Banking Ombudsman

PROJECT REPORT ON BANKING OMBUDSMAN

SUBMITTED TO: UNIVERSITY OF MUMBAI

T.Y. B.COM (BANKING AND INSURANCE) VTH SEMESTER (2011-12)

PROJECT GUIDE: MS. POOJA NAGDEV

SUBMITTED BY:

KARAN P. VED

K.P.B HINDUJA COLLEGE OF COMMERCE & ECONOMICS

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CERTIFICATE

This is to certify that Mr. KARAN VED of T.Y.B.B.I (Semester V) has successfully completed the project on BANKING OMBUSMAN under the guidance of MS. POOJA T. NAGDEV.

PROJECT GUIDE

COURSE COORDINATOR

INTERNAL EXAMINER

EXTERNAL EXAMINER

PRINCIPAL

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DECLARATION

I, MR. KARAN P. VED, student of T.Y.B.Com (Banking &

Insurance) Semester V (2011-2012) hereby declare that I have completed the project on BANKING OMBUDSMAN. I further declare that the information contained in this project report is genuine, true & fair to the best of my knowledge.

Signature of Student
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Banking Ombudsman (KARAN P. VED)

ACNOWELDGEMENT

A person always requires guidance and help of others to achieve success in his set objectives. Similarly, it was not possible for me to complete my assignment. I am indeed very much thankful to all the people who have helped me to complete the project. I am gratefully indebted to Prof. POOJA T. NAGDEV, my project guide for providing me all the necessary help and required guidelines for the completion of my project and also for the valuable time that she gave me from her schedule. Last but not least I am thankful to all my friends, who have been a constant source of inspiration and information for me. I thank to almighty for showering his blessings.

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EXECUTIVE SUMMARY
The aim of this project is to introduce the reader to the topic of THE BANKING OMBUDSMAN. The project also deals with the policy adopted by the RBI and the excess of case laws. The ability of the banking industry to achieve the socio-economic objectives and in the process bringing more and more customers into its fold will ultimately depend on the satisfaction of the customers. Banks have a strong belief that a satisfied customer is the foremost factor in developing our business. This project is focused in understanding the essentiality of the Banking Ombudsman in regards to the public interest and the interest of the banking policies to enable resolution of complaints related to deficiency in banking services. Sensing the need for an easy, expeditious and inexpensive mechanism for redressal of unresolved grievances of customers, the RBI initially formulated the Scheme of Ombudsman, 1995, which became operational in June 1995, providing an institutional and legal framework to bank customers to resolve all their complaint. The scheme is applicable to all scheduled commercial banks having business in India and scheduled primary co-operative banks except Regional Rural Banks. Fifteen offices of Banking Ombudsman at important centres were set up to cover the entire country. The Banking Ombudsman offers customers the opportunity to resolve disputes with their banks without needing to resort to the Courts.

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INDEX
SR.NO. 1. 2. 3. 4. 5. 6. 7.
9.

PARTICULARS INTRODUCTION

PAGE NO. 08-09 DIFFERENT TYPES OF BANKS 10-14 WHAT ARE CONSUMER COMPLAINTS 15-16
AND ITS REDRESSAL? WHAT IS BANKING OMBUDSMAN? OMBUDSMAN AND ITS TYPES? BANKING OMBUDSMAN GLOBALLY BANKING OMBUDSMAN SCHEME BY RBI CONSUMER PROTECTION ACT 1986 CUSTOMER GREIVIANCES CELL OF DIFFERENT BANKS CASESTUDY ON NON-COMPLIANCE OF OMBUDSMAN CONCLUSION BIBILOGRAPHY ANEXXURE 1 ANEXXURE 2 ANEXXURE 3

11. 12.
13. 14. 15. 16. 17.

17-23 24-26 27-28 29-31 32-38 39-47 48-50 51 52 53-66 67-68 69-70

INDEX

OBJECTIVES

To present Banking Ombudsman Scheme & how it works. To present the services of the Banking Ombudsman offered to the customers.
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To show how the Banking Ombudsman deals with customer complaints. To explain the duties, functions & powers of the Ombudsman.

METHODLOGY

The methodology includes the information of the features of the Ombudsman in the form of primary data that had been received from the Branch Managers of the banks and the officers of the RBI. It also includes the informations from the related books & the related websites.

INTRODUCTION

The basic services a bank provides are checking accounts, which can be used like money to make payments and purchase goods and services; savings
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Banking Ombudsman accounts and time deposits that can be used to save money for future use; loans that consumers and businesses can use to purchase goods and services; and basic cash management services such as check cashing and foreign currency exchange. Four types of banks specialize in offering these basic banking services: commercial banks, savings and loan associations, savings banks, and credit unions. A broader definition of a bank is any financial institution that receives, collects, transfers, pays, exchanges, lends, invests, or safeguards money for its customers. This broader definition includes many other financial institutions that are not usually thought of as banks but which nevertheless provide one or more of these broadly defined banking services. These institutions include finance companies, investment companies, investment banks, insurance companies, pension funds, security brokers and dealers, mortgage companies, and real estate investment trusts. Banking services are extremely important in a free market economy such as that found in Canada and the United States. Banking services serve two primary purposes. First, by supplying customers with the basic mediums-of-exchange (cash, checking accounts, and credit cards), banks play a key role in the way goods and services are purchased. Without these familiar methods of payment, goods could only be exchanged by barter (trading one good for another), which is extremely time-consuming and inefficient. Second, by accepting money deposits from savers and then lending the money to borrowers, banks encourage the flow of money to productive use and investments. This in turn allows the economy to grow. Without this flow, savings would sit idle in someones safe or pocket, money would not be available to borrow, people would not be able to
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Banking Ombudsman purchase cars or houses, and businesses would not be able to build the new factories the economy needs to produce more goods and grow. Enabling the flow of money from savers to investors is called financial intermediation, and it is extremely important to a free market economy. Banking institutions include commercial banks, savings and loan associations (SLAs), savings banks, and credit unions. The major differences between these types of banks involve how they are owned and how they manage their assets and liabilities. Assets of banks are typically cash, loans, securities (bonds, but not stocks), and property in which the bank has invested. Liabilities are primarily the deposits received from the banks customers. They are known as liabilities because they are still owned by, and can be withdrawn by, the depositors of the financial institution.

TYPES OF BANKS
There are various types of banks which operate in our country to meet the financial requirements of different categories of people engaged in agriculture, business, profession, etc. On the basis of functions, the banking institutions in
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Banking Ombudsman India may be divided into the following types:

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1. Central Banks
A bank which is entrusted with the functions of guiding and regulating the banking system of a country is known as its Central bank. Such a bank does not deal with the general public. It acts essentially as Governments banker; maintain deposit accounts of all other banks and advances money to other banks, when needed. The Central Bank provides guidance to other banks whenever
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Banking Ombudsman they face any problem. It is therefore known as the bankers bank. It advises the Government on monetary and credit policies and decides on the interest rates for bank deposits and bank loans. Another important function of the Central Bank is the issuance of currency notes, regulating their circulation in the country by different methods. No other bank than the Central Bank can issue currency. 2. Commercial Banks Commercial Banks are banking institutions that accept deposits and grant short term loans and advances to their customers. In addition to giving short-term loans, commercial banks also give medium-term and long-term loan to business enterprises. Commercial banks are of three types: Public Sector Banks These are banks where majority stake is held by the Government of India or Reserve Bank of India. Examples of public sector banks are: State Bank of India, Corporation Bank, Bank of Baroda and Dena Bank, etc Private Sectors Banks In case of private sector banks majority of share capital of the bank is held by private individuals. These banks are registered as companies with limited liability. For example: The Jammu and Kashmir Bank Ltd., Bank of Rajasthan Ltd., Development Credit Bank Ltd, Lord Krishna Bank Ltd., Bharat Overseas Bank Ltd., Global Trust Bank, Vysya Bank, etc. Foreign Banks

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Banking Ombudsman These banks are registered and have their headquarters in a foreign country but operate their branches in our country. Some of the foreign banks operating in our country are Hong Kong and Shanghai Banking Corporation (HSBC), Citibank, American Express Bank, Standard & Chartered Bank, Grindlays Bank, etc. The number of foreign banks operating in our country has increased since the financial sector reforms of 1991. 3. Development Banks Business often requires medium and long-term capital for purchase of machinery and equipment, for using latest technology, or for expansion and modernization. Such financial assistance is provided by Development Banks. They also undertake other development measures like Public Sector Banks comprise 19 nationalized banks and State Bank of India and its 7 associate banks. Industrial Finance Corporation of India (IFCI) and State Financial Corporations (SFCs) are examples of development banks in India. 4. Co-Operative Banks People who come together to jointly serve their common interest often form a cooperative society under the Co-operative Societies Act. When a co-operative society engages itself in banking business it is called a Co-operative Bank. The society has to obtain a license from the Reserve Bank of India before starting banking business and must follow the guidelines set and issued by it. Any cooperative bank as a society is to function under the overall supervision of the Registrar, Co-operative Societies of the State. There are three types of cooperative banks operating in our country: Primary Credit Societies
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Banking Ombudsman These are formed at the village or town level with borrower and nonborrower members residing in one locality. The operations of each society are restricted to a small area so that the members know each other and are able to watch over the activities of all members to prevent frauds. Central Co-operative Banks These banks operate at the district level having some of the primary credit societies belonging to the same district as their members. These banks provide loans to their members and function as a link between the primary credit societies and state co-operative banks. State Co-operative Banks These are the apex (highest level) co-operative banks in all the states of the country. They mobilize funds and help in its proper channelization among various sectors.

5. Specialized Banks There are some banks, which cater to the requirements and provide overall support for setting up business in specific areas of activity. EXIM Bank, SIDBI and NABARD are examples of such banks. They engage themselves in some specific area or activity and thus, are called specialized banks. Export Import Bank of India (EXIM Bank) If you want to set up a business for exporting products abroad or importing products from foreign countries for sale in our country, EXIM bank can
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Banking Ombudsman provide you the required support and assistance. The bank grants loans to exporters and importers and also provides information about the international market. Small Industries Development Bank of India (SIDBI) If you want to establish a small-scale business unit or industry, loan on easy terms can be available through SIDBI. It also finances modernization of small-scale industrial units, use of new technology and market activities. The aim and focus of SIDBI is to promote, finance and develop small-scale industries.

National Bank for Agricultural and Rural Development (NABARD)

It is a central institution for financing agricultural and rural sectors. If a person is engaged in agriculture or other activities like handloom weaving, fishing, etc. NABARD can provide credit, both short-term and long-term, through regional rural banks. It provides financial assistance, especially, to co-operative credit, in the field of agriculture, small scale industries, cottages and village industries in rural areas.

POLICY FOR THE GRIEVANCES REDRESSAL OF THE CUSTOMER COMPLAINTS

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Banking Ombudsman In the present scenario of competitive banking, excellence in customer service is the most important tool for the growth of the business. Customer complaints are part of the business life of any corporate entity. This is more so for banks because banks are service organizations. As a service organization, customer service and customer satisfaction should be the prime concern of any bank. The bank believes that providing prompt and efficient service is essential not only to attract new customers, but also to retain existing ones. This policy document aims at minimizing instances of customer complaints and grievances through proper service delivery and review mechanism and to ensure prompt redressal of customer complaints and grievances. The review mechanism should help in identifying shortcomings in product features and service delivery. Customer dissatisfaction would spoil banks name and image. The Banks policy on grievance redressal follows the under noted principles: Customers be treated fairly at all times Complaints raised by customers are dealt with courtesy and on time

Customers are fully informed of avenues to escalate their complaints grievances within the organization and their rights to alternative remedy, if they are not fully satisfied with the response of the bank to their complaints.

The Bank employees must work in good faith and without prejudice to the interests of the customer.

In order to make banks redressal mechanism more meaningful and effective, a structured system needs to be built up towards such end. Such system would ensure that the redressal sought is just and fair and is within the given framework of rules and regulation. The policy document would be made available at
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Banking Ombudsman all branches. All employees of the Bank should be made aware about the Complaint handling process The customer complaint arises due to: The attitudinal aspects in dealing with customers

Inadequacy of the functions/arrangements made available to the customers or gaps in standards of services expected and actual services rendered. The customer is having full right to register his complaint if he is not satisfied with the services provided by the bank. He can give his complaint in writing, orally or over telephone. If customers complaint is not resolved within given time or if he is not satisfied with the solution provided by the bank.

WHAT IS BANKING OMBUDSMAN?

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Banking Ombudsman An ombudsman is a person who has been appointed to look into complaints about an organization. Using an ombudsman is a way of trying to resolve a complaint without going to court. Banking Ombudsman is a quasi judicial authority functioning under Indias Banking Ombudsman Scheme, and the authority was created pursuant to the a decision by the Government of India to enable resolution of complaints of customers of banks relating to certain services rendered by the banks. The Banking Ombudsman Scheme was first introduced in India in 1995, and was revised in 2002, 2006 and again in 2009. In the wake of the failure in the efficient services of the banks, the RBI brought a scheme for the prompt, efficient and courteous services and also to protect the rights of the customers. The Banking Ombudsman is an official authority to investigate the complaint from the customers and address the complaint and thereby bring the solution among the aggrieved parties. So the Banking Ombudsman plays the role of a mediator and serves the purpose of reconciliation. The Banking Ombudsman has been defined under clause 4 of the Banking Ombudsman Scheme, 2006.

APPOINTMENT & TENNURE

The Reserve Bank may appoint one or more of its officers in the rank of Chief General Manager or General Manager to be known as Banking Ombudsmen to carry out the functions entrusted to them by or under the Scheme. The appointment of Banking Ombudsman under the above Clause may be made for a period not exceeding three years at a time.

CHARACTERISTICS OF BANKING OMBUDSMAN

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Banking Ombudsman The Banking Ombudsman is a quasi judicial authority. It has power to summon both the parties - bank and its customer, to facilitate resolution of complaint through mediation. All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme. The Banking Ombudsman has power to consider complaints from Non-Resident Indians having accounts in India in relation to their remittances from abroad, deposits and other bank-related matters.

The Banking Ombudsman does not charge any fee for resolving

customers complaints. Complaint can be made before a Banking Ombudsman on 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 by any such competent court, tribunal, arbitrator or forum.

DUTIES & FUNCTIONS OF OMBUDSMAN

The Ombudsman shall enquire into and investigate in accordance with the provisions of the Act, and take action or steps as may be prescribed by the Act and concerning Practices and actions by persons, enterprises and other private institutions where complaints allege that violations of fundamental rights and freedoms have taken place.

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All instances or matters of alleged or suspected corruption

and the misappropriation of public moneys or other public property by officials. Without derogating from the provisions, any request or complaint in respect of instances or matters referred to in that provisions, may include any instance or matter in respect of which the Ombudsman has reason to suspect

That the provisions of any law or under the authority of the

State or by any person in its employment, or that any practice is so followed, in a manner which is not in the public interest.

That the powers, duties or functions which vest in the State

or, body or institution, or any person in its employment are exercised or performed in an irregular manner. That moneys forming part of the funds of the State or body or institution, or received or held by or on behalf of the State or body or institution are being or have been dealt with an irregular manner. Any person wishing to lay any instance or matter referred to in provisions before the Ombudsman shall do so in such manner as the Ombudsman may determine or allow.

The Ombudsman shall not be required to investigate any instance or matter referred to in the provisions which has been laid before him or her under the provisions when the grounds on account of which the inquiry is desired is in the opinion of the Ombudsman. The provisions shall not apply in respect of any decision taken in or in connection with any civil or criminal case by a court of law.
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GROUNDS OF CUSTOMERS COMPLAINTS CONSIDERED BY BANKING OMBUDSMAN

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, bills etc; non-acceptance, without sufficient cause, of small denomination notes tendered for any purpose, and for charging of commission in respect thereof;

non-acceptance, without sufficient cause, of coins tendered and for charging of commission in respect thereof;

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 (other than loans and advances) promised in writing by a bank or its direct selling agents;

complaints from Non-Resident Indians having accounts in India in relation to their remittances from abroad, deposits and other bank-related matters;

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;

refusal to accept or delay in accepting payment towards taxes, as required by Reserve Bank/Government;

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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-observance of Reserve Bank guidelines on engagement of recovery agents by banks; and 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;

GROUNDS OF CUSTOMERS COMPLAINTS NOT CONSIDERED BY BANKING OMBUDSMAN

Ones complaint will not be considered if: One has not approached his bank for redressal of his grievance first. 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. 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. Frivolous or vexatious. The institution complained against is not covered under the scheme.
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Banking Ombudsman The subject matter of the complaint is not within the ambit of the Banking Ombudsman. If the complaint is for the same subject matter that was settled through the office of the Banking Ombudsman in any previous proceedings.

PROCEDURE FOR FILING COMPLAINT

Any person who has a grievance against a bank on any one or more of the grounds mentioned above, may, himself or through his authorized representative (other than an advocate), make a complaint to the Banking Ombudsman within whose jurisdiction the branch or office of the bank complained against is located.

Complaints arising out of the operations of credit cards, shall be filed before the Banking Ombudsman within whose territorial jurisdiction the billing address of the card holder is located and not the place where the bank concerned or the credit card processing unit is located.

The complaint shall be made in writing duly signed by the complainant or his authorized representative and shall as far as possible be in the form and shall contain such particulars as specified in the Scheme.

The complainant shall file along with the complaint, copies of the documents, if any, which he proposes to rely upon and also a declaration that the complaint is maintainable as per clause 9(3) of the Scheme..

A complaint can also be made through electronic means.

The complainant shall before making a complaint to the Banking Ombudsman, make a written representation to the bank.

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The complaint can be filed if the bank has rejected the complaint or the complainant had not received any reply within a period of one month after the bank received his representation or if the complainant is not satisfied with the reply given to him by the bank.

The complaint to the Banking Ombudsman is to be made not later than one year after the complainant has received the reply of the bank to his representation or, where no reply is received, not later than one year and one month after the date of the representation to the bank.

The complaint should not be in respect of the same subject matter which was settled or dealt with on merits by the Banking Ombudsman in any previous proceedings whether or not received from the same complainant or along with one or more complainants or one or more of the parties concerned with the subject matter.

The complaint should 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 order has been passed by any such court, tribunal, arbitrator or forum.

The complaint should not be frivolous or vexatious in nature.

The complaint should be made before the expiry of the period of limitation prescribed under the Indian Limitation Act, 1963 for such claims.

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OMBUDSMAN AND ITS TYPES

An ombudsman is a person who has been appointed to look into complaints about an organization. Using an ombudsman is a way of trying to resolve a complaint without going to court. The types of ombudsman are:-

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Banking Ombudsman The Reserve Bank of India (RBI) first introduced the Banking Ombudsman Scheme In1995, which has been revised in 2002 and 2005. The latest revised Scheme has come into force from 1st Jan 2006. S.E.B.I. Ombudsman The Securities Exchange Board of India (SEBI) under section 30 read with subsection (1) of section 11 of the SEBI Act, 1992, has framed the SEBI (Ombudsman) Regulations, 2003, which were notified on 21st August 2003. The Regulations provided for the establishment of the office of Ombudsman to redress the Grievance of investors in securities and connected matters. The listed companies and registered stock intermediaries have to disclose the name address and other particulars of ombudsman in their for the benefit of the investors. Electricity Ombudsman The Electricity Regulatory Commission, under section 181 read with subsection (5) of section 42 of the Electricity Act, 2003, issues guidelines for establishment of forum and Ombudsman for redressal of grievances of Electricity consumers. The Delhi Regulatory Commission (DERC) vide its Notification dated 11th March, 2006 has issued DERC (Guidelines for establishment of Forum of redressal of grievance of the consumer and Ombudsman) Regulations, 2003.

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Telecom Ombudsman The Telecom Regulatory Authority of India Act, 1997, empowers the Telecom Regulatory Authority of India Act 1997, empowers the Telecom Regulatory Authority of India (TRAI) to make the recommendations on laying down the standards of quality of services to be provided by the services providers and conduct the interest of the periodical surveys of Telecom services so as to protect the interest of the consumers. Income Tax Ombudsman The government is considering creating an office of Income Tax Ombudsman to protect individual taxpayers right. The Ombudsman will identify issues that increase the compliance burden or create problems for taxpayers and bring those issues to the attention of the ministry of Finance. The Ombudsman will make appropriate legislative proposal where necessary and send periodical reports to the Department of Revenue, suggesting appropriate action. Insurance Ombudsman The Government of India, Minister of Finance, Department of Economics Affairs, Insurance Division under section 114 (1) of Insurance Act, 1938, has framed the Redressal of Public Grievance Rules, 1998, for appointment of Insurance Ombudsman, which comes into force with effect from 11th November 1998. The Insurance Ombudsman has started functioning from 1999, to provide for efficient, cost effective and impartial settlement of claims and grievance of any person against a Life or General Insurance in Public and private sector.
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BANKING OMBUDSMAN GLOBALLY

Banking Ombudsman, Australia
Banking and Financial Services Ombudsman (BFSO)
The Australian Banking and Financial Services Ombudsman (BFSO) helps individuals and small businesses (including incorporated small businesses) resolve complaints concerning all financial services provided by banks and financial service providers. The BFSO is independent and able to make decisions that are binding on the financial services provider. As a general rule, the BFSO can consider a dispute lodged by an individual or a small business, if it is about a financial service provided by a member bank or an affiliate; and the amount of loss claimed is less than $280,000. This process is free to complainants. The BFSO cannot consider disputes about general policies such as interest rates, fees and branch closures. The BFSO was merged with the Financial Industry Complaints Service (FICS) and Insurance Ombudsman Service (IOS) to form the national Financial Ombudsman Service (FOS) on 1 July 2008. The Financial Ombudsman Service (FOS) takes complaints on a wide range of financial services and consolidates a number of financial services ombudsman and dispute resolution schemes to provide a single national service for banking, insurance and investment disputes in Australia.

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Banking Ombudsman, France French ombudsman

Unlike many other European countries, France does not have a banking ombudsman instead, each individual bank has its own ombudsman or mdiateur. There is however, a government-appointed ombudsman, known as the Mdiateur de la Rpublique.

Banking Ombudsman, South Africa

The Ombudsman of Banking Services helps to resolve complaints regarding certain banks according to the rules of the scheme. The scheme operates on an independent basis and the Ombudsman only reports to the Board of the Ombudsman for the Banking Services. The ombudsman is appointed and paid by the Banking Council of South Africa. It is the ombudsmans duty to mediate between banks and their customers, and to ensure that the customer receives fair and equitable treatment. The ombudsman is an independent body that strives to be impartial and to assess complaints on their merits. The current Ombudsman is Advocate Clive Pillay, appointed from the 2nd May 2007.

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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 has been revised during the years 2002, 2006 and 2009. The Scheme is being executed by Banking Ombudsmen appointed by Reserve Bank at 15 centers covering the entire country. As mandated by the Banking Ombudsman Scheme, the Banking Ombudsmen submit an Annual Report on the functioning of their offices every year. Based on such reports, an Annual Report for the Banking Ombudsman Scheme in a whole is prepared at Reserve Bank of India, Central Office. As is being the practice, the Annual Report covers the last five-year period with focus on the current year. Further, as a result of computerization of the functioning of Banking Ombudsman Offices through the Complaint Tracking Software, detailed analysis was possible on the information pertaining to year 2006-07. With the decision to merge the Banking Ombudsman Offices with that of RBI offices, the accounting period for the Banking Ombudsman Offices were changed from April 1-March 31 to July 1-June 30 to be in congruent with that of RBI offices.

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GENERAL PARTICULARS ON THE SCHEME

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 the ordinary citizen in his dealings with the complex machinery of the establishment. In India, any person whose grievance against a bank is not resolved to his satisfaction by that bank within a period of one month can approach the Banking Ombudsman if his complaint pertains to any of the matters specified in the Scheme. Banking Ombudsmen have been authorized to look into complaints concerning deficiency in banking service , sanction of loans and advances in so far as they relate to non-observance of the Reserve Bank directives on interest rates, delay in sanction or non-observance of prescribed time schedule for disposal of loan applications or nonobservance of any other directions or instructions of the Reserve Bank as may be specified for this purpose, from time to time, and such other matters as may be specified by the Reserve Bank. The Scheme envisages expeditious and satisfactory disposal of customer complaints in a time bound manner. The Banking Ombudsman on receipt of any complaint endeavors to promote a settlement of the complaint by agreement between the complainant and the bank named in the complaint through conciliation or mediation. For the purpose of promoting a settlement of the complaint, the Banking Ombudsman has been allowed to follow such procedures as he may consider appropriate and he is not bound by any legal rule of evidence. If a complaint is not settled by agreement within a period of one month from the date of receipt of the complaint or such further period as the Banking Ombudsman may consider necessary, he may pass an Award after affording the parties reasonable opportunity to present their case.

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SCOPE OF THE SCHEME

The Banking Ombudsman Scheme, 2002 covered 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. There is no change in this regard in the Banking Ombudsman Scheme, 2006 and 2009. In 2009, the Reserve Bank of India announced the revised Banking Ombudsman Scheme with enlarged scope that included customer complaints on certain new areas, such as, credit card complaints, deficiencies in providing the promised services even by banks' sales agents, levying service charges without prior notice to the customer and non adherence to the fair practices code as adopted by individual banks. The important new grounds of complaints added include credit card issues, failure in providing the promised facilities, non-adherence to fair practices code, levying of excessive charges without prior notice and issues pertaining to accepting payment towards taxes and issuing/servicing of Government securities. The grounds of complaints have been enumerated in Clause 8 of the Banking Ombudsman Scheme, 2006.

OPERATIONALISATION
Reserve Bank of India operationalised the Banking Ombudsman Scheme by establishing Banking Ombudsman Offices at 15 centers all over the country. The names, addresses and area of operation of the Banking Ombudsmen have been given in to Annexure A. Reserve Bank frames the guidelines for operationalizing the Scheme and supervises the running of the Scheme.

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The consumer protection Act, 1986 is the history of socio-economic legislation in the country. It is one of the most progressive and comprehensive piece of legislations enacted for the protection of consumers. It was enacted after indepth study of consumer protection laws in a number of countries and in consultation with representatives of consumers, trade and industry and extensive discussions within the Government. The Aim of Consumer Protection Act (CPA) is to address the grievances of the consumers and protecting them from the unethical practices/ behavior or unfair trade practices of the manufacturer/ supplier. All the provisions of the Act have come into force from 1 July 1987. The Act was amended in 1991 and 1993. To make the Consumer Protection Act more functional and purposeful, a comprehensive amendment was carried out in December 2002 and brought into force from 15 March 2003. As a sequel, the Consumer Protection Rules, 1987 were also amended and notified on 5 March 2004. Earlier though there were several legislations to protect the consumer, but the same never proved adequate to protect consumer and compensate them for their compliances. The act not only enhances the awareness and educates the consumer but also provides compensation to them by summary and inexpensive proceedings. Unlike existing laws which are punitive or preventive in nature, the provisions of this Act are compensatory in nature.

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Banking Ombudsman

CONSUMER
Consumer means any person who,Buy any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose, or Hires any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person.

COMPLAINT
Complaint means any allegation in writing made by a complaint that:

As a result of any unfair trade practice adopted by any trader, the complainant has suffered loss or damage.

The goods mentioned in the complaint suffer from one or more defects.

The services mentioned in the complaint suffer from deficiency in any respect.

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Banking Ombudsman A trader has charged for the goods mentioned in the complaint a price in excess of the price fixed by or under any law for the time being in force or displayed on the goods or any package containing such goods, with a view to obtaining any relief provided by this Act.

Remedies Granted under the Consumer Protection Act, 1986 against unfair Trade Practices-:
The District Forum / State Commission / National Commission may pass one or more of the following orders to grant relief to the aggrieved consumer :1. To remove the defects pointed out by the appropriate laboratory from goods in question; 2. To replace the goods with new goods of similar description which shall be free from any defect; 3. To return to the complainant the price, or, as the case may be, the charges paid by the complainant; 4. To pay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by the consumer due to negligence of the opposite party; 5. To remove the defects or deficiencies in the services in question; 6. To discontinue the unfair trade practice or the restrictive trade practice or not to repeat them; 7. Not to offer the hazardous goods for sale: 8. To withdraw the hazardous goods from being offered for sale 9. To cease manufacture of hazardous goods and to desist from offering services which are hazardous in nature;
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Banking Ombudsman

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Banking Ombudsman Right to Safety The right to be protected against the marketing of goods and services which are hazardous to life and property Consumer right to safety applies to all possible consumption patterns and to all goods and services. In the context of the new market economy and rapid technological advances affecting the market, the right to safety has become a pre-requisite quality in all products and services. For example some Indian products carry the ISI mark, which is a NB symbol of satisfactory quality of a product? Similarly, the FPO and AGMARK symbolize standard quality of food products. Right to Information Right to information means the right to be given the facts needed to make an informed choice or decision about factors like quality, quantity, potency, purity standards and price of product or service. The right to information now goes beyond avoiding deception and protection against misleading advertising, improper labeling and other practices. For e.g. when you buy a product or utilize a service, you should be informed about; a) How to consume a product. b) The adverse health effects of its consumption. c) Whether the ingredients used are environment- friendly or not etc. Right to Redress This is the right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulous exploitation of consumers. It is to protect consumer interests that consumers have been given the right to obtain redress. In India, we have a redress machinery called Consumer Courts constituted under
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Banking Ombudsman the Consumer Protection Act (1986), functioning at national state and district levels. But it has not been made complete use of under due to lack of awareness of basic consumer rights among consumers themselves. While in the developed world, right to redress is perhaps the most commonly exercised consumer right, in developing countries, consumers are still wary of getting involved in legal redress system. There are consumer courts in India where any consumer can lodge a case if s/he thinks he or she has been cheated. Right to Consumer Education Consumer education empowers consumers to exercise their consumer rights. It means the right to acquire the knowledge and skill to be informed consumer throughout life. The right to consumer education incorporates the right to the knowledge and skills needed for linking action and influences factors which affect consumer decisions. It is the single most powerful tool that can take consumers from their present disadvantageous position to one of strength in the marketplace. Consumer education is dynamic, participatory and is mostly acquired by hands-on and practical experience. Right to Basic Needs This right is the right to basic goods and services which guarantee dignified living. It includes adequate food, clothing, health care, drinking water and sanitation, shelter, education, energy and transportation. Access to food, water and shelter are the basis of any consumer's life. Without these fundamental amenities, life cannot exist. The right to basic needs means that availability of articles which are the basic need of every consumer must be ensured.

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Banking Ombudsman Right to Safe Environment It means the right to a physical environment that will enhance the quality of life. It includes protection against environmental damage. It acknowledges the need to protect and improve the environment for future generations as well. This right involves protection against environmental problems over which the individual consumer has control. It acknowledges the need to protect and improve the environment for present and future generations. Right to be Heard This means the right to be represented so that consumers interests receive full and sympathetic consideration in the formulation and execution of economic policy. This right is being broadened to include the right to be heard and represented in the development of products and services before they are produced or set up; it also implies a representation, not only in government policies, but also in those of other economic powers. Right to Choice The right is to be assured, wherever possible, access to a variety of products and services at competitive prices. It means the right to have access to a variety of products and services at competitive prices and in the case of monopolies, to have an assurance of satisfactory quality and service at a fair price. The right to choose has been reformulated to read: the right to basic goods and services. This is because the unrestrained right of a minority to choose can mean for the majority a denial of its fair share.

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Banking Ombudsman

OMBUDSMAN FOR YES BANK

YES FOR YOU At YES Bank, we would like to assure you the best of our services at all times. If you would like to share your valuable suggestion, opinion, experience, feedback or scope for improvement on any of our services, then you may either register your complaint in the Online Complaint Form OR please do write in to the Branch Business Leader (Branch Manager) of the nearest Branch in your city explaining the details concerned and they will respond to you- Branch Contact Details. In the event of an unsatisfactory or no response, 1. From the Branch Business Leader within 7 working days, you can address your concern to the Regional Business Leader (Name & Contact details of the Regional Business Leaders are displayed in the respective Branches).
2.

From the Regional Business Leader within 15 working days, please address your concern to Mr. Suhail Kazmi, President Retail Banking & Wealth Management, on 022-6669 9221 or send him an e-mail.

We would like to inform all our customers that our Bank is covered under the Banking Ombudsman Scheme, 2006 of the Reserve Bank of India. The Banking Ombudsman Scheme was introduced by RBI with the objective of enabling resolution of customer Complaints relating to provision of Banking Products &
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Banking Ombudsman Services and to facilitate the satisfaction or settlement of such complaints. Under this scheme, any grievance against the Bank, if not addressed within 30 days can be addressed to the Banking Ombudsman of the concerned city. All our Branches will have the details & address of the Banking Ombudsman of their respective city. A copy of the scheme is available in all our Branches for your perusal. We request you to kindly note the following points, before approaching the Banking Ombudsman.
1.

The complainant, before making a complaint to the Ombudsman, had made a written representation to YES Bank, and the Bank had either rejected the complaint, or the complainant had not received a reply within a period of one month after the complaint was received by the Bank, or the complainant was not satisfied with the reply given by the Bank.

2. The complaint is made not later than one year after the complainant has received YES Banks reply to his/her representation or, where no reply is received, not later than one year and one month after the date of the representation to YES Bank. 3. The complaint has not been settled by the Ombudsman in any previous proceedings. 4. The complaint is not the subject matter of proceedings before any court, tribunal, arbitrator or any other forum. 5. The complaint is not frivolous or vexatious in nature. 6. The complaint is made before the expiry of the period of limitation prescribed under the Indian Limitation Act, 1963 for such claims.

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Banking Ombudsman

OMBUDSMAN FOR HDFC BANK

REDRESSAL OF CONSUMER COMPLAINTS AT HDFC BANK

Depositors having any complaint / grievance with regard to services rendered by the bank have a right to approach the authority designated by the bank for handling customer complaint / grievances. The details of the internal set up for redressal of complaints / grievances will be displayed in the branch premises. The branch officials shall provide all required information regarding procedure for lodging the complaint. In case the depositor does not get response from the bank within one month from date of complaint or he is not satisfied with the response received from the bank, he has a right to approach the Banking Ombudsman appointed by the Reserve Bank of India.

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Banking Ombudsman

OMBUDSMAN IN IDBI BANK IN DETAIL:-

In the present scenario of competitive banking, excellence in customer service is the most important tool for sustained business growth. Customer complaints are part of the business life of any corporate entity. This is more so for banks because banks are service organizations. As a service organization, customer service and customer satisfaction should be the prime concern of any bank. The bank believes that providing prompt and efficient service is essential not only to attract new customers, but also to retain existing ones. This policy document aims at minimizing instances of customer complaints and grievances through proper service delivery and review mechanism and to ensure prompt redressal of customer complaints and grievances. The review mechanism should help in identifying shortcomings in product features and service delivery. Customer dissatisfaction would spoil banks name and image. The Banks policy on grievance redressal follows the under noted principles. Customers be treated fairly at all times Complaints raised by customers are dealt with courtesy and on time

Customers

are

fully

informed

of

avenues

to

escalate

their

complaints/grievances within the organization and their rights to

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Banking Ombudsman alternative remedy, if they are not fully satisfied with the response of the bank to their complaints. Bank will treat all complaints efficiently and fairly as they can damage the banks reputation and business if handled otherwise. The Bank employees must work in good faith and without prejudice to the interests of the customer. In order to make banks redressal mechanism more meaningful and effective, a structured system needs to be built up towards such end. Such system would ensure that the redressal sought is just and fair and is within the given framework of rules and regulation. The policy document would be made available at all branches. All employees of the Bank should be made aware about the Complaint handling process. The customer is having full right to register his complaint if he is not satisfied with the services provided by the bank. He can give his complaint in writing, orally or over telephone. If customers complaint is not resolved within given time or if he is not satisfied with the solution provided by the bank, he can approach Banking Ombudsman with his complaint or other legal avenues available for grievance Redressal.

INTERNAL MACHINERY TO HANDLE CUSTOMER COMPLAINTS/ GRIEVANCES

Customer Service Committee of the Board This sub-committee of the Board would be responsible for formulation of a Comprehensive Deposit Policy incorporating the issues such as the treatment of death of a depositor for operations of his account, the product approval process
44

Banking Ombudsman and the annual survey of depositor satisfaction and the tri-enniel audit of such services. The Committee would also examine any other issues having a bearing on the quality of customer service rendered. This Committee would also review the functioning of Standing Committee on Customer Service. The Customer Service Committee of the Board is responsible for the rendering of customer service to the individual, both as a depositor and also as a borrower. The Committee is, therefore, responsible for examining loan policies and service issues for the individual as a borrower also. Standing Committee on Customer Service The Standing Committee on Customer Service will be chaired by the Managing Director/ Executive Director of the Bank. Besides two to three senior executives of the bank, the committee would also have two to three eminent non-executives drawn from the public as members. The committee would have the following functions: Evaluate feed-back on quality of customer service received from various quarters. The committee would also review comments/feed-back on customer service and implementation of commitments in the Code of Banks Commitments to Customers received from BCSBI. The Committee would be responsible to ensure that all regulatory instructions regarding customer service are followed by the bank. Towards this, the committee would obtain necessary feed-back from zonal/regional managers/ functional heads. The committee also would consider unresolved complaints/grievances referred to it by functional heads responsible for redressal and offer their advice. The committee would submit report on its performance to the customer
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Banking Ombudsman service committee of the board at quarterly intervals.

Nodal Officer and other designated officials to handle complaints and grievances
Bank would appoint a Nodal Officer who will be responsible for the implementation of customer service and complaint handling for the entire bank. The bank may also appoint such other officials as it deems necessary. To enable the customers to voice their grievances or offer suggestions for improvement in customer service, Customer Day is observed at all the offices of the Bank across the organization covering branches, Regional / Zonal Offices and Head Office, on 15th of every month ( next day, if 15th is a holiday or half day). In case of any complaint, the matter may be first brought to the notice of concerned Branch Manager for immediate redressal. If the complaint is not redressed to the satisfaction of the customer, the matter may be taken up with the Regional Manager / Zonal Manager concerned. The Bank has also nominated concerned Regional Manager as Nodal Officer for handling the complaint grievances in respect of the branches under their jurisdiction. If the complainant still feels unsatisfied with the responses received, he/she can address the complaint to the banks Nodal Officer at Head Office designated to deal with customers complaints /grievance giving full details of the case.

MANDATORY DISPLAY REQUIREMENTS

It is mandatory for the bank to provide; Appropriate arrangement for receiving complaints and suggestions. The name, address and contact number of Nodal Officer(s)
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Banking Ombudsman Contact details of Banking Ombudsman of the area Code of banks commitments to customers/Fair Practice code

RESOLUTION OF GRIEVANCES
Branch Manager is responsible for the resolution of complaints/grievances in respect of customers service by the branch. He would be responsible for ensuring closure of all complaints received at the branches. It is his foremost duty to see that the complaint should be resolved completely to the customers satisfaction and if the customer is not satisfied, then he should be provided with alternate avenues to escalate the issue. If the branch manager feels that it is not possible at his level to solve the problem he can refer the case to Regional or Zonal Office for guidance. Similarly, if Regional or Zonal office finds that they are not able to solve the problem such cases may be referred to the Nodal Officer. Complaints relating to non-compliance with the Code may be referred to the Code Compliance officers, who shall ensure speedy disposal of all such complaints.

TIME FRAME
Complaint has to be seen in the right perspective because they indirectly reveal a weak spot in the working of the bank. Complaint received should be analyzed from all possible angles. The first level of receiving complaints is at the branch. Branch Head should try to resolve the complaint within 8 working days. In case the customer does not receive a revert / response within 8 working days from the branch, he can escalate the complaint to the Nodal Officer, who shall strive to revert / answer the complaint within a period of 15 working days. If the
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Banking Ombudsman customer does not receive a satisfactory response from the Bank within a period of one month, he may be provided information about how he can take his complaint further i.e. to the Ombudsman. Communication of Banks stand on any issue to the customer is a vital requirement. Complaints received, which would require some time for examination of issues involved, should invariably be acknowledged promptly.

INTERACTION WITH CUSTOMERS

The Bank recognizes that customers expectation/requirement/grievances can be better appreciated through personal interaction with customers by Banks staff. Structured customer meets, say once in a month will give a message to the customers that the bank cares for them and values their feedback/suggestions for improvement in customer service. Many of the complaints arise on account of lack of awareness among customers about bank services and such interactions will help the customers appreciate banking services better. As for the bank the feedback from customers would be valuable input for revising its product and services to meet customer requirements.

SENSITIZING OPERATING STAFF ON HANDLING COMPLAINTS

Staff should be properly trained for handling complaints. We are dealing with people and hence difference of opinion and areas of friction can arise. With an open mind and a smile on the face we should be able to win the customers confidence. It would be the responsibility of the Nodal Officer to ensure that internal machinery for handling complaints/grievances operates smoothly and
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Banking Ombudsman efficiently at all levels. He should give feedback on training needs of staff at various levels to the HR Dept.

COMPENDIUM OF CASE HANDLED BY THE BANKING OMBUDSMAN OFFICE SUBJECT: Refusal to Close the Account
The complainant, Mr.XYZ was holding a current account with ABC Bank. On 11.09.1990, following a raid conducted on his premises by the Income Tax Dept., jewellery, FDRs, cheque books, passbooks pertaining to his bank accounts with various banks including that with ABC Bank were seized. The credit balance in his current account with ABC Bank at the time of seizure of the documents was Rs.44, 769.10. He stated that it had taken thirteen years for the Income Tax Dept. to finalize his case and to exonerate him. The Income Tax Dept. did not to return the cheque book and passbook seized by them, as they were not traceable. The complainant had approached the ABC Bank for withdrawing the amount lying in his current account but the bank refused to allow him to withdraw the amount without cheque book and the passbook. The Income Tax Dept. by its letter No. GIR No.V- 715 dated 11.09.2003 addressed to ABC Bank certified that during search operations conducted in the premises of Mr.XYZ on 11.09.1990, the department had seized a cheque book in respect of current account No.929 in the name of Mr.XYZ showing a credit balance of
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Banking Ombudsman Rs.44, 647.10 as on the date of seizure adding that the cheque book and passbook were not readily traceable and the department had no objection in allowing operations in the account by the complainant.

DECISION
When the complainant had approached the bank on 12.09.2003 for refund of the amount lying to his credit, the bank had refused to allow him to withdraw the amount. Article 90 of the Limitation Act clearly mentions that limitation would start running from the date of demand. The complaint filed with the office of the Banking Ombudsman is not barred by limitation and is maintainable in law. It is a general rule that the party who affirms any proposition shall prove it. It is also a general rule that the onus lies upon the party who seeks to support his case by a particular fact to prove it. If this basic principle of law of evidence is applied, it is for the bank to prove conclusively as to when and how the account was closed and to produce the documents supporting such payment and closure, which ought to have been in its custody. It may also be pertinent to note that the Asst. Director of Income Tax [Inv.] had served an order under Sec.132 [3] of the Income Tax on the branch manager directing him not to part with the funds lying to the credit of the complainant in current account No.929. When the bank asserts that the account was closed it is for the bank to bring proof of such closure and it cannot excuse itself stating that records were destroyed or its tapes were not readable. The submission that the bank had permitted closure when there was prohibitory order against it is not credible as in the normal course there is no chance of any bank allowing operations in an account when there is a prohibitory order in force. All the facts and circumstances of the case point out to an irrefutable conclusion that there was no chance that the complainant could have received the refund of the current deposit prior to 2003. Therefore it was
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Banking Ombudsman decided to direct the bank that it should refund to the complainant Rs.44, 647.10 which was lying to his credit as on 11.09.1990 when the passbook and cheque book were seized by Income Tax authorities.

ANALYSIS OF THE CASE

This case is about a customer Mr.XYZ, who is a current account holder with the ABC Bank. Mr.XYZ was having a balance of Rs.44,647/- in his current account when the income tax department conducted a raid in his premises. While the investigations the income tax department confiscated his passbook, cheque book, FDRs and other document of all the banks including the ABC Bank. After thirteen years the income tax department was not able to trace his documents. So he decided to withdraw his balance amount and close the account, but the the bank refused to close the account without the cheque book and the passbook. Mr.XYZ was able to prove his statement by providing the letter from the income tax department mentioning that Mr.XYZs passbook having a balance of Rs. 44,647/- as on 11.09.1990 was misplaced by them. The bank refused to refund of the amount lying to his credit even after showing the evidence to them. Therefore the customer approached the Banking Ombudsman to complaint the ignorance of the bank and to get his account closed. As soon as the complaint was lodged to the Banking Ombudsman he founded that the evidence provided by the complainant was true. So the Banking Ombudsman directed the bank to refund the complainant the amount of Rs. 44,467/- that was lying to his credit since 11.09.1990 as per the passbook.

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Banking Ombudsman

Though the Banking Ombudsman Scheme was introduced in the year 1995, with a view to do away with the banking customer complaints, the scheme was amended in subsequent years of 2002 and 2006. But the banks do not seem to have adopted the norms for their efficient functioning, that is the reason behind the increasing consumer cases against the banks, which are governed under the scheme. In the system of Banking Ombudsman, the results are delivered very soon; the procedures are fair together with cost, and proportionate to the nature of the issues involved. The system deals with cases at reasonable speed, is understandable to those who use it, is responsive to the needs of those who use it, and provides as much certainty as the nature of particular cases allows. This is true because over the past five years nearly 36000 complaints are being resolved by the Banking Ombudsman under this Banking Ombudsman Scheme. Though the Banking Ombudsman is eligible enough to deliver the bank customer complaints at the earliest yet the Consumer Redressal Forum/Commission is being taken resort of by most of the bank customers for their redressal of grievances with the bank. The reason is they are well popular among the common public which is lacking with the banking ombudsman and its working. Definitely the Scheme needs popularity in the society for its more appropriateness and effectiveness so that the aggrieved bank customer with the services of the bank prefers to knock the door of the banking ombudsman for redressal. The scheme should provide more powers and levy more duties on the

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Banking Ombudsman banking ombudsman so that they can easily be approachable by the aggrieved bank customer.

BOOKS AND PERIODICALS:

Annual Report by the Reserve Bank of India Banking Ombudsman Scheme 2008-2009. Booklet of The Banking Ombudsman Scheme 2009.

RBI Journals.

WEBSITES:

http://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=159 http://www.nos.org/Secbuscour/25.pdf http://www.hdfcbank.com/aboutus/citizenscharter/Redressalofco mplaintsgrievances.htm http://www.yesbank.in/Banking_Ombudsman.htm http://baseswiki.org/en/Banking_Ombudsman,_South_Africa

http://www.rbi.org.in/Scripts/PublicationsView.aspx?id=11113#2

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Banking Ombudsman

ANNEXURE 1 BANKING OMBUDSMAN SCHEME,2006 (Amended on 3rd Feb, 2009)

The Scheme is introduced with the object of enabling resolution of complaints relating to certain services rendered by banks and to facilitate the satisfaction or settlement of such complaints.

SHORT TITLE, COMMENCEMENT, EXTENT AND APPLICATION

1) This Scheme may be called the Banking Ombudsman Scheme, 2006. 2) It shall come into force on such date as the Reserve Bank may specify. 3) It shall extend to the whole of India. 4) The Scheme shall apply to the business in India of a bank as defined under the Scheme.

SUSPENSION OF THE SCHEME

1) The Reserve Bank, if it is satisfied that it is expedient so to do, may by order suspend for such period as may be specified in the order, the operation of all or any of the provisions of the Scheme, either generally or in relation to any specified bank.
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Banking Ombudsman 2) The Reserve Bank may, by order, extend from time to time, the period of any suspension ordered as aforesaid by such period, as it thinks fit.

DEFINITIONS

1) Award means an award passed by the Banking Ombudsman in accordance with the Scheme. 2) Appellate Authority means the Deputy Governor in charge of the Department of the Reserve Bank implementing the Scheme. 3) Authorized representative means a person duly appointed and authorized by a complainant to act on his behalf and represent him in the proceedings under the Scheme before a Banking Ombudsman for consideration of his complaint. 4) Banking Ombudsman means any person appointed under Clause 4 of the Scheme. 5) Bank means a banking company, a corresponding new bank, a Regional Rural Bank, State Bank of India a Subsidiary Bank as defined in Section 5 of the Banking Regulation Act, 1949 (Act 10 of 1949), or a Primary Cooperative Bank as defined in clause (c) of Section 56 of that Act and included in the Second Schedule of the Reserve Bank of India Act, 1934 (Act 2 of 1934), having a place of business in India, whether such bank is incorporated in India or outside India.

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Banking Ombudsman 6) Complaint means a representation in writing or through electronic means containing a grievance alleging deficiency in banking service as mentioned in clause 8 of the Scheme. 7) Reserve Bank means the Reserve Bank of India constituted by Section 3 of the Reserve Bank of India Act, 1934 (2 of 1934). 8) The scheme means the Banking Ombudsman Scheme, 2006. 9) Secretariat means the office constituted as per sub-clause (1) of clause 6 of the Scheme. 10) Settlement means an agreement reached by the parties either by conciliation or mediation under clause 11 of the Scheme.

ESTABLISHMENT OF OFFICE OF BANKING OMBUDSMAN

APPOINTMENT & TENURE 1) The Reserve Bank may appoint one or more of its officers in the rank of Chief General Manager or General Manager to be known as Banking Ombudsmen to carry out the functions entrusted to them by or under the Scheme. 2) The appointment of Banking Ombudsman under the above Clause may be made for a period not exceeding three years at a time.

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Banking Ombudsman LOCATION OF OFFICE AND TEMPORARY HEADQUARTERS 1) The office of the Banking Ombudsman shall be located at such places as may be specified by the Reserve Bank. 2) In order to expedite disposal of complaints, the Banking Ombudsman may hold sittings at such places within his area of jurisdiction as may be considered necessary and proper by him in respect of a complaint or reference before him. SECRETARIAT 1) The Reserve Bank shall depute such number of its officers or other staff to the office of the Banking Ombudsman as is considered necessary to function as the secretariat of the Banking Ombudsman. 2) The cost of the Secretariat shall be borne by the Reserve Bank.

JURISDICTION, POWERS AND DUTIES OF BANKING OMBUDSMAN

POWERS AND JURISDICTION 1) The Reserve Bank shall specify the territorial limits to which the authority of each Banking Ombudsman appointed under Clause 4 of the Scheme shall extend. 2) The Banking Ombudsman shall receive and consider complaints relating to the deficiencies in banking or other services filed on the grounds mentioned in clause 8 and facilitate their satisfaction or settlement by agreement or through

57

Banking Ombudsman conciliation and mediation between the bank concerned and the aggrieved parties or by passing an Award in accordance with the Scheme. 3) The Banking Ombudsman shall exercise general powers of superintendence and control over his Office and shall be responsible for the conduct of business thereat. 4) The Office of the Banking Ombudsman shall draw up an annual budget for itself in consultation with Reserve Bank and shall exercise the powers of expenditure within the approved budget on the lines of Reserve Bank of India Expenditure Rules, 2005. 5) The Banking Ombudsman shall send to the Governor, Reserve Bank, a report, as on 30th June every year, containing a general review of the activities of his Office during the preceding financial year and shall furnish such other information as the Reserve Bank may direct and the Reserve Bank may, if it considers necessary in the public interest so to do, publish the report and the information received from the Banking Ombudsman in such consolidated form or otherwise as it deems fit.

PROCEDURE FOR REDRESSAL OF GRIEVANCE

GROUNDS OF COMPLAINT 1) Any person may file a complaint with the Banking Ombudsman having jurisdiction on any one of the following grounds alleging deficiency in banking including internet banking or other services.
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Banking Ombudsman

a.

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 in respect thereof; Non-acceptance, without sufficient cause, of coins tendered and for charging of commission in respect thereof;

b.

c.

d. Non-payment or delay in payment of inward remittances;

e.

Failure to issue or delay in issue of drafts, pay orders or bankers cheques;

f. Non-adherence to prescribed working hours;

g.

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;

h. Complaints from Non-Resident Indians having accounts in India in relation to their remittances from abroad, deposits and other bank related matters; i. Refusal to open deposit accounts without any valid reason for refusal; j. Levying of charges without adequate prior notice to the customer;
k.

Non-adherence by the bank or its subsidiaries to the instructions of Reserve Bank on ATM/Debit card operations or credit card operations; 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);

l.

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Banking Ombudsman
m.

Refusal to accept or delay in accepting payment towards taxes, as required by Reserve Bank/Government; Forced closure of deposit accounts without due notice or without sufficient reason;

n.

o. Refusal to close or delay in closing the accounts; 2) A complaint on any one of the following grounds alleging deficiency in banking service in respect of loans and advances may be filed with the Banking Ombudsman having jurisdiction: I.
II.

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 Banks Commitment to Customers, as the case may be; Non-observance of Reserve Bank guidelines on engagement of recover agents by banks; and 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.

III.

IV.

V.

VI.

3) The Banking Ombudsman may also deal with such other matter as may be specified by the Reserve Bank from time to time in this behalf.

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Banking Ombudsman PROCEDURE FOR FILING COMPLAINT 1) Any person who has a grievance against a bank on any one or more of the grounds mentioned in Clause 8 of the Scheme may, himself or through his authorized representative (other than an advocate), make a complaint to the Banking Ombudsman within whose jurisdiction the branch or office of the bank complained against is located. 3Provided that a complaint arising out of the operations of credit cards and other types of services with centralized operations, shall be filed before the Banking Ombudsman within whose territorial jurisdiction the billing address of the customer is located. 2) a) The complaint in writing shall be duly signed by the complainant or his authorized representative and shall be, as far as possible, in the form specified in Annexure A or as near as thereto as circumstances admit, stating clearly: The name and the address of the complainant, the name and address of the branch or office of the bank against which the complaint is made, the facts giving rise to the complaint, the nature and extent of the loss caused to the complainant, and. the relief sought for. b) The complainant shall file along with the complaint, copies of the documents, if any, which he proposes to rely upon and a declaration that the complaint is maintainable under sub-clause (3) of this clause. c) A complaint made through electronic means shall also be accepted by the Banking Ombudsman and a print out of such complaint shall be taken on the record of the Banking Ombudsman. d) The Banking Ombudsman shall also entertain complaints covered by this Scheme received by Central Government or Reserve Bank and forwarded to him for disposal.

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Banking Ombudsman 3) No complaint to the Banking Ombudsman shall lie unless:a) The complainant had, before making a complaint to the Banking Ombudsman, made a written representation to the bank and the bank had rejected the complaint or the complainant had not received any reply within a period of one month after the bank received his representation or the complainant is not satisfied with the reply given to him by the bank; b) The complaint is made not later than one year after the complainant has received the reply of the bank to his representation or, where no reply is received, not later than one year and one month after the date of the representation to the bank; c) The complaint is not in respect of the same cause of action which was settled or dealt with on merits by the Banking Ombudsman in any previous proceedings whether or not received from the same complainant or along with one or more complainants or one or more of the parties concerned with the cause of action ; d) The complaint does not pertain to the same cause of action, for which any proceedings before any court, tribunal or arbitrator or any other forum is pending or a decree or Award or order has been passed by any such court, tribunal, arbitrator or forum; e) The complaint is not frivolous or vexatious in nature; and f) The complaint is made before the expiry of the period of limitation prescribed under the Indian Limitation Act, 1963 for such claims. POWER TO CALL FOR INFORMATION 1) For the purpose of carrying out his duties under this Scheme, a Banking Ombudsman may require the bank against whom the complaint is made or any other bank concerned with the complaint to provide any information or furnish certified copies of any document relating to the complaint which is or is alleged
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Banking Ombudsman to be in its possession. Provided that in the event of the failure of a bank to comply with the requisition without sufficient cause, the Banking Ombudsman may, if he deems fit, draw the inference that the information if provided or copies if furnished would be unfavorable to the bank. 2) The Banking Ombudsman shall maintain confidentiality of any information or document that may come into his knowledge or possession in the course of discharging his duties and shall not disclose such information or document to any person except with the consent of the person furnishing such information or document. Provided that nothing in this clause shall prevent the Banking Ombudsman from disclosing information or document furnished by a party in a complaint to the other party or parties to the extent considered by him to be reasonably required to comply with any legal requirement or the principles of natural justice and fair play in the proceedings. SETTLEMENT OF COMPLAINT BY AGREEMENT 1) As soon as it may be practicable to do, the Banking Ombudsman shall send a copy of the complaint to the branch or office of the bank named in the complaint, under advice to the nodal officer referred to in sub-clause (3) of clause 15, and endeavor to promote a settlement of the complaint by agreement between the complainant and the bank through conciliation or mediation. 2) For the purpose of promoting a settlement of the complaint, the Banking Ombudsman may follow such procedure as he may consider just and proper and he shall not be bound by any rules of evidence. 3) The proceedings before the Banking Ombudsman shall be summary in nature.

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Banking Ombudsman REJECTION OF THE COMPLAINT The Banking Ombudsman may reject a complaint at any stage if it appears to him that the complaint made is; a) Not on the grounds of complaint referred to in clause 8 or otherwise not in accordance with sub clause (3) of clause 9; or b) Beyond the pecuniary jurisdiction of Banking Ombudsman prescribed under clause 12 (5) and 12 (6) or c) Requiring consideration of elaborate documentary and oral evidence and the proceedings before the Banking Ombudsman are not appropriate for adjudication of such complaint; or d) Without any sufficient cause; or e) That it is not pursued by the complainant with reasonable diligence; or f) In the opinion of the Banking Ombudsman there is no loss or damage or inconvenience caused to the complainant.

APPEAL BEFORE THE APPELLATE AUTHORITY

1) Any person aggrieved by an Award under clause 12 or rejection of a complaint for the reasons referred to in sub clauses (d) to (f) of clause 13, may within 30 days of the date of receipt of communication of Award or rejection of complaint, prefer an appeal before the Appellate Authority; Provided that in case of appeal by a bank, the period of thirty days for filing an appeal shall commence from the date on which the bank receives letter of acceptance of Award by complainant under sub. clause (6) of clause 12; Provided that the Appellate Authority may, if he is satisfied that the applicant had sufficient cause for not making the appeal within time, allow a further period not exceeding 30 days; Provided further that appeal may be filed by a bank only with the previous sanction of the Chairman or, in his absence, the Managing Director or the
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Banking Ombudsman Executive Director or the Chief Executive Officer or any other officer of equal rank. 2) The Appellate Authority shall, after giving the parties a reasonable opportunity of being heard a) Dismiss the appeal; or b) Allow the appeal and set aside the Award; or c) Remand the matter to the Banking Ombudsman for fresh disposal in accordance with such directions as the Appellate Authority may consider necessary or proper; or d) Modify the Award and pass such directions as may be necessary to give effect to the Award so modified; or e) Pass any other order as it may deem fit. 3) The order of the Appellate Authority shall have the same effect as the Award passed by Banking Ombudsman under clause 12 or the order rejecting the complaint under clause 13, as the case may be. BANKS TO DISPLAY SALIENT FEATURES OF THE SCHEME FOR COMMON KNOWLEDGE OF PUBLIC 1) The banks covered by the Scheme shall ensure that the purpose of the Scheme and the contact details of the Banking Ombudsman to whom the complaints are to be made by the aggrieved party are displayed prominently in all the offices and branches of the bank in such manner that a person visiting the office or branch has adequate information of the Scheme. 2) The banks covered by the Scheme shall ensure that a copy of the Scheme is available with the designated officer of the bank for perusal in the office premises of the bank, if anyone, desires to do so and notice about the availability
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Banking Ombudsman of the Scheme with such designated officer shall be displayed along with the notice under sub-clause (1) of this clause and shall place a copy of the Scheme on their websites. 3) The banks covered by the Scheme shall appoint Nodal Officers at their Regional/Zonal Offices and inform the respective Office of the Banking Ombudsman under whose jurisdiction the Regional/Zonal Office falls. The Nodal Officer so appointed shall be responsible for representing the bank and furnishing information to the Banking Ombudsman in respect of complaints filed against the bank. Wherever more than one zone/region of a bank are falling within the jurisdiction of a Banking Ombudsman, one of the Nodal Officers shall be designated as the 'Principal Nodal Officer' for such zones or regions. REMOVAL OF DIFFICULTIES If any difficulty arises in giving effect to the provisions of this Scheme, the Reserve Bank may make such provisions not inconsistent with the Banking Regulation Act, 1949 or the Scheme, as it appears to it to be necessary or expedient for removing the difficulty. APPLICATION OF THE BANKING OMBUDSMAN SCHEMES, 1995 AND 2002 The adjudication of pending complaints and execution of the Awards already passed, before coming into force of the Banking Ombudsman Scheme, 2006, shall continue to be governed by the provisions of the respective Banking Ombudsman Schemes and instructions of the Reserve Bank issued there under.

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Banking Ombudsman

Is the New Banking Ombudsman Scheme 2006 differs from its previous schemes?
The vision behind the emergence of Banking Institution is to evolve into a strong, sound and globally competitive financial system, providing integrated services to customers from all segments, leveraging on technology and human resources, adopting the best accounting and ethical practices and fulfilling corporate and social responsibilities towards all stakeholders. As a part of this vision, the RBI lodged various Ombudsman schemes till today which forms a part of our discussion. Yes, the new scheme 2006 differs from its previous schemes. The extent and scope of the scheme, 2006 is much wider than its earlier schemes of 1995 and 2002. Because the new scheme introduces for the first time; Includes complaints relating to credit cards, deficiencies in providing the promised services by banks and its marketing agents, levying of service charges without prior notice to the customers and non-compliance of fair practice codes by the banks; Facilitates the submission of complaints through online; Establishes an appellate authority to facilitate appeals against the awards rendered by the Banking Ombudsmen instead of filing with the Review Authority for review of such awards. The extent and scope of the new Scheme is wider than the earlier Scheme of 2002. The new Scheme also provides for online submission of complaints. The new Scheme additionally provides for the institution of an 'appellate authority' for providing scope for appeal against an award passed by the Ombudsman both by the bank as well as the complainant.
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Banking Ombudsman

ANEXXURE 2:-

RBI amends Banking Ombudsman Scheme: includes complaints relating to Internet Banking and Non-adherence to BCSBI Code

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Banking Ombudsman

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Banking Ombudsman

ANNEXURE 3:COMPLAINT FORM FOR CONSUMER REDRESSAL OF BANKING OMBUDSMAN SCHEME, 2006

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Banking Ombudsman

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