted 259 Town Hall/ awareness/ outreach programs, mainly in Tier II cities.
  • Annual Conference of Ombudsman 2019 was organized on the theme of ‘Consumer Protection beyond Boundaries’ in June 

Opening of third Ombudsman Office at New Delhi

RBI has set up a third office of the Banking Ombudsman and ODT at RBI, New Delhi (New Delhi-III) in order to meet the growing demand for resolution. This office became operational from July 1, 2019. With this, RBI now has 22 Ombudsman Offices.

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