Where there is a dispute with a bank, earlier the only recourse was to approach the Consumer Forum. But with the Banking Ombudsman Scheme, 2006 [Hereinafter refered to as the Scheme] being brought into effect by the RBI, every Bank Customer has a choice either to approach the Consumer Forum or the Banking Ombudsman [Hereinafter referred to as B.O.]. However, ambivalence ensues from any situation with options. Where should one go?
Let us first understand what Banking Ombudsman is in the first place.
Under the Banking Ombudsman Scheme, 2006 the RBI appoints the Banking Ombudsman; who is an officer of the rank of a Chief General Manager or General Manager. Currently there are 15 Ombudsman appointed by the RBI with seats in Ahmadabad, Bangalore, Bhopal, Bhubaneswar, Chandigarh, Guwahati, Hyderabad, Jaipur, Kanpur, Kolkata, Mumbai, New Delhi, Patna and Tiruvananthpuram. A banking ombudsman deals with all issues regarding deficiency of services of Banks. However, the scheme provides for a comprehensive list of topics with regard to which the Ombudsman has jurisdiction. These majorly deal with deficiency of services on part of the Bank. Namely,
a) Refusal or inordinate delay in payment or collection of cheques, drafts, bills, etc.
b) Refusal without reasonable grounds / or charging commission to accept small denomination of notes or coins.
c) Non-adherence to prescribed working hours.
d) Failure or delay in honouring guarantee or letter of credit commitments or in providing any other specified banking facility.
e) Levying of charges without adequate prior notice to the customer.
f) Non-adherence by the bank or its subsidiaries to the instructions of RBI on ATM/Debit card operations or Credit card operations or Fair Practices Code as adopted by the bank.
g) Closure without due notice / or refusal to close bank accounts of the customers.
h) Violation of directives issued by RBI on any other matters relating to banking or other services.
i) A complaint on alleging deficiency in banking service in respect of loans and advances may be filed with the Banking Ombudsman having jurisdiction in respect of
– 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-observance of any other direction or instruction of the RBI as may be specified by the RBI for this purpose from time to time.
j) Grievances of NRIs in respect of their bank accounts in India pertaining to their remittances from abroad, matters related to deposits and other bank-related matters.
How does one file a complaint?
Knowing in what cases a Banking Ombudsman can help you with; the next question that one may ask is how one files a complaint with the Ombudsman. The mode of lodging a complaint with the B.O. is conveniently flexible, it may be in the prescribed form or though an e-mail to the B.O. or just on a plain paper addressed to the B.O. or online at www.bankingombudsman.rbi.org.in. However, it must be noted that before a complaint is filed with the ombudsman a written representation should have been made to the bank and the bank should have either rejected or not responded to the complaint within one month of receiving such a complaint.
Initially, the Banking Ombudsman seeks to resolve the dispute between the bank and consumer through a process of settlement. The settlement is in the nature of an agreement that is binding upon the parties to the complaint; that too when both parties agree to the terms of settlement. If the complaint is not settled by way of an agreement within a period of one month then the Banking Ombudsman provides a reasonable opportunity to the parties to present their case and accordingly passes an award with reasons. Any person aggrieved by the award of the Banking Ombudsman can file an appeal within forty-five days of issue of award before the Appellate Authority (Deputy Governor of the RBI). However, the Banks can make an appeal only with the prior sanction of their Chairman or Managing Director or the Executive Director or the Chief Executive Director or any person of equal rank.
Consumer Forum v/s Banking Ombudsman
Having understood how the Banking Ombudsman works, the showdown between the consumer forum and banking ombudsman begins. Which one is better?
Under the Scheme a complaint can be filed by the customer or his representative. On the contrary, in a Consumer Forum any number of customers can file one complaint.
The Scheme provides for a list of topics with regard to deficiency of services on part of the bank. So, the jurisdiction of the B.O. would be invoked only when the issue of the dispute falls squarely in one or more of these topics. On the contrary, the Consumer Protection Act defines ‘services’ in a very wide manner and hence the jurisdiction is much wider.
In case of Banking Ombudsman the only appeal against the award lies with one Appellant Authority. On the other hand, under the Consumer Protection Act, the dispute may first be dealt with by a district consumer forum and then an appeal lies with the state forum, then with the national forum and lastly the Supreme Court. So, the consumer forum route offers greater opportunities of redressal but also makes it a tedious and long running process.
4) Period of Limitation
Under the Scheme, a complaint has to be filed within 1 year after the bank either rejects or does not respond to the prior complaint made to it. In case of Consumer Forum, the complaint may be filed within 2 years of when the dispute had arisen.
A banking ombudsman can award compensation equivalent to the actual loss suffered but not beyond Rs. 10 Lacs. It is only in cases of credit card disputes that the court can take into account harassment and mental agony. However, in case of Consumer Forums, they can not only take into account actual loss but harassment and mental agony suffered by the complainants too.
Taking into consideration, the broad jurisdiction, and the considerations in awards alone consumer forums have emerged as clear winners. However, it may be noted that with more number of possible appeals, longer the case would run. Also, Banking Ombudsman Scheme with less than a decade of existence is still in evolving stage with two revisions effected up to date. But its object is to provide speedy justice to those aggrieved with the services of the banks which it is effectively serving even at the present stage.
Anant Raje, Student
National Law Institute University, Bhopal.
[Submitted as an entry for the MightyLaws.in Blog Post Writing Competition, 2011]