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Bachelor of commerce
Banking & Insurance (B.C.B.I)

In partial of requirement for the Award of Degree of
bachelor of commerce (Banking & Insurance)





I, "Honey G. Peswani" a student of Third year

Bachelor of commerce in Banking &

Insurance (B.C.B.I) of J.WATUMALL
SADHUBELLA GIRLS COLLEGE, Ulhasnagar 421001. Hereby declare that I have completed my
project entitled "BANKING OMBUDSMANS" as a
part of Semester-V of this course in Academic year
The information submitted is true and original to
the best of my knowledge.

Honey G. Peswani

I, "Prof. Teena kachhela" hereby certify that "Honey
G. Peswani" of Third year Bachelor of commerce in
Banking & Insurance (B.C.B.I) J.WATUMALL SADHUBELLA

GIRLS COLLEGE, Ulhasnagar-421001. has completed the

project entitled "Banking Ombudsmans" in the Academic Year
2015-2016 under my guidance.
The information submitted is true and original to the best of my


Prof.Mrs. Teena Kachella


Its gives me immense pleasure to present this project on

Banking Ombudsman
It is the most pleasant part of any project to express gratitude
towards all those who helped me out to complete this project.
My deepest thanks to my project guide Prof. Mrs.TEENA
KACHHELA and as well as our Co-ordinator Prof. Mrs.SMITA
CHAWAK for guiding and correcting various documents of mine
with attention and care. She has taken pain to go through the
project and make necessary corrections as and when needed.
I would also like to thank the college authorities, our principal
Prof.R.H. Suryarao for authorizing my project.

I would be failing in my duty if I do not mention here the

tremendous cooperation and support I received from my family
members in the completion of this book.
I would also like to thank to all those who supported me directly
or indirectly in completing this project.

The aim of this project is to intoduce the reader to the topic of
"OMBUDSMAN IN BANKING SECTOR". the projct 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 companies related to
deficiency in banking services

Sensing the need for a 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.

To present Banking Ombudsman scheme & how it does work.
To explain the duties, functions & powers of the Ombudsman.
To show how the Banking Ombudsman deals with customer
To present the services of the Banking Ombudsman offered to the

The methodology includes the information of the features of the
Ombudsman in the form of primary data that had been received
from the branch manager of the Banks. It also includes the
informations from the related books and from the related
The basic services a bank provides are checking accounts, which
can be used like money to make payments and purchase goods
and services; savings accounts and time deposits that can be
used to save money for future use; loans that consumers and
busineses can use to purchase goods and services; and basic
cash management services such as check cashing and foreign
currency exchange. Four types of banks specalize 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 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 important
to a free market economy.

Banking institutions include commercial banks, savings and loan

associations (SLAs,), saving 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.



In the present scenario of competitive banking, excellence in

customer service is the most important tool for sustained
business growth. Customer complaints are a part of the business
life of any corporate entity. This is more so for banks because
banks are service organization, customer service and customer
satisfaction should be the prime concern of any bank. The bank
believes that providing prompt and effeicient service is essential
not only to attract new customer, but also to retain existing ones.
This policy documents aims at minimizing instances of customer
mechanism and ensure prompt redressal of customer complaints
and grievances. The review mechanism should help in identifying
in short comings in product future and service delivery. Customer
dissatisfication would spoil Banks name and image.
The Banks policy on grievances redressal follows the under noted
principles: Customers be treated fairly at all times.
Complaints raised by customer are dealt with courtesy and
on time.

Customers are fully informed of aveneus 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.
Bank will treat all complaints efficiently and fairly as they
can damage the banks reputation and business if handled
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 frame work 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 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, he

can approach Banking Ombudsman with his complaint
or other legal avenues available for greivances

Banking ombudsman is a quasi judicial authority functioning
under India's Banking Ombudsman scheme 2006, and the
authority was created pursuant to the 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 and 2006. 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
agreed party. So the Banking Ombudsman plays the role of
mediator and serves the purpose of reconciliation of the Banking
Ombudsman, 2006.


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 Ombudsman to carry out the
functions entrusted to them by or under the scheme.

The appointment of Banking Ombudsman the above

clause may be made for the period not exceeding three
years at a time.

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. The cost of the secretariat shall
be borne by Reserve bank.


The Banking Ombudsman is the 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 cooperative banks are
covered under the scheme.

The banking ombudsman has power to consider the

complaints from Non- resident Indian 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 customer complaints

No complaint can be made before the 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 being passed
by any such competent court, tribunal or arbitrator or

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.

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 conciliation and mediation between the bank
concerned and the aggrieved parties or by passing an Award
in accordance with the scheme.

The Banking Ombudsman shall exercise general powers of

superintendence and control over his Office and shall be
responsible for the conduct of business thereat.

The Office of the Banking Ombudsman shall draw up an

annual budget for itself in consulation with Reseve Bank and
shall exercise the powers of expenditure within the approved
budget on the lines of Reseve Bank of India Expenditure
Rules, 2005.

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
recevied from the Banking Ombudsman in such consolidated
form or otherwise as it deems fit.

Banking Ombudsman
S.E.B.I Ombudsman
Electricity Ombudsman
Telecom Ombudsman
Income tax Ombudsman
Insurance Ombudsman

Banking Ombudsman
The Reserve Bank of India (RBI) first introduced the Banking
Ombudsman scheme in 1995, which has been revised in 2002
and 2005. The latest revised scheme has come into force from 1 st
January 2006.

S.E.B.I Ombudsman
The Securities Exchange Board of India (SEBI) under
section 30 read with sub section (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 Ombudsman Commission, under
section 181 read with sub-section (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
Notifications dated 11th March, 2006 has issued DERC (Guidelines
for establishment of forum of redressal of grievance of the

consumer and Ombudsman) Regulations, 2003. It may be noted

that the Ombudsman is the APPELLATE Authority under the
Electricity Act 2003, and the DERC Regulations, 2003 and
therefore an electricity consumer has to first approach the
Consumer Grievance redressal Forum established under the DERC
Regulations, 2003.

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. The telecom operaters
frequently threaten to disconnects the phones and with draw the
numbers given to subscribers if the deadline for payment is
missed by a day or there is miscalculation of the tiniest amount.
The TRAI is, however, neither empowered to look into the
grievances of individual customers nor take action against the
operates who do not meet quality of standards As there is no
specialized body to redress the grievance of telecom customers,
they have to approach consumer forum setup under the
Consumer Protection Act, 1986, or civil courts for Resolution
adjudication of disputes.

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. It is proposed to initially setup offices of
Ombudsman at Delhi, Mumbai, Kolkata, and Chennai.

Insurance Ombudsman
The Government of India, Minister of Finance, Department of
Economies 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 11 th
November 1998. The Insurance Ombudsman has started
functioning from 1999, to provide for efficient, cost and impartial
settlement of claims and grievance of any person against a Life or
General Insurance in Public and Private sector. The meaning of
expression any other person is wider than consumer and
therefore, even third party having grievance with respect to an
Insurance contract can approach the 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 sufficent cause, of small

denomination notes tenderd for any purpose, and
for charging of commission in respect thereof.

Non-acceptance, without sufficient cause, pf coins

tenderd and for charging of commission in respect

Non-payment or delay in payment of inward


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

Levying of charges without adequat 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

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-observeance of Reserve bank guidelines on

engagement of recovery agents by banks.

Non-observance of Reserve Bank Directives on

insert rates.

Delays in sanction, disbursement or non

observeance of precribed time schedule for
disposal of loan applications.

Non-acceptance of application for loans without

furnishing valid reasons to the applicant.


Ones complaint will not be considerd 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


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.


Clause 9 of banking ombudsman scheme 2009, lays down

the procedure to file a complaint before banking ombudsman
as well as condition in which a complaint cannot approach
the banking ombudsman.

1. Any customer who has the grievance against the bank

on any one or more of the grounds mentioned in the
Scheme may, himself or through his authorized
representative (other than an advocate), make a
complaint to the banking Ombudsman within whose
jurisidication the branch or office of the bank complaint
against is located. But the complaint arising out of the
operation of credit cards, has to be filed before the

banking Ombudsman within whose territorial

jurisdication the billing address of the card holder is
located and not the place where the bank concererned
or the credit processing unit is located.
2. The complaint in writing has to be duly signed by the
complainant or his authorised representative. The
complainant has to show the copoes of the documents,
which the proposes to relay upon and a declaration
under causes 9 (3) of the scheme. He has to mention
the following things in the complaint:
The name and the address of the complaint,
The name and address of the branch or offices of the
bank aagainst which the complaint is made,
The fact giving rise to the complaint,
The nature and extent to the loss caused to the
complainant, and
The reief sought for.

A complaint can also be made through electronic

means. The Banking Ombudsman also entertains
complaints covered by this scheme recevied by
Central Government or Reserve Bank and forwarded
to him for diposal
3. Following conditions have to be fulfilled for making a complaint before the
Banking Ombudsman:

Before making a complaint to the Banking Ombudsman, the complaint had

to, make a written representation to the bank. If the bank rejects the
complaint or the complainant had not recevied 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.

The complaint should be made before one year, from the day the
complainant has received the reply of the bank to his representation or,
where no reply is received, before one year and one month from the date of
the representation to the bank;

The compalint does not touch upon matter which was settled or dealt with on
merits by the Banking Ombudsman in any prevoius 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

The complaint does not pertain to the same subject matter, for which any
proceedings before any court, tribunal or arbitrator or any other forum is

A decree or Award or order has been passed by any such court, tribunal,
arbitrator or forum;

The compalint is not frivolous or vexatious in nature; and

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

If the customer is not satisfied with the award of the Banking
Ombudsman, he can approach to the RBI, to the appellate called
Deputy Governor, Still he is not satisfied, after approaching to the RBI,
he can go the High court.


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 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 and 2006. The
Scheme is being executed by Banking Ombudsman appointed by Reserve Bank at
15 centers covering the entire country. As mandated by the Banking Ombudsman
Scheme, the Banking Ombudsman submit an Annual Report on the functioning of
their offices every year. Based on such reports, an Annual Report for the Banking
Omudsman 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
decesion to merge the Banking Ombudsman Offices with that of RBI Offices, the
accounting period for the Banking Ombudsman Offices was changed from April 1March 31 to July 30 to be in congruent with that of RBI Offices. Accordingly, the
information analyzed for the year 2006-07 pertains to the period July 1, 2006 to
June 30, 2007.


The word Ombudsman in general means a grievance man, a public official
who is appointed to investigate complaints against the administration. He is
to intervence 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 satisfication by the 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 Ombudsman
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 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 complaint 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
considera 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 reciept of the complaint or such further has the Banking Ombudsman
may consider necessary, He may pass an Award after affording the parties
reasonable oppurtunity to present there case. He shall be guided by the
evidence placed before him by the parties, the principles of banking law and
practise, directions,instructions and guidelines issued by the Reserve
Banking from time to time and such other factors , which in his opinion are
necessary in the interest of justice.


The Banking Ombudsman Scheme, 2002 covered all the Regional Rural
Banks in addition to all Commercial Banks and Scheduled Primary cooperative Banks, which where already