BANKING OMBUDSMAN SCHEMES OF RBI – PART I

Banking Ombudsman Scheme, 2006

Banking Ombudsman Scheme, 2006 (“BOS 2006”) was an expeditious and reasonable forum set up by the Reserve Bank of India (“RBI”) for resolution of complaints regarding services rendered by banks. It was introduced by RBI under Section 35A of the Banking Regulation Act, 1949. The main aim of BOS 2006 was to enable the resolution of complaints relating to certain services rendered by banks and to facilitate the satisfaction or settlement of such complaints. 

Apart from BOS 2006, the RBI had also introduced Ombudsman Scheme for NBFCs in 2018 and Digital Transactions in 2019. These three Ombudsman schemes have now been integrated by the RBI. The next three blogs will cover each of these Ombudsman schemes.

 Who is a Banking Ombudsman?

A Banking Ombudsman is a senior official appointed by the RBI to redress consumer complaints against deficiency in certain banking services covered by BOS 2006. Currently, there are twenty Banking Ombudsmen that have been appointed, with their offices located mostly in state capitals. A complaint can be filed before the Banking Ombudsman if a customer doesn’t receive any reply from the bank within a period of one month after filing a complaint with the bank’s grievance cell, or the bank rejects the complaint, or if the complainant is not satisfied with the reply given by the bank.

Grounds for complaints under BOS 2006

The Banking Ombudsman can receive and consider any complaint relating to the below mentioned deficiency in banking services:

  • non-payment or inordinate delay in the payment or collection of cheques, drafts, bills etc.
  • non-acceptance, without sufficient cause, of small denomination notes tendered for any purpose, and for charging of commission, or of coins tendered and for charging of commission;
  • non-payment or delay in payment of inward remittances;
  • failure to issue or delay in issue of drafts, pay orders or bankers’ cheques;
  • non-adherence to prescribed working hours;
  • failure to provide or delay in providing a banking facility promised in writing by a bank or its direct selling agents;
  • delays, non-credit of proceeds to parties’ accounts, non-payment of deposit or non-observance 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;
  • complaints from NRI 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 to the instructions of Reserve Bank on ATM / Debit Card and Prepaid Card operations in India by the bank or its subsidiaries
  • Non-adherence by the bank or its subsidiaries to the instructions of Reserve Bank on credit card operations
  • Non-adherence to the instructions of Reserve Bank with regard to Mobile Banking / Electronic Banking service in India by the bank
  • 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;
  • 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;
  • Non-adherence to the provisions of the Code of Bank’s Commitments to Customers issued by Banking Codes and Standards Board of India and as adopted by the bank ;
  • Non-observance of Reserve Bank guidelines on engagement of recovery agents by banks;
  • Non-adherence to Reserve Bank guidelines on para-banking activities like sale of insurance / mutual fund /other third party investment products by banks
  • Any other matter relating to the violation of the directives issued by the Reserve Bank in relation to banking or other services.
  • A customer can also lodge a complaint on the following grounds of deficiency in service with respect to loans and advances
  • non-observance of Reserve Bank Directives on interest rates;
  • delays in sanction, disbursement or non-observance of prescribed time schedule for disposal of loan applications;
  • non-acceptance of application for loans without furnishing valid reasons to the applicant; and
  • non-adherence to the provisions of the fair practices code for lenders as adopted by the bank or Code of Bank’s Commitment to Customers, as the case may be;
  • non-observance of any other direction or instruction of the Reserve Bank as may be specified by the Reserve Bank for this purpose from time to time.
  • The Banking Ombudsman may also deal with such other matter as may be specified by the Reserve Bank from time to time.

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