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Resolving Financial Grievances: How the RBI Ombudsman Works for You




Resolving Financial Grievances: How the RBI Ombudsman Works for You

By Tejaswini Kaushal (RMLNLU’26)

What if you believe your issue hasn’t been adequately resolved by a bank, housing finance or non-banking finance company? Even more concerning, what if the bank has overlooked your complaint? Is there an alternative recourse for banking customers beyond the standard channels and the internal ombudsman scheme implemented in 2018? Yes, you can. This can be done through the Banking Ombudsman appointed by the Reserve Bank of India (“RBI”).

1.     Who is a Banking Ombudsman?

The Banking Ombudsman, established as a quasi-judicial authority in 2006, serves as a platform for addressing customer grievances concerning specific services provided by banks. An ombudsman is a government-appointed official vested with a notable level of autonomy. Their primary responsibility is to advocate for the public’s interests by examining and redressing grievances raised by individuals. They are tasked with scrutinizing complaints directed at different organizations or businesses and working towards fair resolutions. The Banking Ombudsman is a high-ranking official appointed by the RBI to address customer grievances related to specific banking services, as outlined in Clause 8 of the Banking Ombudsman Scheme 2006.[1]

Currently, there are twenty-two Banking Ombudsmen appointed, and their offices are primarily situated in state capitals. Section 35A of the Banking Regulation Act, 1949 pertains to the Banking Ombudsman Scheme.[2] Enacted in 1995, later revised in 2002, and subsequently the Banking Ombudsman Scheme of 2006.[3] This scheme encompasses not only scheduled Commercial Banks but also Regional Rural Banks and Scheduled Primary Co-operative Banks. Notably, the RBI has also recently expanded the purview of the Banking Ombudsman to include Non-Banking Financial Companies (“NBFCs”). Additionally, the Banking Ombudsman entertains complaints from Non-Resident Indians with accounts in India concerning remittances from abroad, deposits, and other banking matters.

As of November 12, 2021, the RBI has introduced a new Integrated Ombudsman Scheme, superseding the previous Banking Ombudsman Scheme.[4]

1.1.  Does the Banking Ombudsman have judicial powers?

The Banking Ombudsman possesses quasi-judicial powers, meaning they are a non-judicial entity with the authority to interpret and apply existing laws.[5]

2.     What is the Integrated Ombudsman Scheme 2021?

The RBI has integrated its three Ombudsman schemes, namely:

i.               The Banking Ombudsman Scheme, 2006,[6]

ii.              The Ombudsman Scheme for Non-Banking Financial Companies, 2018,[7] and

iii.            The Ombudsman Scheme for Digital Transactions, 2019,[8]

into a unified framework called “The Reserve Bank - Integrated Ombudsman Scheme, 2021” [hereinafter “the Scheme”].[9] This comprehensive scheme follows the ‘One Nation One Ombudsman’ approach, removing the need for complainants to categorize their complaints under specific schemes.[10]

The Scheme encompasses non-scheduled primary co-operative banks holding deposits of INR 5 crore or more. This signifies an adoption of the ‘One Nation One Ombudsman’ approach, ensuring a jurisdiction-neutral dispute resolution mechanism.

The scheme mandates the provision of cost-free resolution for customer complaints pertaining to service deficiencies. If such complaints remain unresolved or unanswered by any entity under the regulatory purview of the RBI within a period of thirty days, the scheme is activated to provide redressal.[11]

2.1.  What are the Notable Features of the Scheme?

               i.         Simplified Complaint Filing: Complainants are no longer required to determine which scheme their complaint falls under, streamlining the filing process.

              ii.         Definition of ‘Deficiency in Service’: The scheme explicitly defines ‘deficiency in service’ as the basis for filing a complaint, with specific exclusions. This means complaints will not be rejected solely on the grounds of not falling within the listed grounds.

            iii.         Abolition of Jurisdiction: The scheme does away with the concept of jurisdiction for individual Ombudsman offices.

            iv.         Centralized Receipt and Processing Centre: A central hub has been established at RBI, Chandigarh, for the initial processing of both physical and email complaints in any language.

              v.         Role of Principal Nodal Officer: The responsibility of representing the Regulated Entity and providing information for customer complaints rests with the Principal Nodal Officer, who holds a rank equivalent to a General Manager in a Public Sector Bank.

            vi.         Limited Right of Appeal for Regulated Entities: Regulated Entities do not have the right to appeal in cases where an Award is issued by the Ombudsman against them for failing to furnish satisfactory and timely information/documents.

           vii.         Contact Centre and Toll-Free Number: A Contact Centre with a toll-free number (14448) has been set up to operate from 9:30 am to 5:15 pm in Hindi, English, and eight regional languages. This service will be expanded to cover more Indian languages in due course. It provides information and guidance to complainants regarding the alternate grievance redress mechanism of RBI.

         viii.         Accessibility of Scheme Document: A copy of the Scheme is available on the RBI website and the CMS portal.

2.2.  What are the Key Implications of the Scheme?

               i.         Streamlined Grievance Resolution: It facilitates convenient submission and resolution of customer complaints. For a comprehensive understanding of Grievance Redressal Mechanism components, refer to the linked article.

              ii.         Enhanced Customer Service: This initiative marks a positive stride towards elevating customer service standards in banks, NBFCs, and Non-Bank Prepaid Payments Issuers.

            iii.         Consolidated Redressal: The One Nation One Ombudsman approach by the RBI seeks to amalgamate consumer grievance resolution into a unified ombudsman framework, replacing the previous three schemes.

            iv.         Effectiveness and Efficiency: This represents a significant stride towards augmenting the efficiency and promptness, akin to the impact of the One Nation One Ration Card Scheme (“ONORC”).

2.3.  What Benefits that Accrue to You from the Scheme?

               i.         Concerns Regarding Complaint Resolution Time:  One major concern highlighted was the extended duration for resolving customer complaints. The Committee’s Recommendation: The committee proposes a phased reduction of the Turnaround Time (TAT) for complaint resolution to 30 days over a span of two years.

              ii.         Cost-Free Redress for Customers: The Scheme is designed to address customer complaints involving deficient services provided by entities under RBI regulation.

            iii.         Trigger for Ombudsman Intervention: If a complaint remains unresolved or lacks a response within 30 days by the regulated entity, customers have the option to escalate the matter to the Ombudsman.

            iv.         Empowering Customers in Dispute Resolution: Customers retain the right to approach the Ombudsman even if they are dissatisfied with the resolution offered or the explanations provided by the financial institution.

              v.         Digital Payment Trends and Enhanced Efficiency: With the surge in digital payments, the Scheme is poised to play a more efficient role in aiding customers.

            vi.         Strengthening Consumer Confidence through Grievance Redressal: An effective grievance redressal mechanism aligned with financial consumer protection will significantly bolster customer confidence nationwide.

3.     What are the Conditions for Submitting Complaints?

3.1.  What are the Conditions to be Met to File a Complaint?

               i.         A written complaint must be made to the relevant Regulated Entity before approaching the Ombudsman.

              ii.         The complainant must be dissatisfied with the response or not receive a reply within 30 days.

            iii.         The complaint to the Ombudsman must be made within one year of receiving the reply or within one year and 30 days of the original complaint.

3.2.  What Categories can Complaints Not Pertain To?

               i.         Commercial decisions made by the Bank.

              ii.         Disputes between a vendor and the Bank regarding an outsourcing contract.

            iii.         Grievances not directly addressed to the Ombudsman.

            iv.         General grievances against Bank management or executives.

              v.         Disputes initiated by the Bank in compliance with legal orders.

            vi.         Services outside the regulatory scope of the Reserve Bank.

           vii.         Disputes between Banks.

         viii.         Disputes related to employee-employer relationships in a Bank.

3.3.  Specific Kinds of Complaints that the Baking Ombudsman Will Entertain

The ambit of complaints eligible for consideration by a Banking Ombudsman is extensive. They are empowered to entertain grievances related to:

               i.         Non-payment or excessive delay in processing cheques, drafts, bills, etc.

              ii.         Unjust refusal, without valid cause, of small denomination notes, and imposition of commission for this service.

            iii.         Unjust refusal, without valid cause, of coins, along with commission charges.

            iv.         Non-payment or delays in the processing of inward remittances.

              v.         Failure to issue or delays in issuing drafts, pay orders, or bankers’ cheques.

            vi.         Failure to adhere to stipulated working hours.

           vii.         Failure to uphold commitments regarding guarantees or letters of credit.

         viii.         Failure to provide, or delay in providing, a promised banking facility (excluding loans and advances) as stated in writing by a bank or its direct selling agents.

            ix.         Delays or non-credit of proceeds to parties’ accounts, non-payment of deposits, or non-adherence to Reserve Bank directives on interest rates applicable to various accounts.

              x.         Delays in handling export proceeds, export bill collections, and other related matters for exporters, as long as the complaints pertain to the bank’s operations in India.

            xi.         Unjust refusal to open deposit accounts without valid justification.

           xii.         Imposition of charges without adequate prior notice to the customer.

         xiii.         Non-adherence by the bank or its subsidiaries to Reserve Bank instructions on ATM/debit card and credit card operations.

         xiv.         Non-disbursement or delays in disbursement of pensions attributed to actions on the part of the concerned bank (excluding matters related to its employees).

           xv.         Unwarranted refusal or delay in accepting tax payments, as required by the Reserve Bank/Government.

         xvi.         Unwarranted refusal to issue or delays in issuing, servicing, or redeeming Government securities.

        xvii.         Forced closure of deposit accounts without due notice or valid justification.

      xviii.         Account closure without customer consent.

         xix.         Failure to adhere to fair practices codes as adopted by the bank.

           xx.         Customer incurring financial losses due to misinformation provided by bank officials.

         xxi.         Any other matter concerning the violation of Reserve Bank directives related to banking services.

4.     Which institutions do the Scheme cover?

The Scheme encompasses a wide range of financial institutions, including:

      i.         All Scheduled Commercial Banks

     ii.         Regional Rural Banks (“RRBs”)

   iii.         Foreign Banks conducting operations in India

   iv.         Scheduled Primary Co-operative Banks

     v.         Non-Banking Financial Companies (excluding Housing Finance Companies) that are either authorized to accept deposits or have a customer interface, with an assets size of Rs 100 crore and above in the previous financial year.

   vi.         Non-Scheduled Primary Co-operative Banks with a deposit size of ₹50 crore and above.

  vii.         All System Participants as defined within the Scheme.

4.1.  Can I Lodge a Complaint Against a Foreign Bank Operating in India?

Absolutely, the Scheme extends its coverage to foreign banks conducting operations within India. Consequently, you have the right to file a complaint against foreign banks as well.

4.2.  Can I lodge a complaint regarding lack of retrieval of amount post a failed transaction?

Regarding failed transactions, there are specific guidelines set forth by the RBI to address customer concerns about the retrieval of funds. In a circular dated September 20, 2019, the RBI established a framework for harmonization of ‘Turn Around Time’ (“TAT”) and customer compensation for failed transactions using authorized Payment Systems. This circular outlines the prescribed TAT for the reversal of funds in the event of a failed transaction. Additionally, it outlines a compensation mechanism should there be a delay on the part of the Regulated Entity in reversing the funds.

4.3.  Can I lodge a complaint if I’m a victim of fraudulent transaction?

In cases of losses resulting from fraudulent transactions through electronic and digital banking, customers are advised to promptly report any unauthorized activities to their respective banks. Timely reporting is crucial in maximizing the chances of recovering the lost funds.

As per the RBI circular on Limiting Liability of Customers in Unauthorised Electronic Banking Transactions dated July 06, 2017, the following conditions apply:[12]

·       Zero liability of the customer shall be established if there is contributory fraud, negligence, or deficiency on the part of the bank, regardless of whether or not the transaction is reported by the customer.

·       If the deficiency leading to the unauthorized transaction lies neither with the bank nor the customer, but elsewhere in the system, and the customer notifies the bank within three working days of receiving communication regarding the unauthorized transaction, the customer will not be held liable.

5.     What should you keep in mind Before Filing a Complaint?

Before initiating a complaint under the Scheme, it is imperative to ensure the following:

      i.         You have submitted a written complaint to the relevant Regulated Entity and:

·       Your complaint was either partially or entirely rejected by the Regulated Entity, and you remain dissatisfied with their response, OR

·       You have not received any response within 30 days after the Regulated Entity received your complaint.

     ii.         The complaint must be lodged with the Ombudsman within one year after:

·       Receiving a response from the Regulated Entity regarding your complaint, OR

·       In case no response is received, within one year and 30 days from the date of the initial complaint.

   iii.         The complaint pertains to a distinct cause of action that is not:

·       Currently under review or has been conclusively settled by an Ombudsman, regardless of whether it was filed by the same complainant or alongside one or more complainants, OR

·       Currently under review by any Court, Tribunal, Arbitrator, or any other governing body, or has been settled or conclusively addressed on its merits by any such entity, regardless of whether it was filed by the same complainant or alongside one or more complainants or parties involved.

   iv.         The complaint is not malicious, frivolous, or vexatious in nature.

     v.         Ensure that the complaint was submitted to the Regulated Entity before the expiration of the limitation period prescribed by the Limitation Act, 1963, for such claims.

   vi.         Provide all necessary information as specified in the Scheme.

  vii.         Ensure that the complaint is filed by the complainant personally or through an authorized representative, excluding advocates unless the advocate is the aggrieved party.

Note: “Regulated Entity” encompasses banks, Non-Banking Financial Companies, System Participants, Credit Information Companies, or any other entity specified by the Reserve Bank, to the extent not excluded under the Scheme.

5.1.  Is There a Monetary Limit on the Maximum Value of Complaints?

The Ombudsman has the authority to adjudicate disputes of any monetary value without restriction. However, in cases involving consequential losses experienced by the complainant, the Ombudsman is empowered to grant compensation of up to ₹20 lakh. Additionally, a sum of up to INR 1 lakh may be awarded to cover the complainant’s time, incurred expenses, and any mental distress or harassment suffered. The Scheme document also stipulates that the RBI retains the right to, if deemed necessary in the public interest, release a consolidated or otherwise formatted report containing information provided by the Ombudsman.

6.     How to Lodge a Complaint under the Scheme?

6.1.  Can you directly file a complaint with the RBI Banking Ombudsman?

Before reaching out to the ombudsman to register your RBI complaint, there are specific steps you must follow. Your initial step is to bring the matter to the attention of your bank. The bank is mandated to resolve your complaint within a 30-day period. If the bank does not adequately address your concerns or if you find the resolution unsatisfactory, you may then approach the RBI ombudsman. However, it is important to be aware that complaints that are already pending in another legal forum will not be entertained by the banking ombudsman.

6.2.  Where Can You File a Complaint?

               i.         Lodge at the Banking Ombudsman Office: Submit your RBI complaint at the office of the Banking Ombudsman, situated in the jurisdiction of the bank branch you are concerned with. For credit card-related issues and services with centralized operations, file your complaint with the ombudsman where the billing address of the customer is located.

              ii.         Offline Submission: You have the option to file your RBI complaint in physical form at the Centralized Receipt and Processing Centre (CRPC) located at RBI, 4th floor, Sector 17, Chandigarh, 160017.

6.3.  How to File the Complaint?

      i.         Writing to RBI:

·       You can draft a letter outlining your RBI complaint and send it to the RBI Ombudsman office via post, fax, or hand delivery. Alternatively, you can also submit your complaint via email.

·       Ensure you provide supporting documents and file this complaint with the Banking Ombudsman within a year of your bank’s failure to resolve the grievance.

·       Mention essential details like your name, address, mobile number, and bank account number in your complaint.

     ii.         Using the RBI Complaint Management System (CMS):

·       Access the RBI Complaint Management System online at [https://cms.rbi.org.in].

·       Complaints will be directed to the relevant ombudsman/regional office.

·       Follow these steps:

o   Visit the CMS RBI website and click on ‘File a Complaint.’

o   Choose your preferred language and select the type of entity (bank, NBFC, or other).

o   Provide details such as your mobile number, bank’s area of operation, state, district, bank name, etc. If your complaint pertains to a credit card, specify your bank name, branch name, your name, and email ID.

o   Indicate if the complaint is sub-judice/under arbitration, provide complaint details, check the declaration, specify the nominated person for the complaint, attach any necessary documents, and click ‘submit’ to file your complaint.

   iii.         Making a Complaint via Phone:

·       While you can initially call the relevant office, ultimately, a formal, written complaint is required for official processing.

   iv.         How to Track Your RBI Complaint Status:

·       Visit the RBI CMS website [https://cms.rbi.org.in/].

·       Select your preferred language, enter your complaint number, input the captcha, and click ‘submit’ to check your complaint’s status.

6.4.  Are There any Charges Associated with Filing a Complaint?

No, filing a complaint under the Scheme is entirely cost-free.[13] This service is provided without any fees by the RBI.

In March of 2022, the RBI responded to the proliferation of misleading information circulating on social media concerning the Scheme.[14] These online messages purported that the general public needed to engage third parties, often for a fee, to file complaints against entities regulated by the RBI in order to expedite grievance redressal. The RBI emphatically clarified that it has no affiliations with any entity for addressing grievances against regulated entities and categorically does not levy any charges for such services.

The RBI underscored that it has instituted a cost-free grievance redress mechanism within the RB-IOS, ensuring that no fees or charges, in any shape or form, are involved in the process. This declaration serves to reaffirm the RBI’s commitment to a transparent and accessible complaint resolution system for all.

7.     What is the Post-Complaint Filing Process?

7.1.  What Happens After Filing a Complaint with the RBI?

After submitting your complaint, you’ll receive a Unique Identification Number (“UID”) for tracking the case’s progress. The ombudsman will then take action, and there are two possible outcomes. The ombudsman’s involvement can lead to either an amicable resolution between you and your bank or an official order.

7.2.  How Long Does the RBI Take to Resolve a Complaint?

The banking ombudsman typically takes between six to eight weeks to resolve the issue. During this period, you may be contacted by RBI representatives for further details regarding your complaint.

7.3.  What Forms of Compensation Can I Anticipate if My Complaint is Resolved in my Favor?

If your complaint is resolved in your favor, the ombudsman may grant compensation in various forms. This may encompass the reimbursement of charges or fees, the payment of interest, and even compensation for any mental distress or harassment you may have experienced. If the bank is instructed to provide monetary compensation due to a financial dispute, the refund is capped at INR 20 lakhs or the amount directly linked to the service provider’s actions, whichever is lower. This compensation is in addition to the disputed amount. You may also be eligible for compensation of up to INR 1 lakh for mental distress, harassment, and related losses.

7.4.  What If You’re Not Satisfied with the Banking Ombudsman’s Decision?

In cases of dissatisfaction with the ombudsman’s decision, there are steps you can take:

·       You can escalate the matter to the Appellate Authority within the RBI.

·       If you’re still dissatisfied, you have the option to write to the RBI Deputy Governor.

·       Ultimately, if all else fails, you may choose to pursue resolution through the consumer courts.

This multi-level approach ensures that avenues for resolution remain open and accessible to banking consumers.

7.5.  When is There No Right to Appeal?

Under this scheme, a regulated entity is devoid of the privilege to file an appeal if the Ombudsman issues an Award against it due to failure in providing accurate and prompt information or documents. The Scheme mandates regulated entities to submit the required information or documents to the Ombudsman’s office within a 15-day timeframe. Failure to do so in a timely and satisfactory manner will result in the regulated entity forfeiting its right to appeal in instances where the Ombudsman issues an Award against them.

8.     Conclusion

With the detailed knowledge you now have about how the Ombudsman system is set up and functions, you’re in a good position to confidently reach out to them if you ever have a complaint or concern. This understanding gives you the ability to navigate the process smoothly, ensuring that your issues are dealt with in a fair and proper manner. Remember, the Ombudsman is there to help you find a resolution, so don’t hesitate to use this valuable resource if you need it.

 

 


[3] Banking (n. 1).

[7] Ombudsman Scheme for Non-Banking Financial Companies, 2018 <https://rbidocs.rbi.org.in/rdocs/Content/PDFs/NBFC23022018.pdf>.

[8] Ombudsman Scheme for Digital Transactions, 2019 <https://rbidocs.rbi.org.in/rdocs/Content/PDFs/OSDT31012019.pdf>.

[9] Integrated (n. 4).

[11] Ibid.

[12] Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions (6 July 2017) <https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11040&Mode=0>.

[13] RBI FAQs, What is the procedure for filing the complaint before the RBI Ombudsman?, <https://www.rbi.org.in/commonperson/English/Scripts/FAQs.aspx?Id=3407#QU16>.

[14] Sneha Kulkarni, ‘RBI clarifies on the mode of receipt of complaints under Integrated Ombudsman Scheme’ (Economic Times, 10 March2022) <https://economictimes.indiatimes.com/wealth/personal-finance-news/rbi-clarifies-on-the-mode-of-receipt-of-complaints-under-integrated-ombudsman-scheme/articleshow/90102051.cms?from=mdr>

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