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The Banking Ombudsman Scheme, 1995 was notified by RBI on June 14, 1995 in terms of the powers conferred on the Bank by Section 35A of the Banking Regulation Act, 1949 to provide for a system of redressal of grievances against banks. The Scheme sought to establish a system of expeditious and inexpensive resolution of customer complaints. The Scheme is in operation since 1995 and was revised during the year 2002. The Scheme is being executed by Banking Ombudsmen appointed by RBI at 15 centres covering the entire country.

The word ‘Ombudsman’ in general means a ‘grievance man’, a public official who is appointed to investigate complaints against the administration. He is to intervene for theordinarycitizen in his dealings with the complex machinery of the establishment.


The objective behind this scheme is to make available an expeditious and cost effective grievance redressal mechanism to bank customers.

Vision and Goals of the Banking Ombudsman Offices

Vision Statement

To be a visible and credible system of dispute resolution mechanism for common persons utilizing the banking services.


– To ensure redressal of grievances of users of banking services in an inexpensive, expeditious, fair and reasonable manner that will provide impetus to improved customer services in the banking sector on a continuous basis.

– To provide valuable feedback suggestions to Reserve Bank of India towards framing appropriate and timely guidelines to banks to improve the level of customer service and to strengthen their internal grievance redressal systems.

– To enhance the awareness of the Banking Ombudsman Scheme.

– To facilitate quick and fair (non-discriminatory) redressal of grievances through use of IT systems, comprehensive and easily accessible database and enhanced capabilities of staff through training.


The Banking Ombudsman Scheme, 2002 covers all the Regional Rural Banks in addition to all Commercial Banks and Scheduled Primary Co-operative Banks, which were already covered by earlier Banking Ombudsman Scheme, 1995. The grounds of complaints that can be entertained by the Banking Ombudsmen have been enumerated in Clause 12 of the Banking Ombudsman Scheme 2002.

What are complaints Ombudsman may receive?

The Banking Ombudsman can receive and consider any complaint relating to the following deficiency in banking services (including internet banking):

* non-payment or inordinate delay in the payment or collection of cheques, drafts or bills

* non-acceptance of small denomination notes

* non-acceptance of coins tendered

* non-payment or delay in payment of inward remittances

* failure to issue or delay in issue of drafts

* non-adherence to prescribed working hours

* failure to provide or delay in providing a banking facility

* complaints from Non-Resident Indians having accounts in India

* refusal to open deposit accounts without any valid reason for refusal

* levying of charges without adequate prior notice to the customer

* non-disbursement or delay in disbursement of pension

* refusal to accept or delay in accepting payment towards taxes

* forced closure of deposit accounts without due notice

* refusal to close or delay in closing the accounts

* non-adherence to the fair practices code as adopted by the bank

* any other matter relating to the violation of the directives

When a person may file the complaint?

One can file a complaint before the Banking Ombudsman if the reply is not received from the bank within a period of one month after the bank concerned has received one s representation, or the bank rejects the complaint, or if the complainant is not satisfied with the reply given by the bank.

Rules for filing complaint

Any person may himself or through his authorized representative make a complaint to the bank. If the bank rejects the complaint or the complainant does not receive any reply within a month or the complainant is not satisfied with the reply even by the bank, the complainant may approach the Banking Ombudsman for redress of the grievance subject to the following:

· The complaint should be made within one year after the cause of action has arisen.

· The complaint is not in respect of the same subject matter that was settled through the Office of the Banking Ombudsman in any previous proceedings.

· The complaint does not pertain to the same subject matter for which any proceedings before any court, tribunal or arbitrator or any other forum is pending or a decree or award or a final order has already been passed.

· The complaint is not frivolous or vexatious in natur

When will one s complaint not be considered by the Ombudsman ?

a. One has not approached his bank for redressal of his grievance first.

b. One has not made the complaint within one year from the date one has received the reply of the bank or if no reply is received if it is more than one year and one month from the date of representation to the bank.

c. The subject matter of the complaint is pending for disposal / has already been dealt with at any other forum like court of law, consumer court etc.

d. Frivolous or vexatious.

e. The institution complained against is not covered under the scheme.

f. The subject matter of the complaint is not within the ambit of the Banking Ombudsman.

g. If the complaint is for the same subject matter that was settled through the office of the Banking Ombudsman in any previous proceedings.

How & Where can one lodge his/her complaint?

One can file a complaint with the Banking Ombudsman simply by writing on a plain paper. One can also file it online or by sending an email to the Banking Ombudsman. One may lodge his/ her complaint at the office of the Banking Ombudsman under whose jurisdiction, the bank branch complained against is situated. For complaints relating to credit cards and other types of services with centralized operations, complaints may be filed before the Banking Ombudsman within whose territorial jurisdiction the billing address of the customer is located.


The performance of the Banking Ombudsmen has been analysed on the aspects such as: the quantum of complaints handled by them, the timeliness in handling the issues, and appropriateness of the decisions of the Banking Ombudsmen. More than 5000 complaints are received by the Banking Ombudsmen every year. The number of complaints received by the BO offices has been steadily increasing since 1999-2000. The number of complaints received during 2000-01, 2001-02 and 2002-03 stood at 5803, 5907 and 5399 respectively while there was a sharp rise during the year 2003-04 at 8246. Details are as given below:

Number of complaints received by the Banking Ombudsmen Period

No. of Offices of Banking Ombudsman

No. of complaints received during the year

Average No. of complaints per office





















Role of Arbitrator

Any dispute between a bank and its constituents or between a bank and another bank may be referred to a Banking Ombudsman for arbitration, if both the parties agree for such a reference provided that the value of the claim in such dispute does not exceed Rs.10 lacs.


The Banking Ombudsman shall report to the Reserve Bank, the non-compliance by any bank of an award and the Review Authority shall pass the necessary order. If a bank fails to implement the award within the prescribed time limit, the complainant may approach the Review Authority with a prayer to pass an appropriate direction to the bank for immediate compliance of the award. The Review Authority shall not receive any such additional or new material from any party which was not produced before the Banking Ombudsman. The Review Authority may call for the comments of the Banking Ombudsman in a review application filed before him, provided he is satisfied that such comments of the Banking Ombudsman are necessary in the exigencies of the case.

The object behind the Banking Ombudsman Scheme is to make available an expeditious and cost effective grievance redressal mechanism to bank customers. Hence Banking ombudsman will endeavor to promote a settlement through conciliation or mediation and he will not be bound by any legal rule of evidence.With effect from January 1, 2006, RBI has further modified the scheme. Now complaints relating to credit cards can also be preferred by aggrieved customers. Earlier, retired bank officers or retired bureaucrats were being appointed as ombudsmen. With effect from Jan.2006, RBI officers are appointed as ombudsmen.

Centres And Their Operational Areas


Gujarat, Union Territories of Dadra and Nagar Haveli, Daman and Diu




Madhya Pradesh and Chattisgarh




Himachal Pradesh, Punjab and Union Territory of Chandigarh


Tamil Nadu, Union Territories of Pondicherry and Andaman and Nicobar Islands


Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and Tripura


Andhra Pradesh




Uttar Pradesh (excluding District of Ghaziabad) and Uttaranchal


West Bengal and Sikkim


Maharashtra and Goa

New Delhi

Delhi, Haryana, Jammu and Kashmir and Ghaziabad district of Uttar Pradesh


Bihar and Jharkhand


Kerala and Union Territory of Lakshadweep

Some Important Developments during the year 2008-09

Meeting of the Committee on Subordinate Legislation, Rajya Sabha on functioning of the Banking Ombudsman Scheme in the private sector banks and foreign banks:

Deputy Governor represented the Bank during the deliberations of the Committee on Subordinate Legislation on functioning of the Banking Ombudsman Scheme in the private sector banks and foreign banks. The Committee was headed by Dr Najma Heptulla, MP and the banks called for discussion were HDFC, Citibank, Standard Chartered Bank, Deutsche Bank and HSBC Ltd.

Advertisement under series ‘Jago Grahak Jago”:

An advertisement campaign on the Banking Ombudsman Scheme has been released by the Bank in collaboration with Ministry of Consumer Affairs, Food & Public Distribution, Government of India as a joint campaign under the ‘Jago Grahak Jago’ series. A massive advertising & visual publicity campaign on the Banking Ombudsman scheme had been carried out in both print and electronic media. This publicity will help in elevating awareness about the BO Scheme among the common people. In addition, banks were instructed to display details of the BO Scheme in all bank branches for the benefit of their customers.

Up gradation of Complain Tracking Software (CTS)

The upgraded version of CTS package went live from July 1, 2009. The upgraded CTS package has provision to enter the complaints, acknowledge the complaints, edit the complaints to update it, upload/ down load supporting of citizens. The System is to record and receive the grievances online and redress them indicating action at different levels. The Government of India is monitoring the System. All the Public Sector banks, Offices of the Banking Ombudsman, RBI, SIDBI, IDBI Bank, NABARD etc., have been listed by Government of India as subordinate offices and given username and password to access the DARPG portal to enable them to dispose of the grievances against banks online. The Government of India intends to discontinue with the disposal of grievances in paper form in a phased manner.

Reform Banking Ombudsman

Latest Law Commission onCheque Bounce

J. Venkatesan reports that the Law Commission of India has recommended setting up of fast track courts to dispose over 3.8 million cases pending cheque bounce cases and has suggested that an amendment to the Instruments Act to compel the drawer of a cheque to pay 50 per cent of the amount of the receipt of summons. The head of Commission, Justice A. R. Lakshmanan has noted that because of the huge pendency of the cases the credibility of the business within and outside the country suffered a serious setback. “Dishonour of a cheque by a bank causes incalculable loss, injury and inconvenience to the payee, and the credibility of issuance of cheque is also being eroded to a large extent…”

Banking Ombudsmanon cheque Bounce

The practical experience at Banking Ombudsman reveal that officials of Banking Ombudsman of RBI have soft corner for the largest public sector bank of India- State Bank of India. Despite the fact that they observed – “the bank had erroneously returned the cheque” Banking Ombudsman noted that by refund of actual expenses in pursing complaint (Rs. 2000) and apology, “complaint has been reasonably addressed and no further compensation for any loss or damage on account of the deficiency in Bank’s service could be allowed…”. This is in contrast to its decision, a year ago, against Corporation Bank which too had wrongly bounced cheque of the same senior citizen – “..It is therefore advised that the complainant may be compensated with Rs, 1500/- towards harassment caused…”. Why so soft on SBI? Further Banking Ombudsman did not issue any directions to SBI nor to Corporation Bank, on account of serious deficiency of service. Coming back, SBI did not render any sincere apology to the senior citizen. What to talk of promising efficient customer service or responding to query under RTI, sent through post office.

More on the working of Banking Ombudsman. The Banking Ombudsman passed an Award against the erring SBI, the passbook of complaint also mentioned-”As per orders passes by banking Ombudsman..”. However, the official letter from Banking Ombudsman maintained that that complaint was resolved amicably between the bank and the complainant. No award was passed, how to contest? When it was asked under RTI Act that- “were terms of settlement signed by both complainant and the bank before the Banking Ombudsman as a mark of settlement/agreement? Please list the number of complainants disposed by settlement where terms of settlement was signed by the bank and complainant in 2007-08? The response of RBI-”No such practice is envisaged under the provisions of the Banking Ombudsman Scheme, 2006”. Not surprising, on record, ,majority of complainants Banking Ombudsman are amicably resolved. What option does the common man have when the normal grievance redressal mechanism fails? To sit at home and accept the helplessness or to approach the Courts, aleady overflowing with cheque bounce cases?

In the light of public interest Justice A. R. Lakshmanan’s observation, SARCAJC appeals to Reserve Bank of India to Amend the present Banking Ombudsman Scheme so that compensation can be awarded to common man (taking account the loss of the complainant’s time and harassment and mental anguish), whose cheque is wrongly bounced by any Bank. Further, apart from officials of Reserve Bank of India, two active representatives of general public should be included in Banking Ombudsman structure so that Banking Ombudsman Scheme effectively works in the public interest and eases the pressure of cheque bounce cases in the Indian courts.

Review Of Literature

Awareness Fridays: A Guide to the Indian Banking Ombudsman Scheme Vinaya HS on January 2, 2009

The Reserve Bank of India also governs the Banking Ombudsman Scheme which provides an “expeditious and inexpensive forum to bank customers for resolution of their complaints relating to banking services.” The objective of the Banking Ombudsman Scheme is to be a visible and reliable system of dispute resolution mechanism for bank customers. Though the Ombudsman was launched way back in 1995, how many among us are really aware of when and how to approach the Banking Ombudsman? Thankfully, as always, the Reserve Bank of India has recently released a guide on this very topic.
RBI amends Banking Ombudsman Scheme

Mumbai, May 24: The Reserve Bank of India (RBI) brought about crucial amendments to the Banking Ombudsman Scheme, 2006 which will now enable aggrieved customers to not only appeal against any Ombudsman’s decision but also to appeal in case of complaints being rejected. The appeal could be made to the deputy governor’s office of the RBI. The Ombudsman, however, has the right to reject complaints if they are ; not on the grounds of complaint referred to in clause 8; beyond the pecuniary jurisdiction of Banking Ombudsman prescribed; frivolous, vexatious, malafide; without any sufficient cause; that it is not pursued by the complainant with reasonable diligence; in the opinion of the Banking Ombudsman there is no loss or damage or inconvenience caused to the complainant; or requiring consideration of elaborate documentary and oral evidence and the proceedings before the Banking Ombudsman. In case of a complainant being aggrieved by the award under clause 12 or by rejection of a complaint, he may exercise the option of an appeal within 30 days, the RBI said in its notification.


Journal of Financial Regulation and Compliance



This paper examines the role of the Banking Ombudsman in dealing with complaints about banking services. It describes the procedures for investigating eligible complaints and considers the overlap with other Ombudsman schemes, in particular those of the Building Societies and Insurance Ombudsmen.

Exemplary Cases dealt with by BO offices where customers were right

Case 1 :

The complainant was maintaining a current account and approac