Banking Ombudsman
Scheme 2006
- Structure & Functioning
31st January 2009
Road map
 A historical perspective
 Legal basis and scope of the Banking
Ombudsman Scheme
 Vision & Goals
 Structure and processes
 Sharing of experiences
 The way ahead
Backdrop
 Growing Public Policy concern
 Customer dissatisfaction - a topic of discussion in
various fora including the floor of Parliament
 Growing customer expectations with increasing
Awareness of rights.
 The satisfaction levels of customers is the touch
stone on which the quality of service is toned.
 Market discipline issues and need for policy
intervention
Customer Service – Policy
Evolution
 Formulated the Banking Ombudsman Scheme
1995 and revised in 2002 to enhance the scope of
complaint redressal.
 Set up the Committee on Procedures and
Performance Audit of Public Services in 2003
to look into the issues relating to banking
services rendered to the common man.
 Banks were advised in December 2003 to
constitute an Adhoc Committee to undertake
Procedures and Performance Audit on public
services rendered by them.
Customer Service – Policy
evolution …contd..
 Banks were advised in August 2004 to constitute
Customers' Service Committee of the Board to
bring about ongoing improvement in the quality
of customer service rendered.
 Banks were asked in April 2005 to convert the
Adhoc Committees into Standing Committee on
Customer Service to serve as a focal point for
customer service in banks with powers to
evaluate the functioning in various departments
of the banks.
Customer Service – Policy
Evolution: contd..
 RBI facilitated the formulation of Fair Practices
Code for Lenders and Codes of Conduct in
respect of credit card operations, direct sales
agencies and calculation of dues and repossession
of security.
 RBI prescribed proper disclosures by banks
relating to aspects such as maintenance of
minimum balances in accounts, issue of cheque
books, entry in pass books, statement of
accounts, formulation of transparent cheque
collection policy by banks, etc.
Customer Service Policy
Evolution: contd
 RBI introduced in June 2005 simplified
procedures to facilitate expeditious and hassle
free settlement of claims of deceased depositors.
 RBI issued in November 2005, comprehensive
guidelines on credit card operations to protect
the interest of credit card holders.
 A clean note policy was formulated and
implemented to improve quality of currency in
circulation and ensure sufficient availability of
fresh currency and coins.
Customer Service - Policy
Evolution: contd
 Banks were also advised to formulate a
transparent and comprehensive deposit policy
setting out the rights of the depositors in general
and small depositors in particular.
 RBI has facilitated the setting up of the Banking
Code and Standards Board of India.
 For the first time, RBI in its report on Trend and
Progress of Banking in India 2004-05 listed the
complaints
received
against
Scheduled
Commercial Banks under the caption "Customer
Services in Commercial Banks" to highlight the
issue of customer service in banks.
Customer Service - Policy
Evolution: contd
 RBI advised banks, in April 2005 to place all the awards
passed by the Banking Ombudsman before the
Customer Service Committee to enable them to address
issues of systemic deficiencies existing in banks, if any,
brought out by the awards.
 RBI also advised banks to place all the awards
remaining unimplemented for more than three months
with the reasons therefore before the Customer Service
Committee to enable the Committee to report to the
Board such delays in implementation without valid
reasons and for initiating necessary remedial action
Customer Service - Policy
Evolution: contd
 In December 2005, the Banking
Ombudsman Scheme was revised (termed
as the Banking Ombudsman Scheme,
2006) to widen its scope and improve its
effectiveness and accessibility to the
public.
GENERAL PARTICULARS
OF THE SCHEME
 Legal Basis: Notified in terms of Sec 35A of
Banking Regulation Act 1949
 Purpose of the Scheme: Expeditious and
inexpensive redressal of customer complaints.
 Areas covered:
Deficiency in banking services
deficiency in sanctioning of loans and
advances
Other specified matters
Banking Ombudsman Scheme
1995
2002
2006
Institutions
covered
Commercial banks Commercial banks
Scheduled primary Scheduled primary
cooperative banks cooperative banks
RRBs
Commercial banks
Scheduled primary
cooperative banks
RRBs
Stages of
Redressal
Settlement
Recommendation
Award
Agreement
Award
Review
Agreement
Award
Appeal
Staffing
BO -By a
Selection
CommitteeRetired personnel
Secretary- RBI
Deputy Secretary
& Staff- SLBC
Bank
BO -By a
Selection
CommitteeRetired personnel
Secretary- RBI
Deputy Secretary
& Staff- SLBC
Bank
Serving Chief
General Manager/
General Manager
Secretary- RBI
Deputy Secretary
& Staff- RBI
Banking Ombudsman Scheme
1995
2002
2006
Funding
Participating
Banks
Participating
Banks
RBI
Procedure
Complaint Receipt
Prescribed
application in writing
Prescribed
application in
writing
Online/email/by post
Prescribed application
not insisted
www.bankingombudsm
an.rbi.org.in
Nature of
Complaints
Not specified
Specifically
prescribed
clause 12
Specifically
prescribed clause 8
Cases of fraud
cannot be handled
Cases of fraud
can be handled
Focus on resolution
of grievances
VISION
To provide an inexpensive, transparent
and credible mechanism ensuring fair
treatment of the common person
utilizing Banking services
Goals
 To ensure customer facilitation and protection
through redressal of grievances of users of
banking services in an inexpensive, expeditious,
fair, reasonable and hassle free manner that will
provide impetus for improved customer service
on a continuous basis
 Provide feedback for framing appropriate and
timely guidelines
 Enhance awareness of the scheme itself
Enhancements provided by the
2006 Scheme :
Wider Scope
Simpler procedures
Better focus
Greater involvement of RBI
Organizational Chart
Deputy
Governor
(Appellate Authority
Executive Director
Customer Services Department
Office of the Banking Ombudsman
Redressal Process
Receipt of complaint
Review by BO
Reject
Non Maintainable
Maintainable
Maintainable
Complaints
Referred to Bank
Resolved by mutual settlement
(Clause 11)
Unresolved Complaints
Reject
(Clause 13)
Award (Clause 12)
Complainant to accept & Bank
to implement
Complainant’s right to
Appeal
Bank & Complainant can
File an Appeal
Appellate Authority
Banking
Ombudsman
Legal
Department
CSD, CO
Regulatory
Departments
Bank to
Implement
Customer
Set aside the award
Remand the matter to BO
Modify the award
Pass any other order
Procedure for lodging complaints
 Essential – grievance to be taken up with
bank first;
 Aggrieved persons not satisfied by a bank’s
service and its resolution of complaint can
apply to the Banking Ombudsman within
one year;
 Complaint in prescribed format or in any
other but incorporating all the required
information.
 Complaints can be submitted online/
email/in hard copy
 Complaints
from
individuals/
their
representatives( except advocates)/GOI/RBI
Complaints Redressal Procedure
Maintainability of Complaint
Prescribed time –rejection of complaint/non
receipt of reply within one month of his
representation / non satisfaction of reply
not later than one year after the cause of action
not time barred as per the Indian Limitation Act
1963
Not a subject matter on which BO decision has
already been taken
Not a subject matter which is before court/
tribunal/ arbitrator/ other forum
Grounds of complaint . . . Banking
Services
 non-payment or inordinate delay
in payment or collection of
–
–
cheques, drafts, bills etc.;
inward remittances
 non-acceptance of
– small denomination notes
– coins
or charging commission for acceptance
Grounds of complaint . . . Banking
Services
 failure to issue or delay in issue, of drafts,
pay orders or bankers’ cheques;
 non-adherence to prescribed working hours;
 failure to honour guarantee or letter of
credit commitments ;
 failure to provide or delay in providing a
banking facility (other than loans and
advances) promised in writing by a bank or
its direct selling agents;
Grounds of complaint . . . Banking
Services
 delays, non-credit of proceeds to parties'
accounts, non-payment of deposit or nonobservance of the Reserve Bank directives,
if any, applicable to rate of interest on
deposits in any savings, current or other
account maintained with a bank ;
 delays in receipt of export proceeds,
handling of export bills, collection of bills
etc., for exporters provided the said
complaints pertain to the bank's
operations in India;
Grounds of complaint . . . Banking
Services
 complaints from Non-Resident Indians
having accounts in India in relation to
their remittances from abroad, deposits
and other bank-related matters;
 refusal to open deposit accounts without
any valid reason for refusal;
 levying of charges without adequate prior
notice to the customer;
 non-adherence by the bank or its
subsidiaries to the instructions of Reserve
Bank on ATM/Debit card operations or
credit card operations;
Grounds of complaint . . . Banking
Services
 non-disbursement
or
delay
in
disbursement of pension (to the extent
the grievance can be attributed to the
action on the part of the bank
concerned), but not with regard to its
employees;
 refusal to accept or delay in accepting
payment towards taxes, as required by
Reserve Bank/Government;
 refusal to issue or delay in issuing, or
failure to service or delay in servicing
or redemption of Government
securities;
Grounds of complaint . . . Banking
Services
 forced closure of deposit accounts without
due notice or without sufficient reason;
 refusal to close or delay in closing the
accounts;
 non-adherence to the fair practices code as
adopted by the bank; and
 any other matter relating to the violation of
the directives issued by the Reserve Bank in
relation to banking or other services.
Complaints - Loans and
Advances




non-observance of RBI directives on
interest rates;
delays in sanction, disbursement or nonobservance of prescribed time schedule
for disposal of loan applications;
non-acceptance of application for loans
without furnishing valid reasons to the
applicant and
non-observance of any other directions
or instructions of the RBI from time to
time.
Excluded
 Complaints arising out of frauds and
forgery and subjudice cases (Supreme
Court’s observation that it would not be
appropriate for BOs to give a finding on
forgery or to form an opinion on cases
already referred to courts)
Charges for application . . .
There are no charges to
be paid by the
applicant
to
the
Banking Ombudsman
Processes
 Proceedings are summary in nature
 Procedure discretionary as the Banking Ombudsman may
consider just and proper
 Not bound by any rules of evidence
 Each case is dealt on a stand alone basis and cannot be
cited as precedent
 Disposals take into account evidence, the principles of
Banking Law & Practice, instructions, guidelines and
directions of RBI
 Right of the complainant to approach any court or forum
at any time during or after the proceedings is not affected
Stages of settlement
 The Banking Ombudsman
– first endeavours to promote a settlement
between the parties through mediation/
conciliation,
or else
– proceeds to make an Award on merits of
the case.
Compliance with the Award
Customer to give acceptance within 30
days
Within one month of
complainant’s confirmation
receipt
of
Appeal against the Award
Both the bank and the complainant can
appeal
Time limit: 30 days
Appellation Process
 Banks to get the sanction of the Chairman/ CEO
 Appellate Authority can;
Dismiss the appeal
Allow the appeal and set aside the award
Remand the matter for fresh disposal
Modify the award
Pass any other order as it may deem fit
Dealings with the bank
Nodal Officers appointed by banks at
Zonal/Regional Office levels
BO to deal through the Nodal Officers.
All bank branches to display the name of
the Banking Ombudsman and contact
particulars
Banking Ombudsmen Complaint
Monitoring Application on RBI’s
Secured Internet Website
 Finance Ministry instructions vide letter dated
August 11, 2005 for computerization and online
complaint monitoring system for Banking
Ombudsman Scheme by September 30, 2005.
 Complaint
Monitoring
Application
was
successfully tested and hosted on the RBI’s Secured
Internet Website. It is in operation since September
30, 2005 .
Features of the Monitoring
Mechanism
 It is common to all Banking Ombudsmen offices.
 Each Banking Ombudsmen office will feed in the
complaint details on the application.
 The application generates a unique complaint id,
which can be used by Banking Ombudsmen, RBI
and Finance ministry to monitor/track the status of
a particular complaint.
 Automatic
acknowledgement
generated
on
tracking of complaints
 RBI and Finance Ministry can monitor the overall
status of complaints at all the Banking
Ombudsmen offices.
Right to Information Act and
Banking Ombudsman Scheme
The following are in the public domain:
 The BO Scheme
 FAQs
 Complaint Application form
 BO addresses & email ids
 Annual Review of the Scheme
Right to Information Act and
Banking Ombudsman Scheme
 The Complainant can get the status of his
complaint till disposal
 At disposal the Award gives reasons for
decision taken
 Each decision of the Appellate Authority is
a speaking order
BENEFITS OF THE BO
SCHEME
 Prompt and impartial resolution of
complaints
 No cost to the customer
 Assessment based on overall fairness, good
business practices, accepted banking law
and practice
Road Ahead
 Focus on customer education and financial
literacy
 Customer Awareness and Empowerment
 Understanding rights and responsibilities
 Percolation of the spirit of the Banking
Code and Standards as adopted by the bank
down the rank and file to the level of the
service delivery interface
Thank
You
Average cost per complaint
Year
Amount
(Rs)
2003-04
7413
2004-05
6315
2005-06
3045
2006-07
2538
2007-08
2611