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Amendments to deal with today’s ills

Is it true that the Reserve Bank of India has amended the Banking Ombudsman Scheme to expand its jurisdiction? If so, can you please give some details?

Amendments to deal with today’s ills

A wider ambit: The RBI building in Mumbai



Pushpa Girimaji

Is it true that the Reserve Bank of India has amended the Banking Ombudsman Scheme to expand its jurisdiction? If so, can you please give some details?

Yes, the 2017 amendment to the Banking Ombudsman scheme has widened the scope of the scheme and brought under the ambit of the Ombudsman, a number of hitherto excluded issues pertaining to the banking operations.

To be more specific, the amendments finally provide for redress of a large number of highly vexatious problems faced by bank customers in recent years such as fraudulent withdrawal of money through electronic banking as well as stolen and cloned debit and credit cards, besides mis-selling of insurance, mutual funds and other investment products. Similarly, the amendments have also brought under the jurisdiction of the Ombudsman issues such as erroneous reporting of credit information to the Credit Information Bureau and the failure to rectify such factual inaccuracies. These are all issues on account of which consumers have for long suffered not just financial loss but also harassment and mental anguish. And in the absence of any redress at the ombudsman level, they have had to fight long battles before the consumer court. Finally, consumers can seek resolution of their disputes in these matters through the Ombudsman.

The revised ombudsman scheme, which came into effect from July 1 this year, includes in the list of ‘Grounds for complaint’, non-adherence to the instructions of the Reserve Bank vis-à-vis mobile banking/electronic banking services in respect of delay or failure to effect online payment or fund transfer and unauthorised electronic payment/fund transfer . Similarly, one can complain against banks for sale of unsuitable, improper financial products such as insurance and mutual funds, besides lack of transparency in such sale and delay in facilitating after sales service.

Another positive change brought about in the Ombudsman Scheme is the provision to award compensation for harassment and mental anguish, besides loss of the complainant’s time and other expenses, up to a limit of Rs 1 lakh. Despite the low limit, I really welcome this because earlier the Scheme provided for such compensation only in cases of credit card operations. So, extending this to all complaints is really good. Second, the compensation awarded for any loss suffered as a direct consequence of the bank’s omission or commission (or the pecuniary jurisdiction to pass an award) has been raised from Rs 10 lakh to 20 lakh.

 

Are there any pre-conditions that one must remember while filing a complaint before the Ombudsman? 

One of the most important conditions is the requirement of the complainant going to the Ombudsman only after exhausting the complaint redress system available with the bank. The Scheme requires the complainant to first write to the bank (preferably the nodal officer) and approach the ombudsman only if there is no response within a month or if the response is not satisfactory. Consumers must remember this because a number of cases before the Ombudsmen are rejected for this reason.

Otherwise, filing a complaint before the Ombudsman is easy — you can even send it electronically. You do not need any lawyer and the process of resolution of the complaint is very simple. First and foremost, the Ombudsman will try to promote a settlement through conciliation or mediation between the parties and if it is agreeable to the complainant, will pass an order. If not, the Ombudsman will pass an award after giving both the parties an opportunity to present their case. One can also file an appeal against the order of the Ombudsman before the Appellate Authority.

The complaint has to be filed before the Ombudsman under whose jurisdiction the bank branch concerned is situated. However, in case of credit card and other types of services with centralised operations, a complaint can be filed before the Ombudsman under whose territorial jurisdiction the billing address of the complainant is located. You can get the details of the scheme as well as the addresses of the 20 Ombudsmen in the country from the website of the Reserve Bank of India.

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