What is Banking Ombudsman Scheme? Scheme Details

Last updated on September 21st, 2023 at 04:44 pm

Banking Ombudsman is a appellate authority for making complaints relating to services rendered by Banks. And provide resolution in timely manner to the issues faced by customers with the banks.

The Banking Ombudsman Scheme is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995. The same has been seen a lot of changes along with new developments.

Let’s look at the important provisions of the scheme and how it can be helpful for the common man.

What is Banking Ombudsman Scheme?

The Banking Ombudsman is a senior official appointed by the Reserve Bank of India (RBI) to redress customer complaints against deficiency in certain banking services.

All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.

Thus the Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank customers for resolution of complaints relating to certain services rendered by banks.

Who is Banking Ombudsman Authority?

The Reserve Bank may appoint one or more of its officers in the rank of Chief General Manager or General Manager to be known as Banking Ombudsmen to carry out the functions entrusted to them by or under the Scheme.

The appointment of Banking Ombudsman under the above Clause may be made for a period not exceeding three years at a time.

The Reserve Bank shall depute such number of its officers or other staff to the office of the Banking Ombudsman as is considered necessary to function as the secretariat of the Banking Ombudsma

When to Go for Banking Ombudsman?

Banking Ombudsman can provide the quick and free resolution to the complaints against banks. But one can only go for the authority after making complaint with the respective bank. And in the case of resolution is not provided by the Bank.

Thus upon the following conditions you can go for Ombudsman.

1. If the reply is not received from the bank within a period of one month. Even after the bank concerned has received one’s representation.
2. The bank rejects the complaint you made.
3. If you have not satisfied with the reply given by the bank.

What Type of Complaints are accepted?

Now you know that the you can make a complaint with the banking Ombudsman. But it is important to understand when any on what grounds you can make a complaint.

You can make complaint regarding inefficiency and unresponsiveness of the Bank to your complaints.

Read our Article on How to make Complaint for more details. Also learn what type of complaints you can makes as well as How to make a complaint with Ombudsman.

Resolution/Compensation by Banking Ombudsman

Banking Ombudsman is a free resolution body created by RBI to resolve the consumers issue faced with the Banking Industry.

Thus The Banking Ombudsman does not charge any fee for filing and resolving customers’ complaints.

Upon satisfied that the service provided by banks are not upto the mark. And are deviated from the regulations provided by RBI. The Ombudsman will provide compensation to the customers.

But the Compensation that can be awarded by the Ombudsman has the following limitations.

• The amount, if any, to be paid by the bank to the complainant by way of compensation for any loss suffered by the complainant is limited to the amount arising directly out of the act or omission of the bank or Rs 20 lakhs, whichever is lower.
• The Banking Ombudsman may award compensation not exceeding Rs 1 lakh to the complainant only in the case of complaints relating to credit card operations for mental agony and harassment.
• It is up to the complainant to accept the award in full and final settlement of your complaint or to reject it. If one is not satisfied with the decision passed by the Banking Ombudsman, one can approach the appellate authority against the Banking Ombudsmen’s decision.
• The bank also has the option to file an appeal before the appellate authority under the scheme.
• If one is aggrieved by the decision, one may, within 30 days of the date of receipt of the award, appeal against the award before the appellate authority. The appellate authority may, if he/ she is satisfied that the applicant had sufficient cause for not making an application for appeal within time, also allow a further period not exceeding 30 days.

Conclusion

Thus the Banking Ombudsman provides a timely resolution to the customer complaints on banking. It is a good initiative by the RBI to make a hassle free banking experience for the customers.

But the banks are being more responsive to the customer complaints these days. Thus try to resolve your complaints with the respective banks first. If you do not get your problem resolved you can approach a Banking Ombudsman.