The Banking Ombudsman Scheme

Article for Blog Post Writing Competition 2011 | by Ashwani Yadav

April 10th, 20115:24 pm

In today’s life Banking is a sector or place which if surveyed is the most visited and most working department in the country whether it is private, nationalized, RRB’s, co-operative etc. Almost all the economy transactions are dealt with banks only.

The load of work is increasing day by day on banks taking into account whether it is scholarships or farmers loans or subsidy to farmers or for students or corporate sectors. As a result of increasing work load on banks, there is also an increase of inadequacies and deficiency of services by the Banks to the customers or the general public.

The Banking Ombudsman Scheme was passed to enable an expeditious and inexpensive forum to bank customers for resolution of complaints relating to certain services rendered by banks.

Banking Ombudsman is a quasi judicial authority functioning under India’s Banking Ombudsman Scheme 2006, 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 is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995 and was revised in 2002. The current scheme became operative from 1st January 2006, and replaced and superseded the banking Ombudsman Scheme 2002. From 2002 until 2006, around 36,000 complaints have been dealt by the Banking Ombudsman.

The type and scope of the complaints which may be considered by a Banking Ombudsman is very comprehensive, and it has been empowered to receive and consider complaints pertaining to its jurisdiction on the following grounds alleging deficiency in banking including internet banking or other services:

(a) non-payment or inordinate delay in the payment or collection of cheques, drafts, bills etc.;

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

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

(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) delays, non-credit of proceeds to parties’ accounts, non-payment of deposit or non-observance of the Reserve Bank directives, if any, applicable to rate of interest on deposits in any savings, current or other account maintained with a bank ;

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

(j) refusal to open deposit accounts without any valid reason for refusal;

(k) levying of charges without adequate prior notice to the customer;

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

(m) 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);

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

(o) refusal to issue or delay in issuing, or failure to service or delay in servicing or redemption of Government securities;

(p) forced closure of deposit accounts without due notice or without sufficient reason;

(q) refusal to close or delay in closing the accounts;

(r) non-adherence to the fair practices code as adopted by the bank;

(s)non-adherence to the provisions of the Code of Bank’s Commitments to Customers issued by Banking Codes and Standards Board of India and as adopted by the bank ;

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

(u) any other matter relating to the violation of the directives issued by the Reserve Bank in relation to banking or other services.

The complaint regarding the loans and advances can also be filed where the Banking Ombudsman have its jurisdiction on the following grounds:

(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 furnishing valid reasons to the applicant; and

(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; and

(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.


In a survey in my university i.e. Dr. RML National Law University, many students face problems regarding the passing of educational loans before the admissions but were not aware of the Ombudsman Scheme. Banking Ombudsman Scheme has proved to be a boon not only for a educated and rich person but also for a poor and less educated person also.

According to me if these types of very simple and easily functional schemes are also launched for other government departments also then it will definitely lead to leasing burdens on our legal systems which are meant for imparting timely justice but are failing due to these types of small matters. The most important feature of this scheme is that the filing complaint under this scheme is free of cost.


Article by-

Ashwani Yadav

Ist year student

Dr. RML Natioanal Law University


[Submitted as an entry for the Blog Post Writing Competition, 2011]

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