Kritika Mundra

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INTRODUCTION

The banking system in India was originated over 200 years ago, where a bank named Bank of Bengal was formed in the year 1806, since then the banking system in India is facing continuous changes. During the period of pre-independence, the banks like Bank of Bengal, Punjab National Bank, Allahabad Bank had played a vital role in reforming the banking system in India. However, during the period of 1935, the banking system in India faced various major changes in regulating the banking system of our country. Many banks became nationalized during the period of pre-independence which has improved the reliability of people into the Nationalized Banks

After the period of post-independence, the central government from time to time empowered the Reserve Bank of India to regulate the Indian banking industry. Many private Banks such as ICICI, HDFC, UTI banks were the major winners post liberalization. The RBI publishes various guidelines for the banks from time to time and also manages the finances of the banks with the help of repo rates, reverse repo rates, CRR and SLR. 

In the banking sector, the customers may have a wide range of grievances. Though the Customers could approach the consumer courts as per the Consumer Protection Act, the lack of proper legislation particularly relating to banking laws and what amounts to service deficiency, made it difficult for the customers to get their complaints resolved. Henceforth, various committees were appointed and working groups were formed to look into dispute resolution matters. A commission named Banking Commission was formed which was headed by Sri, R, G, Saraiya followed by Sri R.K. Talwar which made as near about 172 recommendations. But still the problem remained unresolved. Then Narasimhan Committee on Banking and Financial Sector Reforms was formed and they examined the critical areas and recommended the formation of a body which will solely look into the dispute grievance named Banking Ombudsman and introduced a scheme ‘Banking Ombudsman Scheme 1995’. 

According to the Cambridge Dictionary, the term Ombudsman means someone who works either for a government or large organizations and deals with the complaints which are made against it. [1] An ombudsman is an official, who are usually appointed by the government and who investigates complaints against any financial institution, industries, universities or other public entities. 

RBI acknowledged the suggestion relating to the banking ombudsman and the then Governor of RBI, Dr. C. Rangarajan approved the scheme under on June 14, 1995 under S-35A of the Banking Regulation Act, 1949. [2]

The principal motive behind the setting up of the Ombudsman was for speedy disposal of complaints. RBI has amended the plans time to time, the recent change being in the year 2006, which came into effect from 2017. Till Date, there are about twenty Banking Ombudsmen operating in the country.  [3]

BANKING OMBUDSMAN SCHEME, 2006

Banking Ombudsman scheme, 2006 and it extends to whole of India and shall apply to all the banks as defined under the present scheme.[4] Clause 3(4) of the Scheme defines banking ombudsman as any person who is appointed as per Clause 4 of the Scheme. The clause states that the RBI may appoint one or more officers in the rank of Chief General Manager or Manager who would be known as Banking Ombudsman. They are appointed for the period not exceeding three years. For effective implementation of this scheme Reserve Bank of India has set up fifteen Bank ombudsman offices across the country.

Clause 6 states that RBI shall depute such number of officers to the office of Ombudsman to function as the Secretariat of the Ombudsman. 

PROCEDURE FOR FILING OF COMPLAINTS

Any individual who has a grievance against any bank on any grounds mentioned under Clause 8 of the scheme, may approach the ombudsman, either himself or through an authorized representative. The e-mail address of all the ombudsman is mentioned in the website named, ‘www.bankingombudsman.rbi.org.in’. One can reach the ombudsman only if the concerned bank refuses or delays in solving the particular complaint or rejects to resolve the same.  The complaint must be made in writing and has to be duly signed by the complainant or his authorized representative, in a specified form ‘Annexure A’ 

The complaint can also be filed online. While filing a complaint, few things must be stated clearly, i.e., – 

1. The name and address of the complainant
2. The name and address of the branch or office of the bank against which the complaint has been made.
3. The facts must be clearly stated.
4. The extent of loss
5. The relief sought by the individual. [5]

The Banking Ombudsman may dismiss a complaint at any stage in the event that it appears to the ombudsman that the complaint made to him is:

1. Paltry, vexatious, mala fide or without any adequate reason; or
2. that it isn’t sought after by the complainant with sensible constancy; or
3. in the assessment of Banking Ombudsman there is no misfortune or harm or bother caused to the complainant; or
4. past the financial purview of Banking Ombudsman; or 
5. in the assessment of the Banking Ombudsman the convoluted idea of the objection requires thought of expand narrative and oral proof and the procedures before him are not suitable for arbitration of such grievance. [6]

GROUNDS OF FILING THE COMPLAINT

Clause 8 of the Scheme lists several grounds for filing a complaint. The complaint can be made on any of the grounds alleging deficiency in the services of the Bank including services provided in internet banking. The clause states 24 causes of filing the complaints.  Some of the reasons are: –  Non-payment or delay in the payment or collection of drafts or cheques; Non-acceptance of small denomination notes, without providing any sufficient cause; Non-acceptance of coins without any sufficient cause and charging commission thereof; Refusal to open deposit account without stating the reason of refusal; Refusal or delay in closing the accounts; Non adherence to the fair practice code as adopted by the Bank; Non adherence to the guidelines laid down by the RBI.

SETTLEMENT OF CLAIMS

The judgement passed by the ombudsman is known as awards. On the receipt of a grievance, the target of the ombudsman is to advance a settlement of the objection by arrangement between the complainant and the bank through appeasement or intervention. On the off chance that the objection isn’t settled by arrangement inside a time of one month from the date of the receipt of the complaint, the Ombudsman will pass an award. In passing the award, the ombudsman will be guided by the narrative proof put before him by the gatherings and thus the guideline of banking law and practice, headings gave by the RBI and so forth has to be abided. The award passed will contain the heading/s, assuming any, to the bank for explicit execution of its commitments and notwithstanding or something else, the sum, assuming any, to be paid by the bank to the complainant by method of remuneration for any misfortune endured by the complainant, emerging legitimately out of the demonstration or oversight of the bank. After the passing of the award, its duplicate is given to the complainant and the bank named in the complaint. It is available to the complainant to acknowledge the award in full and last settlement of his grumbling or to dismiss it. The Banking Ombudsman will not have the ability to pass an award coordinating instalment of a sum which is more than the real misfortune endured by the complainant as an immediate result of the demonstration of oversight or commission of the bank, or ten lakh rupees whichever is lower. Notwithstanding, on account of protests, emerging out of Visa activities, the Banking Ombudsman may likewise grant pay not surpassing Rs. 1 lakh to the complainant, taking into account the loss of the complainant’s time, costs brought about by the complainant, provocation and mental pain endured by the complainant. [7]

CONCLUSION

We can conclude by saying that the Banking Ombudsman is the supreme authority which is established by the RBI in the interest of general public. The ombudsman resolves the complaints in a time bound manner and there is no involvement of the judiciary system. This method of settlement is an interesting form of dispute resolution where the ombudsman employs discretion and helps in retaining the aggrieved customers while making the bank accountable for the problems faced by the customers. In a nutshell, the Banking Ombudsman saves times, costs and protect the customers from the constant delay caused by the banks for the resolution of the complaint. 

REFERENCES

¹ Definition of Ombudsman, Cambridge Dictionary, Last accessed on  29^th August,2021, <https://dictionary.cambridge.org/dictionary/english/ombudsman#:~:text=%2F%2Dm%C9%99n%2F%20us,by%2050%20percent%20last%20year&gt; .

² Adam Hayes, ‘Ombudsman’. Investopedia (Last Updated on 30^th March,2021), Last accessed on 29^th August,2021. < https://www.investopedia.com/terms/o/ombudsman.asp>

³ Sheen Kaul, ‘Critical Analysis of the Banking Ombudsman’, Last accessed on 30^th August,2021. < https://www.legalserviceindia.com/legal/article-2521-critical-analysis-of-the-banking-ombudsman.html>

⁴ Banking Ombudsman Scheme,2006 (As amended up to 1^st July,2017).

⁵ Clause 9 of the Scheme,2006

⁶ Clause 13 of the Scheme,2006

⁷ Raj Verdhan, ‘Banking Ombudsman Scheme- Complaint, Process, settlements’, Thesis business, (Last Updated on 19^th April,2020), Last accessed on 30^th August,2021. <https://www.thesisbusiness.com/banking-ombudsman-scheme.html>

1. Banking Ombudsman Scheme,2006 (As amended up to 1^st July,2017). 
2. Clause 9 of the Scheme,2006
3. Clause 13 of the Scheme,2006
4. Raj Verdhan, ‘Banking Ombudsman Scheme- Complaint, Process, settlements’, Thesisbusiness, (Last Updated on 19^th April,2020), Last accessed on 30^th August,2021. < https://www.thesisbusiness.com/banking-ombudsman-scheme.html>