Who is banking ombudsman?

The banking ombudsman is the senior official appointed by the central bank (RBI) to redress customer complaints against the lack of certain banking services that are covered under the grounds of complaint specified under Clause 8 of the Banking Ombudsman Scheme 2006.

The objective of the Ombudsman is to investigate complaints against the banking services, insurance, and income tax and to facilitate the satisfaction and settlement of such complaints. Ombudsman has the power to conduct investigations with the power being bestowed by parliament.

The Banking Ombudsman has the following jurisdiction:

(a) non-observance of Reserve Bank directives on interest rates;

(b) delays in sanction, disbursement or non-observance of prescribed time schedule for disposal of loan applications;

(c) non-acceptance of application for loans without delivering valid reasons to the applicant;

(d) non-adherence to the provisions of the fair practices code for lenders as adopted by the bank or Code of Bank’s Commitment to Customers, as the case may be;

(e) non-observance of Reserve Bank guidelines on engagement of recovery agents by banks;

(f) 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.

(g) include customer complaints on 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 Reserve Bank had first introduced the Banking Ombudsman Scheme in 1995 to provide expeditious and inexpensive forum to bank customers for resolution of their complaints relating to deficiency in banking services. The Scheme was revised in 2002 mainly to cover Regional Rural Banks and to permit review of the Banking Ombudsmens’ awards against banks by the Reserve Bank. The Banking Ombudsmen currently have their offices in 15 centres.

The Reserve Bank is also in an advanced stage of setting up an independent Banking Codes and Standards Board of India to ensure that comprehensive code of conduct for fair treatment to customers are formulated by banks and adhered to. The Reserve Bank of India had announced setting up of the Board in its Annual Policy for 2005-2006 announced by the Governor, Dr Y V Reddy in April 2005.