April 20, 2020

Banking Ombudsman Scheme in Details

Banking Ombudsman Scheme came into the picture in order to resolve the complaints of bank customers related to certain services rendered by the banks. 

Banking Ombudsman was introduced in India for the First time in 1995 under Section 35 A of the Banking Regulation Act, 1949 by RBI and underwent a revision in 2002. 

Banking Ombudsman Scheme became operational in the country on 1st January 2006, and also replaced the previously operational Scheme of 2002. 

Banking Ombudsman Scheme 2006:-
The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank customers for resolution of complaints relating to certain services rendered by banks. The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking services. The Banking Ombudsman does not charge any fee for filling and resolving customers' complaints. The amount, if any,to be paid by the banks 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. 10 lakhs, whichever is lower.  The complaint of the customer may be led by his/ her authorised representative as well.The customer may also be awarded a compensation of amount not exceeding Rs. 1 lakh to the complainant, only in case of complaints related to credit card operations for mental agony or harassment. In case the customer is not satised with the decision passed by the Banking Ombudsman, one can approach the appellate authority against the Banking Ombudsman's decision. Appellate Authority is vested with a Deputy Governor of RBI. Such an appeal has to be made within 30 days of the date of receipt of the award. 

Banking Ombudsman is appointed for a  period of 3 years. 

The Banking Ombudsman Scheme covers all Scheduled Commercial Banks, Regional Rural Banks as well as Scheduled Primary Co-operative Banks.                 

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