PRESENTED BY: KULDEEP KUMBHAR STD: T.Y B&I (B.

COM) ROLL NO: 11-6326 Under Guidance OMKAR SIR

MEANING OF BANK

An institution that provides a great variety of financial services. At their most basic, banks hold money on behalf of customers, which is payable to the customer on demand, either by appearing at the bank for a withdrawal or by writing a check to a third party. Banks use the money they hold to finance loans, which they make to businesses and individuals to pay for operations, mortgages, education expenses, and any number of other things. Many banks also perform other services for fee; for instance they offer certified checks to customers guaranteeing payment to third parties. In some countries they may provide investment and insurance services. With the exception of Islamic banks, they pay interest on deposits and receive interest on their loans. Banks are regulated by the laws and central banks of their home countries; normally they must receive a charter to engage in business. Banks are usually organized as corporations. DEFINITION OF BANK As per Section 5(b) of Banking Regulation Act, 1949, banking means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdraw able by cheque, draft, order or otherwise. NATURE OF THE BANKING INDUSTRY Banks safeguard money and provide loans, credit, and payment services such as checking accounts, debit cards, and cashier's checks. Banks also may offer investment and insurance products. As a variety of models for cooperation and integration among finance industries have emerged, some of the traditional

distinctions between banks, insurance companies, and securities firms have diminished. In spite of these changes, banks continue to maintain and perform their primary roleaccepting deposits and lending money.

RECENT DEVELOPMENTS. Declining home prices were one cause of the recent financial crisis. As home values declined, many borrowers stopped paying (defaulted) on their home loans (mortgages.) With prices of houses declining and increasing rates of default, banks suffered large losses. Some banks suffered larger losses than other banks because they made riskier mortgage loans or owned mortgages concentrated in areas of the country with the largest housing price declines. Many banks with large losses were bought by other, stronger banks, or were taken over by the FDIC. The financial crisis accelerated an ongoing fundamental change in the banking industry as banks diversify their services to become more competitive. The financial crisis has allowed stronger banks to buy other banks and companies that provide other financial services at lower prices than before the crisis. Some other financial services that many banks offer their customers include: financial planning and asset management services, brokerage services, and insurance services. Banks purchase companies that offer these services and still offer them through a subsidiary or a third party. The financial crisis also helped commercial banks increase their share of the investment banking industry. Investment banks help companies and governments raise money through the issuance of stocks and bonds. As banks respond to regulatory changes and other changes driven by the financial crisis, the nature of the banking industry will continue to undergo significant change.

BANKING REGULATION ACT, 1949

As per Section 5(c) of Banking Regulation Act, 1949 a "Banking Company" means any company which transacts the business of banking in India: Any company which is engaged in the manufacture of goods or carries on any trade and which accepts the deposits of money from public merely for the purpose of financing its business as such manufacturer or trader shall not be deemed to transact the business of banking within the meaning of this clause." As per Section 5(b) of Banking Regulation Act, 1949, banking means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, and order or otherwise. As per Section 5(d) of Banking Regulation Act, 1949, company means any company as defined in Section 3 of the Companies Act, 1956 and includes a foreign company within the meaning of Section 591 of that Act. As per section 51 of Banking Regulation Act, 1949, certain provisions of the Banking Regulation Act are also applicable to the State Bank of India, any corresponding new bank, a regional rural bank and any subsidiary bank. "Corresponding new bank" has been defined under clause (ee) of section 2 of the DICGC Act to mean a corresponding new bank constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 or 1980.

IMPORTANCE OF A BANK
The importance of the banking system to an economy no emphasis. Well organized banking systems provide liquidity and mobility to the financial resources available in the economy. It helps the economy in the following regards. 1. Bring economic stability in the country The banks play a prominent role in providing stability to a country economically. It helps in getting out of depression or inflation. During depression the banks follow a cheap money policy and generate money income which pushes up the consumption level and the economy gets price support to reactivate production units and the produced level is enhanced which raises the employment level. The investment rises to stimulate saving and to expand which further increases employment opportunities. Similarly the banks specially the central banks take certain measures to control inflation in the economy. The central bank through it is well adjusted monetary policy stabiles the internal price level and thus facilitates economic & development in the country. 2. Co-ordination among All the Units The banking system maintains coordination among all the units which are engaged in banking functions. It consists of collecting of surplus money from the people and lending them to the entrepreneurs who utilize it for productive purposes. Creating a country wide circulation of money through remittance facilities. Activating idle money to make them productive Provide finance by credit accommodation to different sectors of the economy. 3. Encourage saving The banks encourage saving by providing safe custody and making it a source of income to the persons who save. The people having surplus money arising out of saving deposit it with the banks. The banks pay them interest and get them relief from burden of safety and other risks.

4. Accerate investment The banks constitute a source of accelerating investment in the economy. The funds collected from the depositors are used for financing development projects in the public and private sectors and for granting loans and advance for raising the production level of the country. 5. Capital formation In any plan of economic development capital occupies a place of pivotal importance. Without capital nothing can be achieved effectively. Banks obimulate capital formation in the country. Savings of the people is capitalized through lending by banks. 6. Creation of money Banks create money in the sense that through credit granted to entrepreneurs, whether to the private or government agents they increase supply of money which they manage because of inflow of fund through deposits. The development agencies manage to bridge the gap between the income and expenditure and thus the development work continues undisturbed 7. Facilitate trade The banks facilitate trade by furnish information regarding financial stability and dealings of the parties in the market to customers. They provide remittance facility to the entrepreneurs and help them in the settlement of transactions even at far places.

TYPES OF BANKS
There are various types of banks which operate in our country to meet the financial requirements of different categories of people engaged in agriculture, business, profession, etc. On the basis of functions, the banking institutions in India may be divided into the following types 1. CENTRAL BANKS A bank which is entrusted with the functions of guiding and regulating the banking system of a country is known as its Central bank. Such a bank does not deal with the general public. It acts essentially as Governments banker; maintain deposit accounts of all other banks and advances money to other banks, when needed. The Central Bank provides guidance to other banks whenever they face any problem. It is therefore known as the bankers bank. It advises th e Government on monetary and credit policies and decides on the interest rates for bank deposits and bank loans. Another important function of the Central Bank is the issuance of currency notes, regulating their circulation in the country by different methods. No other bank than the Central Bank can issue currency . 2. COMMERCIAL BANKS Commercial Banks are banking institutions that accept deposits and grant shortterm loans and advances to their customers. In addition to giving short-term loans, commercial banks also give medium-term and long-term loan to business enterprises. Commercial banks are of three types: Public Sector Banks Private Sectors Banks Foreign Banks 3. DEVELOPMENT BANKS Business often requires medium and long-term capital for purchase of machinery and equipment, for using latest technology, or for expansion and modernization.

Such financial assistance is provided by Development Banks. They also undertake other development measures like Public Sector Banks comprise 19 nationalized banks and State Bank of India and its 7 associate banks. Industrial Finance Corporation of India (IFCI) and State Financial Corporations (SFCs) are examples of development banks in India. 4. CO-OPERATIVE BANKS People who come together to jointly serve their common interest often form a cooperative society under the Co-operative Societies Act. When a co-operative society engages itself in banking business it is called a Co-operative Bank. The society has to obtain a license from the Reserve Bank of India before starting banking business. Any co-operative bank as a society is to function under the overall supervision of the Registrar, Co-operative Societies of the State. As regards banking business, the society must follow the guidelines set and issued by the Reserve Bank of India. 5. SPECIALIZED BANKS There are some banks, which cater to the requirements and provide overall support for setting up business in specific areas of activity. EXIM Bank, SIDBI and NABARD are examples of such banks. They engage themselves in some specific area or activity and thus, are called specialized banks. Export Import Bank of India (EXIM Bank) The bank grants loans to exporters and importers and also provides information about the international market. Small Industries Development Bank of India (SIDBI) The aim and focus of SIDBI is to promote, finance and develop small-scale industries. National Bank for Agricultural and Rural Development(NABARD)

It is a central institution for financing agricultural and rural sectors. If a person is engaged in agriculture or other activities like handloom weaving, fishing etc.

Headquarters Coordinates Established Governor Central bank of

Mumbai, Maharashtra 18.93337N 72.836201ECoordinates: 18.93337N 72.836201E 1 April 1935 Duvvuri Subbarao India

Currency ISO 4217 Code Reserves Base borrowing rate

Indian Rupee INR US$300.21 billion (2010) 7.25%

Base rate Website

deposit

6.25%

rbi.org.in

The Reserve Bank of India (RBI) is the central banking institution of India and controls the monetary policy of the rupee as well as US$300.21 billion (2010) of currency reserves. The institution was established on 1 April 1935 during the British Raj in accordance with the provisions of the Reserve Bank of India Act, 1934 and plays an important part in the development strategy of the government. It is a member bank of the Asian Clearing Union.

STRUCTURE Central Board of Directors

The Central Board of Directors is the main committee of the central bank. The Government of India appoints the directors for a four-year term. The Board consists of a governor, four deputy governors, four directors to represent the regional boards, and ten other directors from various fields.

Governors
The central bank till now was governed by 21 governors. The 22nd, Current Governor of Reserve Bank of India is D. Subarea.

Offices and branches

The Reserve Bank of India has 4 regional offices, 15 branches and 5 sub-offices. It has 22 branch offices at most state capitals and at a few major cities in India. Few of them are located in Ahmedabad, Bangalore, Bhopal, Bhubaneswar, Chandigarh, Chennai, Delhi,Gu wahati, Hyderabad, Jaipur, Jammu, Kanpur, Kolkata, Lucknow, Mumbai, Nagpur, Patna, and Thiruvananthapuram. Besides it has sub-offices at Dehradun, Gangtok, Kochi, Panaji, Raipur, Ranchi, Shimla and Srinagar. The bank has also two training colleges for its officers, viz. Reserve Bank Staff College at Chennai and College of Agricultural Banking at Pune. There are also four Zonal Training Centers at Belapur, Chennai, Kolkata and New Delhi.

MAIN FUNCTIONS Monetary authority

The Reserve Bank of India is the main monetary authority of the country and beside that the central bank acts as the bank of the national and state governments. It formulates implements and monitors the monetary policy as well as it has to ensure an adequate flow of credit to productive sectors. Objectives are maintaining price stability and ensuring adequate flow of credit to productive sectors. Objectives are to maintain public confidence in the system, protect depositors' interest and provide cost-effective banking services to the public. The Banking Ombudsman Scheme has been formulated by the Reserve Bank of India (RBI) for effective addressing of complaints by bank customers. The RBI controls the monetary supply, monitors economic indicators like the gross domestic product and has to decide the design of the rupee banknotes as well as coins.

Manager of exchange control

The central bank manages to reach the goals of the Foreign Exchange Management Act, 1999. Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.

Issuer of currency
The bank issues and exchanges or destroys currency and coins not fit for circulation. The objectives are giving the public adequate supply of currency of good quality and to provide loans to commercial banks to maintain or improve the GDP. The basic objectives of RBI are to issue bank notes, to maintain the currency and credit system of the country to utilize it in its best advantage, and to maintain the reserves.

Developmental role
The central bank has to perform a wide range of promotional functions to support national objectives and industries. The RBI faces a lot of inter-sectoral and local inflation-related problems. Some of this problem is results of the dominant part of the public sector.

Related functions
The RBI is also a banker to the government and performs merchant banking function for the central and the state governments. It also acts as their banker.

The National Housing Bank (NHB) was established in 1988 to promote private real estate acquisition. The institution maintains banking accounts of all scheduled banks, too.

BANKING OMBUDSMAN INTRODUCTION

An ombudsman is a person who has been appointed to look into complaints about an organization. Using an ombudsman is a way of trying to resolve a complaint without going to court. Banking Ombudsman is a quasi judicial authority functioning under Indias Banking Ombudsman Scheme, 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 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 aggrieved parties. So the Banking Ombudsman plays the role of a mediator and serves the purpose of reconciliation. The Banking Ombudsman has been defined under clause 4 of the Banking Ombudsman Scheme, 2006. Under the amendment in the year 2006, it was decided that the banking ombudsman should not be from any bank and should solely be from the staff of RBI so as to maintain the idea of impartial justice. There are 15 offices of banking ombudsman in India presently. A customer has to file his complaint to the nearest office in his area. The office of Banking Ombudsman handles issues against all commercial banks, cooperative banks as

well as regional rural banks (RRBs). It handles cases related to any kind of trouble faced by the customer in availing banking services which he has a right in. It also addresses to cases related to internet banking. It takes up cases having valuation less than Rs 10 lakhs. In case the customer has been made to go through phase of mental harassment and agony in the process, he can also be compensated by Banking Ombudsman in genuine cases.

APPOINTMENT & TENNURE

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 Ombudsmen to carry out the functions entrusted to them by or under the Scheme. The appointment of Banking Ombudsman under the above Clause may be made for a period not exceeding three years at a time.

WHAT KINDS OF COMPLAINTS CAN BE HANDLED?

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 sufficient cause, of small denomination notes tendered for any purpose, and for charging of commission in respect thereof; non-acceptance, without sufficient cause, of coins tendered and for charging of commission in respect thereof; non-payment or delay in payment of inward remittances; failure to issue or delay in issue of drafts, pay orders or bankers cheques; non-adherence to prescribed working hours; 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; 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; complaints from Non-Resident Indians having accounts in India in relation to their remittances from abroad, deposits and other bank-related matters; refusal to open deposit accounts without any valid reason for refusal; levying of charges without adequate 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; 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); refusal to accept or delay in accepting payment towards taxes, as required by Reserve Bank/Government; 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-adherence to the fair practices code as adopted by the bank or 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;

non-observance of Reserve Bank guidelines on engagement of recovery agents by banks; and, Any other matter relating to the violation of the directives issued by the Reserve Bank in relation to banking or other services.

A customer can also lodge a complaint on the following grounds of deficiency in service with respect to loans and advances:

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-adherence to the provisions of the fair practices code for lenders as adopted by the bank or Code of Banks Commitment to Customers, as the case may be; 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.

The Banking Ombudsman may also deal with such other matter as may be specified by the Reserve Bank from time to time. All commercial banks, regional rural banks, scheduled primary cooperative banks having business in India and internet banks are covered by the Scheme.

THE FOLLOWING CONSIDERED:

COMPLAINTS

WILL

NOT

BE

Where the bank has not been approached to redress the grievance first. The complaint has not been submitted to the Ombudsman within one year from the date of last communication with 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. The complaint is frivolous or vexatious. The institution complained against is not covered under the scheme. The subject matter of the complaint is not within the ambit of the Banking Ombudsman. The complaint relates to the same subject matter that was settled through the office of the Banking Ombudsman in any previous proceedings.

WHO CAN ACCESS THE MECHANISM?

Any customer/authorized representative who has a grievance against a bank can complain to the Banking Ombudsman in whose jurisdiction the branch of the bank complained against is located. Some banks have centralized certain transactions, like housing loans, credit cards, etc. If there are complaints regarding such transactions, complaints would have to be made to the Banking Ombudsman in the State in which the bank customer receives the bill.

WHAT PROCESSES ARE USED?

Complaints can only be filed with the Banking Ombudsman after customers have initially raised them with the bank. Where there has been no reply received from the bank after one month, the bank rejects the complaint, or the complainant is not satisfied with the reply given by the bank then a complaint can be submitted to the Ombudsman. In matter of recovery of assets not entirely in the domain of Banking Ombudsman, the presence of Debt Recovert Tribunals and Adalats are important. Under the present Law, recovery cases filed by banks/Financial Institutions (FIs) with claim amounts below 10 lakhs are filed before the usual Civil Courts and cases with claim amounts from 10 lakhs and above are filed before the DRTs. Complaints can be submitted in writing (post or email) or through the online complaint form. Complaints can be lodged at the office of the Banking Ombudsman under whose jurisdiction; the bank branch complained against is situated. For complaints relating to credit cards and other types of services with centralized operations, complaints may be filed before the Banking Ombudsman within whose territorial jurisdiction the billing address of the customer is located. The Banking Ombudsman endeavours to promote, through conciliation or mediation, a settlement of the complaint by agreement between the complaint and the bank named in the complaint.

WHAT ARE THE POSSIBLE OUTCOMES OR AVAILABLE RESOLUTIONS TO COMPLAINTS?

If the terms of settlement (offered by the bank) are acceptable to one in full and final settlement of one s complaint, the Banking Ombudsman will pass an order as per the terms of settlement which becomes binding on the bank and the complainant. The outcomes of DRT's and its appellate body DRATs can enforced. They are provide the powers of a civil court in matters of deciding. The Lok Adalats passes an award which has the force of a decree as in civil court which the parties are to abide. Adalats have a conciliatory approach compared to DRTs/DRAT's. If a complaint is not settled by an agreement within a period of one month, the Banking Ombudsman proceeds further to pass an award. Before passing an award, the Banking Ombudsman provides reasonable opportunity to the complainant and

the bank, to present their case. It is up to the complainant to accept the award in full and final settlement of your complaint or to reject it. The Banking Ombudsman can award compensation not exceeding Rupees one lakh to the complainant in the case of complaints arising out of credit card operations, taking into account the loss of the complainant's time, expenses incurred by him as also, harassment and mental anguish suffered. The amount, if any, to be paid by the bank to the complainant by way of compensation for any loss suffered by the complainant is limited to the amount arising directly out of the act or omission of the bank or Rs 10 lakhs, whichever is lower.

CAN THE DECISION BE APPEALED?

Both bank customers and the bank are able to appeal to the Reserve Bank against the awards given by the Banking Ombudsmen. The Banking Ombudsman Scheme 2006 permits banks and complainants to appeal against the decisions of the Banking Ombudsman. The appeal option is, exercised by banks on grounds that the Award appears to be patently in conflict with the Reserve Banks instructions and/ or the law and practice relating to banking. Complainants can appeal against the decision of the Banking Ombudsman in respect of complaints falling on such grounds specified in the Scheme. The Appellate Authority is the Deputy Governor in charge of the Banking Ombudsman Scheme. The Appellate Authority either dismisses the appeal or, allows the appeal and setting aside the Award or, it might remand the matter to the Banking Ombudsman for fresh disposal in accordance, with such directions as the Appellate Authority may consider necessary or proper or modify the Award and pass directions as may be necessary.

CAN OUTCOMES BE MONITORED?

During the year 2007-08, the Banking Ombudsmen received 47887 complaints as against 38638 received in the previous year (an increase of 24%) and disposed of 89% of the total complaints (84% in the previous year), with only 11% carried forward to the next year. Of the 11% of complaints carried forward to the next year, only 6 % were more than 2 months old. The Banking Ombudsmen have been generally effective in redress of complaints.

CAN OUTCOMES BE ENFORCED?

The DRT/DRATs decisions are binding on the parties to the transaction since it has powers as that of the civil court. The Award of the Adalats are similar to a decree passed by the Civil Court and hence, binding on the parties.

CHARACTERISTICS OF BANKING OMBUDSMAN

The Banking Ombudsman is a 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 Co-operative Banks are covered under the Scheme. The Banking Ombudsman has power to consider complaints from Nonresident Indians 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 Customers complaints. Complaint can be made before a 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 been passed by any such competent court, tribunal, arbitrator or forum.

DUTIES & FUNCTIONS OF OMBUDSMAN

The Ombudsman shall enquire into and investigate in accordance with the provisions of the Act, and take action or steps as may be prescribed by the Act and concerning Practices and actions by persons, enterprises and other private institutions where complaints allege that violations of fundamental rights and freedoms have taken place. All instances or matters of alleged or suspected corruption and the misappropriation of public moneys or other public property by officials. Without derogating from the provisions, any request or complaint in respect of instances or matters referred to in that provisions, may include any instance or matter in respect of which the Ombudsman has reason to suspect-

That the provisions of any law or under the authority of the State or by any person in its employment, or that any practice is so followed, in a manner which is not in the public interest. That the powers, duties or functions which vest in the State or, body or institution, or any person in its employment are exercised or performed in an irregular manner. That moneys forming part of the funds of the State or body or institution, or received or held by or on behalf of the State or body or institution are being or have been dealt with an irregular manner. Any person wishing to lay any instance or matter referred to in provisions before the Ombudsman shall do so in such manner as the Ombudsman may determine or allow. The Ombudsman shall not be required to investigate any instance or matter referred to in the provisions which has been laid before him or her under the provisions when the grounds on account of which the inquiry is desired is in the opinion of the Ombudsman.

The provisions shall not apply in respect of any decision taken in or in connection with any civil or criminal case by a court of law.

TYPES OF OMBUDSMAN

BANKING OMBUDSMAN

The Reserve Bank of India (RBI) first introduced the Banking Ombudsman Scheme In1995, which has been revised in 2002 and 2005. The latest revised Scheme has come into force from 1stJan 2006.

S.E.B.I. OMBUDSMAN

The Securities Exchange Board of India (SEBI) under section 30 read with subsection (1) of section 11 of the SEBI Act, 1992, has framed the SEBI(Ombudsman) Regulations, 2003, which were notified on 21stAugust 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 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 Notification dated 11thMarch, 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 Act2003, 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 telecoms operators frequently threaten to disconnects the phones and with draw the numbers given t o 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 operators 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 Resolutions 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 Economics 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 11thNovember 1998. The Insurance Ombudsman has started functioning from 1999, to provide for efficient, cost effective and impartial settlement of claims and grievance of any person against a Life r General Insurance in Public and private sector. The meaning of expression any other person is wider than consumer and therefore, even thirdparty having grievance with respect to an Insurance contract can approach the Ombudsman.

BANKING OMBUDSMAN SCHEMES BANKING OMBUDSMAN SCHEME 1995 CHAPTER I PRELIMINARY 1. SHORT TITLE, APPLICATION COMMENCEMENT, EXTENT AND

1.

This scheme may be called the Banking Ombudsman Scheme, 1995. '

2. It shall come into force on such date as the Reserve Bank of India may specify. 3. It shall extend to the whole of India.

4. This scheme shall apply to the business in lndia of every commercial bank (other than Regional Rural Banks) and. Scheduled Primary Co-operative Bank, having a place of business in India, whether such bank is incorporated in India or outside India.

2. OBJECT OF THE SCHEME

The object of the Scheme is to enable resolution of complaints relating to provision of banking services and to facilitate the satisfaction, or settlement of such complaints.

3. SUSPENSION OF THE SCHEME

1. The Reserve Bank, if it is satisfied that it is expedient so to do, may by order suspend for such period as may be specified in the order, the operation of all or any of the provisions of this scheme, either generally or in relation to any specified banking company. 2. The Reserve Bank may, by order, extend from time to time, the period of any suspension ordered as aforesaid by such period, as it thinks fit.

CHAPTER II ESTABLISHMENT OF BANKING OMBUDSMAN 4. APPOINTMENT

The Reserve Bank may appoint one or more persons to be known as Banking Ombudsman to carry out the functions entrusted to him by or under the scheme. The Banking Ombudsman shall hold office during the pleasure of the Governor, Reserve Bank.

5. TERRITORIAL JURISDICTION

The Reserve Bank shall specify the territorial limits, to which the authority of each of the Banking Ombudsman appointed pursuant to Clause 4 shall extend.

6. LOCATION OF OFFICE
The office of the Banking 0mbudsman will be located at such places as may be specified by the Reserve Bank.

7. FACILITY FOR HAVING TEMPORARY HEADQUARTERS

In order to expedite disposal of complaints, the Banking Ombudsman may hold sittings at other places within his area of jurisdiction.

8. QUALIFICATION
The Banking Ombudsman will be a person of high standing in the legal, banking, financial services, and public administration or management sectors.

9. TENURE
The Banking Ombudsman will be appointed for a period not exceeding three years and be eligible for extension for a further period not exceeding two years subject to an overall age limit of 65 years. Consequent on appointment, the Banking Ombudsman shall devote his whole time to the affairs of his office. Provided that the Reserve Bank may, if in its opinion it is necessary so to do, permit the Banking 0mbudsman to undertake such part time honorary work as is not likely to interfere with his duties as Banking Ombudsman.

10. REMUNERATION
The remuneration and other perquisites payable/extended to the Banking Ombudsman will be determined by the Reserve Bank from time to time and borne by the banks in such proportion and in such manner as may be determined by the Reserve Bank.

11. STAFFING OMBUDSMAN

OF

THE

OFFICE

OF

THE

BANKING

1. The Banking Ombudsman shall be provided with a secretariat drawn from banks, Reserve Bank, etc. who will be placed on duty with the Office of the Banking Ombudsman. 2. The cost of the secretariat will be shared by banks in such proportion as may be determined by the Reserve Bank.

CHAPTER III JURISDICTION OMBUDSMAN 12. GENERAL

The Banking Ombudsman's powers and duties will be:a. to receive complaints relating to the provision of banking services. b. to consider such complaints and facilitate their satisfaction, or settlement by agreement, by making a recommendation, or Award in accordance with this scheme.

POWERS

AND

DUTIES

OF

BANKING

13. SPECIFIC AMBIT OF AUTHORITY

As regards banking services, the Banking Ombudsman's authority will include:a. all complaints concerning deficiency in service such as:-

i. Non-payment/inordinate delay in the payment or collection of cheques, drafts/bills etc. ii. Non-acceptance, without sufficient cause, of small denomination notes tendered for any purpose, and for charging of commission in respect thereof; iii. iv. v. Non-issue of drafts to customers and others; Non-adherence to prescribed working hours by branches; Failure to honor guarantee/letter of credit commitments by banks;

vi. Claims in respect of unauthorized or fraudulent withdrawals from deposit accounts, etc.; vii. Complaints pertaining to the operations in any savings, current or any other account maintained with a bank, such as delays, non-credit of proceeds to parties' accounts, non-payment of depositor non-observance of the Reserve Bank directives, if any, applicable to rate of interest on deposits. viii. Complaints from exporters in India such as delays in receipt of export proceeds, handling of export bills, collection of bills, etc. provided the said complaints pertain to the bank's operations in India; and ix. Complaints from Non-Resident Indians having accounts in India in relation to their remittances from abroad, deposits and other bank-related matters. b) Complaints concerning loans and advances only insofar as they relate to:i. Non-observance of Reserve Bank directives on interest rates, ii. Delays in sanction/non-observance of prescribed time schedule for disposal of loan applications and iii. Non-observance of any other directions or instructions of the Reserve Bank, as may be specified for this purpose, from time to time. (c) Such other matters as may be specified by the Reserve Bank from time to time in this behalf.

14. OTHER POWERS AND DUTIES

1. General superintendence and control The Banking Ombudsman shall exercise general superintendence and control over his office and shall be responsible for the conduct of business thereat. 2. Power to incur expenditure The Banking Ombudsman shall have power to incur expenditure on behalf of the office. In order to exercise the aforesaid power, the Banking Ombudsman will draw up an annual budget for his office in consultation with Reserve Bank. The

Reserve Bank will indicate the shares to be borne by the concerned banks. The Banking Ombudsman shall exercise the powers of expenditure within the approved budget. 3. Annual report on functioning and Working of the banking ombudsmans office 1. The Banking Ombudsman shall send to the Governor, Reserve Bank, in May every year, a report containing a general review of the activities of the office of the Ombudsman during the preceding financial year, and shall furnish such other information as the Reserve Bank may direct. 2. The Reserve Bank may, if it considers necessary in the public interest so to do, publish in such consolidated form or otherwise as it deems fit, the report and the information received from the Banking Ombudsman.

CHAPTER IV PROCEDURE FOR REDRESSAL OF GRIEVANCE

15. COMPLAINT 1. Any person who has a grievance against a bank, may himself or through an authorized representative make a complaint in writing to the Banking Ombudsman within whose jurisdiction the branch or office of the bank complained against is located. 2. The complaint shall be in writing duly signed by the complainant or his authorized representative and shall state clearly the name and address of the complainant, the name and address of the branch or office of the bank againstwhich the complaint is made, the facts giving rise to the complaint supported by documents, if any, relied on by the complainant, the nature and extent of the loss caused to the complainant and the relief sought from the Banking Ombudsman and a statement about the compliance of the conditions referred to in sub- clause (3) of this clause. 3. No complaint to the Banking Ombudsman shall lie unless

a. The complainant had before making a complaint to the Banking Ombudsman made a written representation to the bank named in the complaint and either the bank had rejected the complaint or the complainant had not received any reply within a period of two months after the bank concerned received his representation or the complainant is not satisfied with the reply given to him by the bank. b. The complaints made not later than one year after the bank had rejected the representation or sent its final reply on the representation of the complainant. c. The complaint is not in respect of the some subject matter, which was settled through the office of the Banking Ombudsman in any previous proceedings whether received from the same complainant or any one or more of the parties concerned with the subject matter. d. The complaint is not 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 order of dismissal has already been passed by any such court, tribunal, arbitrator or forum. e. The complaint is not frivolous or vexatious in nature.

16. POWER TO CALL FOR INFORARATION

1. For the purpose of carrying out his duties under this scheme, a Banking Ombudsman may require the bank named in the complaint to provide any information or furnish certified copies of any document relating to the subject matter of the complaint which is or is alleged to be in its possession. Provided that in the event of the failure of a bank to comply the requisition made under sub clause (1) the Banking Ombudsman may, if he sees fit, draw the inference that the information, if provided or copies if furnished, would be unfavorable to the bank. 2. The Banking Ombudsman shall maintain confidentiality of any information or document coming into his knowledge or possession in the course of discharging his duties and shall not disclose such information or document to any person except with the consent of the person furnishing such information or document. Provided that nothing in this clause shall prevent the Banking Ombudsman from

disclosing information or document furnished by a party In a complaint to the other party or parties, to the extent considered by him to be reasonably required to comply with the principles of natural justice and fair play in the proceedings.

17. SETTLEMENT OF COMPLAINT BY AGREEMENT

1. As soon as it may be practicable so to do the Banking Ombudsman shall cause a notice of the receipt of any complaint along with a copy of the complaint to the branch or office of the bank named in the complaint and endeavour to promote a settlement of the complaint by agreement between the complainant and the bank named in the complaint through conciliation or mediation. 2. For the purpose of promoting a settlement of the complaint, the Banking Ombudsman may follow such procedure as he may consider appropriate and he shall not be bound by any legal rule of evidence.

18. RECOMMENDATION FOR SETTLEMENT

1. If a complaint is not settled by agreement within a period of one month from the date of receipt of the complaint or such further period as he may consider necessary, the Banking Ombudsman may make a recommendation by reference to what is, in his opinion, fair in all the circumstances. Copies of the recommendation shall be sent to the complainant and the bank concerned. 2. The recommendation by the Banking Ombudsman shall be open to acceptance by the complainant only if he accepts all terms of the recommendation in full and final settlement of his claim against the bank and he shall, if he accepts the recommendation, within two weeks from the date of receipt of the recommendation send his acceptance in writing stating clearly that he is prepared to accept a settlement in terms of the recommendation is full and final settlement of his complaint. 3. The Banking Ombudsman shall cause a copy of the letter of acceptance, received from the complainant to be forwarded to the bank. The bank shall, if the recommendation is acceptable to it, comply with the terms of the recommendation immediately on receipt of acceptance of the terms by the complainant and inform the Banking Ombudsman of the settlement in terms of his recommendation. If the

recommendation is not acceptable to the bank, it shall inform the Banking Ombudsman within a period of two weeks.

19. AWARD BY THE BANKING OMBUDSMAN

1. Where the complaint is not settled by agreement or recommendation as provided in clause 18 or 19 as the case may be, within a period of two months from the date of receipt of the complaint or such extended date as may be considered necessary by him, the Banking Ombudsman shall inform the parties of his intention to pass an Award. 2. It shall be open to the parties to submit any further representations or evidence in support of their case within a period of 15 days from the date of notice referred to in sub- clause (1). 3. The Banking Ombudsman shall pass an Award after affording the parties reasonable opportunity to present their case. He shall be guided by the evidence placed before him by the parties, the principles of banking law and practice, directions, instructions and guidelines issued by the Reserve Bank from time to time and such other factors which in his opinion are necessary in the interest of justice. 4. An Award shall be in writing and shall state the direction/s, if any, to the bank for specific performance of its obligations and the amount awarded to the complainant by way of compensation for the loss suffered by him Belong with a summary of the reasons for making the award, Provided that the Banking Ombudsman shall not award any compensation in excess of that which is necessary to cover the loss suffered by the complainant as a direct consequence of the commission or omission of the bank, or for an amount exceeding rupees ten lakhs, whichever is lower. 5. A copy of the award shall be sent to the complainant and the bank named in the complaint. 6. An Award shall not be binding on a bank against which it is passed unless the complainant furnishes to it, within a period of one month from the date of the Award, a letter of acceptance of the award in full and final settlement of his claim in the matter. Within fifteen days from the date of receipt by it, of the acceptance

in writing of the Award by the complainant the bank shall comply with the Award and intimate the compliance to the Banking Ombudsman. 7. The Banking Ombudsman shall report to the Reserve Bank the non-compliance by any bank of an Award which became binding on it pursuant to sub-clause (6).

20. REJECTION OF THE COMPLAINT

The Banking Ombudsman may reject the complaint at any stage if it appears to him that the complaint is made without any sufficient cause or that it is not pursued by the complainant with reasonable diligence or that prima facie, there is no loss or damage or inconvenience suffered by the complainant.

CHAPTER V MISCELLANEOUS 21. REMOVAL OF DIFFICULTIES

If any difficulty arises in giving effect to the provisions of this scheme, the Reserve Bank may make such provision not inconsistent with the Banking Regulation Act 1949 or the scheme, as appears to it to be necessary or expedient for removing the difficulty

BANKING OMBUDSMAN SCHEME 2002

Commercial Banks are service-providing institutions. They have a network of branches established at different centers catering to lakhs of customers. What if there are deficiencies in the service provided to a customer? The aggrieved customers can of-course prefers a complaint to the Zonal or Head Office of the Bank with a view to get his grievance redressed. In fact routine complaints are settled by this course. But when direct remedies fail, what is the recourse open to the customer? Is he to approach a court of law? Of-course, but it is costly and time-

consuming. Can he write to RBI? He can but what RBI will do is that to forward his complaint to the Chairman of the Bank for suitable action. If he complains to the Finance Ministry, his complaint will again may reach the Chairman of the Bank routed through the Reserve Bank of India. 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 centers were set up to cover the entire country. Any person whose grievance against a Bank is not resolved to his satisfaction by the Bank within a period of two months, he can approach the Banking Ombudsman if his complaint pertains to any of the matters specified in the scheme. Banking Ombudsmen have been authorized to look into the complaints concerning a. 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, delays in sanction or non-observance of prescribed time schedule for disposal of loan application or non observance of any other directions or instructions of the Reserve Bank, etc. and b. Other matters as may be specified by the Reserve Bank. Ombudsman would make recommendations after listening to both parties. In case the recommendation made by the Banking Ombudsman is not accepted by either of the parties, Banking Ombudsman proceeds to make an award. The procedure for the redressal of grievances under the Banking Ombudsman Scheme is profiled as under: 1. Written complaint is to be lodged by a person or an authorized representative 2. Complaint shall include signature of the complainant or an authorized representative along with the name, address and also name and address of the bank

office/branch along with supportive documents, the nature and extent of the loss incurred and the relief sought from the Banking Ombudsman and a statement about the compliance of the conditions referred to in Sub-clause (3) of this clause. 3. No complaint to the Banking Ombudsman shall lie unless: Written representation was made to the bank and either the bank had rejected the complaint or no reply was received from the bank within 60 days of receipt of complaint or in case of unsatisfactory reply received from the bank The complaint is made one year after the rejection of the representation by the bank or dispatch of final reply by the bank on the representation The complainant is not in receipt of the same subject matter if settled by the Banking Ombudsman in previous proceeding/s whether received from the same complainant or any one or more of the parties concerned with the subject matter. The complaint is not 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 order of dismissal has already been passed by any such court, tribunal, arbitrator or forum. The complaint if not frivolous or vexatious in nature. The experience gained from the functioning of the scheme for the last seven years, the RBI during June last year modified and broad-based the Scheme making it more comprehensive and effective with wider coverage and enlarged authority/functions to the Ombudsman. The new scheme came into effect June 14, 2002.

Salient Modifications Included in the New Scheme

1. The new Banking Ombudsman Scheme, 2002 covers all the regional rural banks in addition to all commercial banks and scheduled primary co-operative banks. 2. The Banking Ombudsman Scheme, 2002 additionally provides for the institution of a "Reviewing Authority" to review the Ombudsman's Award. A bank against whom an Award has been passed, may with the approval of the chief executive, file an application to the Deputy Governor-in-charge of Rural Planning and Credit

Department (RPCD) of the Reserve Bank of India to seek a review of the Award. The bank can request for such a review only when the Award appears to the patently in conflict with the bank's instructions and/or the law and practice relating to banking. 3. The scheme has been revised to enable the Banking Ombudsman to function as an Arbitrator on references to him of disputes either between banks and their customers or between two banks. The value of the subject matter of individual disputes under arbitration will not exceed Rs.10 lakhs. The adjudication of pending complaints and execution of the awards already passed before coming into being of the Banking Ombudsman Scheme, 2002 will continue to be governed by the provisions of the Banking Ombudsman Scheme, 1995.

OBJECTIVES OF THE SCHEME 2002

The Scheme is introduced with the object of: 1. Enabling resolution of complaints relating to provision of banking services and to facilitate the satisfaction or settlement of such complaints; and 2. Resolving disputes between a bank and its constituent as well as between one bank and another bank through the process of conciliation, mediation and arbitration.

Establishment of Office of Banking Ombudsman (Clauses 4 to 8)

The Banking Ombudsman shall be a person of repute and having experience in the legal, banking, financial services, public administration or management sectors and if such person is a civil servant he should be in the rank of Joint Secretary or above in the Government of India and in case of such person being from banking sector, he should have had the experience of working as a whole time director in a public sector or equivalent position. He must be a minimum of 55 years of age and initially appointed for a term of three years, which can be extended for further periods of two years each until he reaches the age of 65. Selection for the appointment of Ombudsman is made by a selection committee consisting of three

Dy.Governors of RBI and the Additional Secretary (Financial Sector), Department of Economic Affairs. Each Ombudsman so appointed will have distinct territorial jurisdiction, specified by the RBI and will have an office with a Secretariat at the place (normally Cities where RBI Branch functions). (Clause -9)

Jurisdiction, Powers and Duties of Banking Ombudsman General (Clause: 10)

The Banking Ombudsman shall have the following powers and duties a. to receive complaints relating to provision of banking services;

b. to consider such complaints and facilitate their satisfaction or settlement by agreement, through conciliation and mediation between the bank and the aggrieved parties or by passing an Award in accordance with the Scheme; c. to resolve by way of arbitration such disputes between banks or between a bank and its constituents as may be agreed upon by the contesting parties in accordance with the provisions of the Scheme and the Arbitration and Conciliation Act, 1996. Other Powers and Duties (Clause 11) 1. The Banking Ombudsman shall exercise general powers of superintendence and control over his Office and shall be responsible for the conduct of business thereat. 2. The Banking Ombudsman shall have the power to incur expenditure on behalf of the Office. In order to exercise such power, the Banking Ombudsman will draw up an annual budget for his Office in consultation with Reserve Bank and shall exercise the powers of expenditure within the approved budget. The Reserve Bank will indicate the share of expenditure to be borne by the concerned banks. 3. The Banking Ombudsman shall send to the Governor, Reserve Bank, by 31st May every year, a report 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. 4. The Reserve Bank may, if it considers necessary in the public interest so to do, publish the report and the information received from the Banking Ombudsman in such consolidated form or otherwise as it deems fit.

Procedure for Redressal of Grievance Grounds of Complaints (Clause: 12)

1. A complaint on any one of the following grounds alleging deficiency in banking service may be filed with the Banking Ombudsman having the jurisdiction: non-payment/inordinate delay in the payment or collection of cheques, drafts, bills etc.; non-acceptance, without sufficient cause, of small denomination notes tendered for any purpose, and for charging of commission in respect thereof; non-issue of drafts to customers and others; non-adherence to prescribed working hours by branches; failure to honors guarantee/letter of credit commitments by banks; claims in respect of unauthorized or fraudulent withdrawals from deposit accounts, or fraudulent encashment of a cheque or a bank draft etc., complaints pertaining to the operations in any savings, current or any other account maintained with a bank, such as 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. complaints from exporters in India such as delays in receipt of export proceeds, handling of export bills, collection of bills etc., provided the said complaints pertain to the bank's operations in India; Complaints from Non-Resident Indians having accounts in India in relation to their remittances from abroad, deposits and other bank-related matters. Complaints pertaining to refusal to open deposit accounts without any valid reason for refusal and Any other matter relating to the violation of the directives issued by the Reserve Bank in relation to banking service.

2. The Banking Ombudsman is also vested with the jurisdiction to deal with Complaints concerning loans and advances in so far as they relate to the following: 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 directions or instructions of the Reserve Bank, as may be specified by the Reserve Bank for this purpose, from time to time. The Banking Ombudsman may also deal with any such other matter as may be specified by the Reserve Bank from time to time in this behalf. Procedure for Filing Complaints (Clause:13) 1. Any person who has a grievance against a bank relating to the banking services as enumerated under Clause 12 of the Scheme, may himself or through his authorized representative make a complaint to the Banking Ombudsman within whose jurisdiction the branch or office of the bank complained against is located. 2. The complaint shall be in writing duly signed by the complainant or his authorized representative (other than an advocate) in a form specified in AnnexureA of the Scheme and shall state clearly the name and address of the complainant, the name and address of the branch or office of the bank against which the complaint is made, the facts giving rise to the complaint supported by documents, if any, that are desired to be relied upon by the complainant, the nature and extent of the loss caused to the complainant, the relief sought from the Banking Ombudsman and a declaration about the compliance of the conditions referred to in sub-clause (3) of this clause. 3. No complaint to the Banking Ombudsman shall lie unless: the complainant had before making a complaint to the Banking Ombudsman made a written representation to the bank named in the complaint and either the bank had rejected the complaint or the complainant had not received any reply within a period of one month after the bank concerned received his

representation or the complainant is not satisfied with the reply given to him by the bank; b. the complaint is made not later than one year after the cause of action has arisen as per sub-clause (a) above; c. the complaint is not in respect of the same subject matter which was settled through the Office of the Banking Ombudsman in any previous proceedings whether or not received from the same complainant or along with any one or more complainants or any one or more of the parties concerned with the subject matter; d. 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 pending or a decree or Award or a final order has already been passed by any such competent court, tribunal, arbitrator or forum; and e. the complaint is not frivolous or vexatious in nature

BANKING OMBUDSMAN SCHEME, 2006. SCOPE OF THE SCHEME.

In 2006, the Reserve Bank of India announced the revised Banking Ombudsman Scheme with enlarged scope that included customer complaints on certain new 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.

APPLICATION OF THE SCHEME.

The scheme is applicable to all commercial banks, regional rural banks and scheduled primary cooperative banks having business in India.

FUNDING.

Unlike the old scheme, the revised Banking Ombudsman Scheme is fully staffed and funded by the Reserve Bank instead of the banks.

FILING COMPLAINTS.
Under the revised Banking Ombudsman Scheme, the complainants can file their complaints in any form, including online.

APPEAL.
The bank customers would also be able to appeal to the Reserve Bank against the awards given by the Banking Ombudsmen.

FORUM FOR THE COMPLAINTS.

The 2006 scheme provides a forum to bank customers to seek redressed of their most common complaints against banks, including those relating to credit cards, service charges, promises given by the sales agents of banks, but not kept by banks, as also, delays in delivery of bank services.

NEW AREAS OF COMPLAINT.

The bank customers can complain about non-payment or any inordinate delay in payments or collection of cheques towards bills or remittances by banks, as also non-acceptance of small denomination notes and coins or charging of Commission for acceptance of small denomination notes and coins by banks.

PROVISIONS OF THE SCHEME.

The Banking Ombudsman Scheme 2006 provides a wide scope and extent to the schemes of 1995 and 2002. Many new changes have been made in the old scheme. The most essential provisions of the scheme are as follows: 1. Appointment and tenure. The Section 4 of the scheme provides for the appointment of one or more of the officers of the Reserve Bank of India in the rank of Chief General Manager or General Manager to be known as Banking Ombudsmen to carry out the functions

entrusted to them by or under the Scheme. Their tenure would be not more than a period of five years. 2. Location of the office. Generally, the office of the banking ombudsman is located at the place specified by the Reserve Bank of India. For the expedite disposal of the complaints, a banking ombudsman may hold office at such places, under his jurisdiction which he deems fit for the disposal of the complaints. 3. Powers and Jurisdictions. The scheme lays down the following provisions4 Dealing with powers and functions of the Banking Ombudsman: Authority of each Banking Ombudsman extends to the territorial limits entailed By the Reserve Bank of India. The Banking Ombudsman has power to receive and consider complaints relating to the deficiencies in banking or other services filed on the grounds ofcomplaints5. He has to 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 exercises general powers of superintendence and Control over his Office and is responsible for the conduct of business thereat. 3Clause 5 of the Banking Ombudsman Scheme, 2006.4Clause 7 of the Banking Ombudsman Scheme, 2006.5 Clause 8 of the Banking Ombudsman Scheme, 2006. The Office of the Banking Ombudsman draws up an annual budget for itself in consultation with Reserve Bank and exercises the powers of expenditure within the approved budget on the lines of Reserve Bank of India Expenditure Rules, 2005. The Banking Ombudsman has to 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. He has to 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 received from the Banking Ombudsman in such consolidated form or otherwise as it deems fit. 4. Grounds of complaints. Clause 8 of the scheme lays down the following grounds on which a banking customer may seek the redressal from the banking ombudsman: Non-payment or inordinate delay in the payment or collection of cheques, drafts, Bills, etc. Non-acceptance, without sufficient cause, of small denomination notes tendered For any purpose, and for charging of commission for this service; Non-acceptance, without sufficient cause, of coins tendered and for charging of commission for this service; Non-payment or delay in payment of inward remittances; Failure to issue or delay in issue, of drafts, pay orders or bankers cheques; Non-adherence to prescribed working hours; Failure to honor guarantee or letter of credit commitments; 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; Delays, non-credit of proceeds to parties' accounts, non-payment of deposit or on-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 ; Delays in receipt of export proceeds, handling of export bills, collection of bills etc., for exporters provided the said complaints pertain to the bank's operations in India; Refusal to open deposit accounts without any valid reason for refusal; Levying of charges without adequate 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; 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); Refusal to accept or delay in accepting payment towards taxes, as required by Reserve Bank/Government;

 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-adherence to the fair practices code as adopted by the bank; and Any other matter relating to the violation of the directives issued by the Reserve Bank in relation to banking or other services. 5. Procedure for filing complaint. Clause 9 of the Banking Ombudsman Scheme, 2006 lays down the procedure to file a complaint before the Banking Ombudsman as well as the conditions in which a complainant cannot approach the banking ombudsman. 1. Any person who has a grievance against a 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 jurisdiction the branch or office of the bank complained against is located. But the complaint arising out of the operations of credit cards, has to be filed before the Banking Ombudsman within whose territorial jurisdiction the billing address of the card holder is located and not the place where the bank concerned or the credit card processing unit is located. 2. The complaint in writing has to be duly signed by the complainant or his authorized representative. The complainant has to show the copies of the documents, which he proposes to rely upon and a declaration under Clause 9(3) of the scheme. He has to mention the following things in the complaint: the name and the address of the complainant, the name and address of the branch or office of the bank against which the complaint is made, the facts giving rise to the complaint, The nature and extent of the loss caused to the complainant, and The relief sought for. A complaint can also be made through electronic means. The Banking Ombudsman also entertains complaints covered by this Scheme

received by Central Government or Reserve Bank and forwarded to him for disposal. 3. Following conditions have to be fulfilled for making a complaint before the Banking Ombudsman: Before making a complaint to the Banking Ombudsman, the complainant had to, make a written representation to the bank. If the bank rejects the complaint or the complainant had not received 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 complaint does not touch upon matter which was settled or dealt with on merits by the Banking Ombudsman in any previous 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 matter; 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 pending or a decree or Award or order has been passed by any such court, tribunal, arbitrator or forum; The complaint 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. 6. Appeal. If the customer is not satisfied with the award of the Banking Ombudsman, he can approach to the RBI, to the appellate authority called Deputy

Governor. Still he is not satisfied, after approaching to the RBI, he can go to the High Court.

BANKING OMBUDSMAN: CUSTOMER

TO

THE

AID

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Customers have been often found to be aggrieved by deficiency in appropriate service by banks. Be it a delay in check payment or remittance facility or any other kind of service, grievances of the customer against banks have been many. In order to address the complaints and grievances of customers against banks, a forum has been formed known as the Banking Ombudsman. The concept of Banking Ombudsman was introduced in India in the year 1995. It was revised thereafter in the years 2002 and 2006. The Banking Ombudsman is appointed by Reserve Bank of India. He is a senior official appointed from the staff of the office of RBI. Unlike many other sectors where the senior authority usually a retired official holding top positions in government institutions/banks, the banking ombudsman is an in-service official of RBI mostly chief general managers/senior general managers. Under the amendment in the year 2006, it was decided that the banking ombudsman should not be from any bank and should solely be from the staff of RBI so as to maintain the idea of impartial justice. There are 15 offices of banking ombudsman in India presently. A customer has to file his complaint to the nearest office in his area. The office of Banking Ombudsman handles issues against all commercial banks, cooperative banks as well as regional rural banks (RRBs). It handles cases related to any kind of trouble faced by the customer in availing banking services which he has a right in. It also addresses to cases related to internet banking. It takes up cases having valuation less than Rs 10 lakhs. In case the customer has been made to go through phase of mental harassment and agony in the process, he can also be compensated by Banking Ombudsman in genuine cases.

 POLICY FOR THE GRIEVANCES REDRESSAL OF THE CUSTOMER COMPLAINTS

In the present scenario of competitive banking, excellence in customer service is the most important tool for sustained business growth. Customer complaints are part of the business life of any corporate entity. This is more so for banks because banks are service organizations. As a service organization, customer service and customer satisfaction should be the prime concern of any bank. The bank believes that providing prompt and efficient service is essential not only to attract new customers, but also to retain existing ones. This policy document aims at minimizing instances of customer complaints and grievances through proper service delivery and review mechanism and to ensure prompt redressal of customer complaints and grievances. The review mechanism should help in identifying shortcomings in product features and service delivery. Customer dissatisfaction would spoil banks name and image. The Banks policy on grievance redressal follows the under noted principles:

PROCEDURE FOR FILING COMPLAINT

Any person who has a grievance against a bank on any one or more of the grounds mentioned above, may, himself or through his authorized representative (other than an advocate), make a complaint to the Banking Ombudsman within whose jurisdiction the branch or office of the bank complained against is located. Complaints arising out of the operations of credit cards, shall be filed before the Banking Ombudsman within whose territorial jurisdiction the billing address of the card holder is located and not the place where the bank concerned or the credit card processing unit is located. The complaint shall be made in writing duly signed by the complainant or his authorized representative and shall as far as possible be in the form and shall contain such particulars as specified in the Scheme. The complainant shall file along with the complaint, copies of the documents, if any, which he proposes to rely upon and also a declaration that the complaint is maintainable as per clause 9(3) of the Scheme.. A complaint can also be made through electronic means.

 The complainant shall before making a complaint to the Banking Ombudsman, make a written representation to the bank. The complaint can be filed if the bank has rejected the complaint or the complainant had not received any reply within a period of one month after the bank received his representation or if the complainant is not satisfied with the reply given to him by the bank. The complaint to the Banking Ombudsman is to be made not later than one year after the complainant has received the reply of the bank to his representation or, where no reply is received, not later than one year and one month after the date of the representation to the bank. The complaint should not be in respect of the same subject matter which was settled or dealt with on merits by the Banking Ombudsman in any previous 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 matter. The complaint should not pertain to 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 order has been passed by any such court, tribunal, arbitrator or forum. The complaint should not be frivolous or vexatious in nature. The complaint should be made before the expiry of the period of limitation prescribed under the Indian Limitation Act, 1963 for such claims.

POWER TO CALL FOR INFORMATION

For the purpose of carrying out his duties under the Scheme, a Banking Ombudsman may require the bank named in the complaint or any other related bank to provide any information or furnish certified copies of any document relating to the subject matter of the complaint, which is or is alleged to be in its possession. Provided that in the event of the failure of a bank to comply the requisition without any sufficient cause made under sub-clause (1) the Banking Ombudsman may, if he deems fit, draw the inference that the information, if provided or copies if furnished would be unfavorable to the bank.

 The Banking Ombudsman shall maintain confidentiality of any information or document coming into his knowledge or possession in the course of discharging his duties and shall not disclose such information or document to any person except with the consent of the person furnishing such information or document. Provided that nothing in this clause shall prevent the Banking Ombudsman from disclosing information or document furnished by a party in a complaint to the other party or parties, to the extent considered by him to be reasonably required to comply with the principles of natural justice and fair play in the proceedings.

SETTLEMENT OF COMPLAINT BY AGREEMENT

As soon as it may be practicable to do, the Banking Ombudsman shall cause a notice of the receipt of any complaint along with a copy of the complaint to the branch or office of the bank named in the complaint and endeavour to promote a settlement of the complaint by agreement between the complainant and the bank named in the complaint through conciliation or mediation; For the purpose of promoting a settlement of the complaint, the Banking Ombudsman may follow such procedures as he may consider appropriate and he shall not be bound by any legal rule of evidence.

AWARD BY THE BANKING OMBUDSMAN

If a complaint is not settled by agreement within a period of one month from the date of receipt of the complaint or such further period as the Banking Ombudsman may consider necessary, he may pass an Award after affording the parties reasonable opportunity to present their case. He shall be guided by the evidence placed before him by the parties, the principles of banking law and practice, directions, instructions and guidelines issued by the Reserve Bank from time to time and such other factors, which in his opinion are necessary in the interest of justice. The Award passed under sub-clause (1) above shall state the direction/s, if any, to the bank for specific performance of its obligations in addition to the amount to be paid by the bank to the complainant by way of compensation for the loss suffered by him along with the summary of the reasons for passing the Award. Provided that the Banking Ombudsman shall not give any direction/s in the

Award under sub-clause (1) above regarding payment of compensation in excess of that which is necessary to cover the loss suffered by the complainant as a direct consequence of the commission or omission of the bank, or for an amount exceeding rupees ten lakhs whichever is lower. The Banking Ombudsman may while passing an Award under sub-clause (1) above, in respect of a complaint as stipulated under Clause 13(4) of the Scheme, may direct the complainant to furnish an indemnity, on the lines as per sub-clause (4). The indemnity referred to in Sub-clause (3) shall be in favour of the bank whereby the complainant should undertake to refund to the bank such amount as the bank would pay to him in implementation of the Award, together with interest accrued thereon at the rate as applicable for deposit in savings account, in the event of the decision of the Court in a criminal proceeding or civil proceeding, or tribunal or arbitrator or any other forum as the case may be, against the complainant leading to the conclusion that there was no such omission or commission on the part of the bank or its employee which could be considered as an act with wrong intention and motive on the part of the bank or its employee to facilitate the commission of fraud or unauthorized withdrawal from the bank account of the complainant and in such cases it shall be open to the bank to invoke the indemnity against the complainant. In the event of the complainant refusing to honour the indemnity given by him in favor of the bank it shall be open to the bank to approach a court of law for invoking its claim based on the indemnity against the complainant. A copy of the Award shall be sent to the complainant and the bank named in the complaint. An Award shall not be binding on a bank against which it is passed unless the complainant furnishes to it, within a period of 15 days from the date of receipt of copy of the Award, a letter of acceptance of the award in full and final settlement of his claim in the matter. If the complainant does not accept the Award passed by the Banking Ombudsman and fails to furnish his letter of acceptance within such time without making any request for extension of time to comply with such requirements the Banking Ombudsman shall reject his complaint. Provided that in the event of the complainant making a written request for extension of time, the Banking Ombudsman may subject to his

being satisfied with the explanation as furnished by the complainant about his inability to consider the Award and furnish his letter of acceptance, grant extension of time up to further period of fifteen days for such compliance. The bank shall within one month from the date of receipt by it, of the acceptance in writing of the Award by the complainant as per sub-clause (7) above comply with the Award and intimate the compliance to the Banking Ombudsman. If in the opinion of the bank the Award passed against it is : (I) Based on wrong appreciation of facts, law, banking practice, or general directions, if any, issued by the Reserve Bank; or (ii) Implementation of the Award is likely to create a bad precedent for the bank or banking companies, or banking system in general; the bank may file a review application as per provisions of the clause 17 of the Scheme. The bank shall in relation to such Award intimate to the Banking Ombudsman within one month from the date of receipt of copy of the Award its decision to file the review petition. The Banking Ombudsman shall report to the Reserve Bank the noncompliance by any bank of an Award which became binding on it and on receipt of such report the Review Authority shall pass necessary order. Provided that in the event of the bank failing to implement the Award within the prescribed time limit, the complainant may also, if he so desires, approach the Review Authority with a prayer to pass an appropriate direction to the bank for immediate compliance of the Award.

REJECTION OF THE COMPLAINT

(1) The Banking Ombudsman may reject the complaint at any stage if it appears to him that the complaint made is; (a) Frivolous, vexatious, malafide; or (b) Without any sufficient cause or; (c) That it is not pursued by the complainant with reasonable diligence or; (d) Prima facie, there is no loss or damage or inconvenience caused to the complainant.

(2) The Banking Ombudsman may reject a complaint at any stage, if after consideration of the complaint and evidence produced before him the Banking Ombudsman is of the opinion that the complicated nature of the complaint requires consideration of elaborate documentary and oral evidence and the proceedings before the Banking Ombudsman are not appropriate for adjudication of such complaint. The decision of the Banking Ombudsman in this regard shall be final and binding on the complainant and the bank.

COMPLAINT FORM FOR COMPLAINT TO OMBUDSMAN

Annexure A FORM OF COMPLAINT (TO BE LODGED) WITH THE BANKING OMBUDSMAN (FOR OFFICE USE ONLY)

Complaint No. Date .. To, The Banking Ombudsman Reserve Bank of India

of

year

...

(*Territorial jurisdiction, Place of BOs office)

Dear Sir, Sub: Complaint against Name of the banks branch _____________________________________________________________ Name of the Bank _____________________________________________________________ : :

Being aggrieved the complainant named herein has submitted a complaint with the above referred bank. Details of the complaint are as under:

1. NAME OF THE COMPLAINANT :------------------------------------------------------2. MAIL ID OF THE COMPLAINT:---------------------------------------------------------------3. FULL ADDRESS OF THE COMPLAINANT:--------------------------------------------------PIN CODE :--------------PHONE NO. / FAX NO:---------------------------

4. COMPLAINT AGAINST: (NAME AND FULL ADDRESS OF THE BRANCH/ BANK ) :---------------------------------PIN CODE:-----------------------PHONE NO. / FAX NO:-------------------------

PARTICULARS OF BANK ACCOUNT : (Please state nature of account viz. Savings bank/current/cash credit/term deposit/loan account etc. related to the subject matter of the complaint being made) 5. (a) DATE OF REPRESENTATION BY THE COMPLAINANT TO THE BANK (Please enclose three copies of the representation) (b) Whether any reminder was sent by the complainant? (If yes, please enclose three copies of the reminder *)

6. SUBJECT MATTER OF THE COMPLAINT : (Please refer to Clause 8 of the Scheme) :

7. DETAILS OF THE COMPLAINT :

 (If space is not sufficient Please enclose separate sheet)

8. (a) Whether any reply (Within a period of one month after the bank concerned received the representation) has been received? *(If yes, please enclose three copies of the banks reply) (b) Whether the representation has been rejected? *(If yes, please enclose three copies of the banks letter) (c) Whether the complainant has received any other final decision of the bank?

Yes / No

Yes / No

Yes / No

*(If yes, please enclose three copies of the banks letter conveying its final decision) *Note: Online applicants: Please send the proofs while submitting the case 9 NATURE OF RELIEF SOUGHT FROM THE BANKING OMBUDSMAN * (Please enclose three copies of documentary proof, if any, in support of your claim) 10. NATURE AND EXTENT OF Rs.

MONETARY LOSS, IF ANY, CLAIMED BY THE COMPLAINANT BY WAY OF COMPENSATION * (Please enclose documentary proof, if any, to show that such loss is actual loss caused as a direct consequence of alleged omission or commission of the bank )

11. LIST ENCLOSE

OF

DOCUMENTS

(Please enclose three copies of all the documents) Already approached the branch office (c) Whether the complainant has received any other final decision of the bank? 12.Whether the complainant have approached the Bank

Yes/ No

Yes/ No

13.Attach Supporting Files :

14. DECLARATION 1. I/ We , the complainant/s herein declare that: (a) the information furnished herein above is true and correct; and

(b) I/ We have not concealed or misrepresented any fact stated in aforesaid columns and the documents submitted herewith. 2. The complaint is filed before expiry of period of one year reckoned in accordance with the provisions of Clause 9(3) (a) and (b) of the Scheme. 3. (a) The subject matter of the present complaint has never been brought before the Office of the Banking Ombudsman by me/ or by any one of us or by any of the parties concerned with the subject matter to the best of my/ our knowledge. (b) The subject matter of the present complaint is not in respect of the same which was settled through the Office of the Banking Ombudsman in any previous proceedings. (c). The subject matter of the present complaint has not been decided by any forum/court/arbitrator. 1. I/We authorize the bank to disclose any such information/ documents furnished by us to the Banking Ombudsman and disclosure whereof in the opinion of the Banking Ombudsman is necessary and is required for redressal of any other complaint or our complaint. 2. I/We have noted the contents of the Banking Ombudsman Scheme,2006.

NOMINATION (If the complainant wants to nominate his representative to appear and make submissions on his behalf before the Banking Ombudsman or to the Office of the Banking Ombudsman, the following declaration should be submitted.) I/We the above named complainant/s hereby nominate Shri /Smt.. who is not an Advocate and whose address is

as my/our REPRESENTATIVE in all proceedings of this complaint and confirm that any statement, acceptance or rejection made by him/her shall be binding on me/us. He/She has signed below in my presence. ACCEPTED (Signature of Representative)

(Signature of Complainant)

CASES AGAINST THE BANKS. Balla Rama Rao v. Banking Ombudsman, 2003.
A house in the name of B. Narayanama was given on lease to the bank in 1982.Subsequently, the lady died. The Bank did not pay rent from June 1992 to Feb. 1997.Balla Ramarao, the appellant approached the bank. Bank immediately paid the amount Rs. 3, 09,562. Balla contended that the interest should also be paid for the period of 1992to 1997. The bank refused to pay interest. The appellant approached to the banking ombudsman. But he rejected the complaint, holding no merit in the case as it was outside the jurisdiction of the banking ombudsman.

Balla approached to the Andhra Pradesh high court. The high court rejected the appeal, finding that it was outside the jurisdiction of the banking ombudsman.

M/s.Anand Lubricating & Pneumatic Systems Ltd. Vs. State Bank of India7.
The bank was alleged to have failed to issue bank guarantee despite sufficient security and the complainant suffered financial loss. It was held that the nonissuance of bank guarantee despite security deposit with the bank would amount to deficiency in service and the complainant would be entitled to interest on that security amount.6 Clauses 14 of the Banking Ombudsman Scheme, 2006. 7 2003 (2) CPR 53.

The AGM, State Bank of India, Pondicherry & Ors V/s N.Ganesan8.
The complainants son remitted an amount on 5.04.1997 from abroad to be credited to his NRI account with appellant bank. The remittance was not confirmed till 22.04. 1997. Appellant bank pleaded that non- confirmation was due to failure of computers. The issue is whether this delay on the part of the bank amounted to deficiency in service. The Commission in appeal observed that bank officials could have verified vouchers and cheques received by post or confirmation and could have given correct reply within a reasonable time. It was held that failure of the bank to confirm remittance received from outside country within a reasonable period amounts to deficiency in service.

Vettivel Pillai V/s Senior Manager Canara Bank9.

The appellant was having open cash credit facility from 1994 with respondent bank and had issued two cheques of which one was encased and the other was dishonored. Respondent bank averred that appellant had overdrawn account. It was held that when there was credit in favor of the complainant, dishonor of the cheque issued by the complainant could not be said to be bonafide.Respondent bank was held guilty of deficiency of service and appellant was held entitled for compensation.

Corporation Bank & Anr V/s Navin J. Shah10.

Respondent, who is an exporter under discounting agreement entrusted documents relating to export and bills of exchange with appellant bank to negotiate the same through a foreign bank. Respondents allegation is that the bank had failed to collect money in foreign currency indicated in documents but instead collected in local currency, hence there was deficiency in service on the part of the appellant bank and hence a claim for damages was made. In appeal, the Commission held that there was no deficiency of service on the part of the bank as the appellant bank, acting for an on behalf of the respondent, had negotiated the documents as provided under agreement. However the conversion of local currency in U.S. $ became difficult no-account of policy of Sudan Government. It was observed that all that was required to be done under terms of the agreement and under contract had been done by the two banks.

Anthony C. Vaz V/s M/s Himachal Futuristic Communication Ltd & Anr11.
Dividend 8 2000(3) CPR 423 SCDRC (Pond). 9 2000(2) CPR 261 SCDRC (Ker). 10 2000(2) CPR 13 (SC). 11 2000(2) CPR 83 SCDRC (Goa). Warrants were issued by respondent No.1 and were sought to be encashed by respondentNo.2, Banker at Panaji. The appellant filed a complaint before the District Forum as the warrants were returned unpaid with the remarks No advice despite a letter dispatched to them by Industrial Financial Branch of SBI, Chandigarh. Respondent No.2 took the defense that they cannot honor dividend warrants unless they received intimation from local Head Office at Mumbai. The State Commission however held that refusal to clear the dividend warrant was deficiency in service as question of respondent No.2 having no authority to honour the warrants could not arise in view of the letter from Industrial Financial Branch of SBI, Chandigarh. Respondent No. 2 and Respondent No. 1 were held to be jointly liable.

Brijesh Kumar & A.R.Lakshmanan Vs. Canara Bank & anr12.

The Bank charging, unilaterally without prior information or consent of the Bank Customer, for providing their services by supply of MICR Cheque. Consumer Forum and State Commission held it as deficiency of service but National Commission held that it was related to pricing and not in jurisdiction of the Consumer For to decide. The Supreme Court held that the charges by bank for issuance of MICR cheques are not against the directives of the Reserve Bank of India. The questions of it being unilateral or with the consent of each customer do not arise.

India Export Corporation & ors Vs. Chairman-cum-MD, Syndicate Bank & ors13.
The complainant withdrew overdraft facility sanctioned to him by the bank only after availing facility to the extent of Rs.1,20,000/-. The facility was availed by the complainant for business purpose. It was held that where complaint alleging banking service deficiency was found connected with commercial purpose, the consumer complaint would not be maintainable. 12 2003 (1) CPR 296 (SC). 13 2003 (3) CPR 106 (NC).

Col. D.S.Sachar Vs. Zonal Manager, Punjab & Sind Bank, Chandigarh & anr14.
Cash was snatched from the hands of the complainant/appellant at the gate of the respondent bank. The appellant alleges that the absence of security on the gate and the non-provision of steps like siren/alarm system etc. amounts to deficiency in service on the part of the respondent bank. The State Commission held that the non-provision of security on the gate of the bank on the date of occurrence viz. snatching of cash in bank premises cannot be held to be amounting to deficiency in service hired by complainant.

Ratanchand Morarkar vs. Bank of Maharashtra15.

The complainant had deposited amount for issue of pay order in favor of a particular firm. However, the said pay order was cancelled by the bank and was issued in favor of another party. It was held that when the bank has acted in

good faith in cancellation of bank pay order and issuance of fresh pay order in favor of another party on the request made by Manager of the complainant firm, there would be no deficiency in service.

Manohar Singh Chouhan & Ors Vs. Central Bank of India16.

The complainants have purchased a tractor after taking loan from the respondent bank. The respondent bank did not remit the premium amount to the insurance company with which the complainants have insured their tractor as a result of which the loss suffered when the tractor met with an accident could not be recovered from the Insurance Company. The issue for consideration is whether non-payment of premium amount by the bank amounted to deficiency in service. It was held that when hire purchase agreement between the bank and buyer of vehicle with the help of bank loan did not contain a condition creating obligation on the part of the bank to remit premium for insurance policy, complainant buyer of vehicle could not hold bank guilty of deficiency in service.

REAL LIFE CASES SOLVED BY BANKING OMBUDSMAN

As per the Banking Ombudsman Annual Report 2009-2010, ombudsmen have resolved thousands of cases and helped common man get justice. I would say, this is a great way to raise your voice and show banks that they cant take you for granted, just because they are bigger than you in size. A customer has to be treated as per the guidelines, and customer service is the critical part of any service provider. Just to give you some idea, the Banking Ombudsman annual report showcases around 57 different real life cases of how it has helped customers get justice (Page 57-73) . I am highlighting four of those live cases below

1. How a person got compensation of Rs. 16,200 because he got less money from ATM

The complainant maintained an account with AB Bank. He withdrew an amount of Rs. 500 from the ATM of DH bank on July 28, 2009. The cash dispensed by the machine was only Rs. 400. However, his account was debited by Rs. 500. The amount of Rs. 100 was credited back to his account only on January 27, 2010 (Around 162 days late) & despite lodging the complaint immediately, no penalty was paid to him as per the instructions issued by DPSS, vide its circular dated July 17, 2009. Since the bank had delayed in affording the credit to the complainants account by more than five months, the BO directed the bank to pay the penalty amount of Rs.16,200 for the delayed period (Rs 100 for each 162 days) .

2. How a credit card holder got Rs. 10,000 in compensation for nonupdation of CIBIL records
One credit card holder complained about the banks claim against his settled credit card account dues, and non-updation of his status with CIBIL. The bank accepted that although the credit card account was settled three years ago, the status of the account could not be updated in the records of the bank with CIBIL (See a related example) , which was rectified subsequently. Clear negligence was observed on the part of the bank for not updating their records for more than three years, resulting in undue harassment to the complainant. The bank was directed to pay an amount of Rs. 10,000 to the complainant as a token compensation for the violation of BCSBI Codes. The Branch Manager assured him to provide the loan without delay. However after three months the branch returned all the papers stating that the Loan Disbursement Officer was ill because of which they were unable to provide the loan. With the intervention of BO, it was agreed by both the parties, that the complainant would resubmit the loan application and the bank would consider the same again. Moreover, since the complainant had lost Rs. 5000 which had been paid as registration fee to the Institute, the bank agreed to pay Rs. 5000 as a token compensation and another Rs. 5000 as a service gesture. The education loan was sanctioned subsequently by the bank and the student got admitted to the MBA course in the same business school. 3. How a senior citizen claimed Rs. 1 lakh in compensation for

Harassment regarding the loan he never took

Even though the complainant had no business relationship with ABC bank, he was getting calls/SMS from the recovery agents using abusive language & demanding repayment of some loans which he had never taken. Several complaints to the bank against this harassment calls fetched no effect. The bank pleaded to the BO that the telephone numbers from which he was getting the abusive calls did not belong to any of their recovery agents. Based on this, the BO closed the case under clause 13(d) of BO Scheme (i.e. complaint without any sufficient cause). As the complainant continued to get the harassment calls, he went in appeal. During the appeal, the bank admitted that the phone numbers from which he was getting abusive harassment calls belonged to their recovery agents and that they had since taken necessary corrective action to discontinue such calls. The AA observed that the bank had not conducted proper due diligence while sanctioning the loan to some third person indicating a major KYC lapse. To cap it all, the bank had misguided the BO resulting in the BO pronouncing a wrong order, damaging the credibility of the BOS. The AA set aside the decision of the BO and directed the bank to pay the appellant Rs. 1 lakh towards compensation. 4. How a person got Rs. 6,500 as interest for Failed ATM transaction In a case of failed ATM transaction where the account was debited though no cash was dispensed it was observed that as per BOs orders the amount was credited to complainants account, but the bank did not pay the penal interest in terms of extant RBI instructions for the delayed period credit of approximately 2 months. The bank was directed to pay penalty at Rs. 100 per day amounting to Rs. 6500.

CASE STUDY COMPENDIUM OF CASE HANDLED BY THE BANKING OMBUDSMAN OFFICE

SUBJECT: REFUSAL TO CLOSE THE ACCOUNT The complainant, Mr.XYZ was holding a current account with ABC Bank. On11.09.1990, following a raid conducted on his premises by the Income Tax Dept., jewellery, FDRs, chequebooks, passbooks pertaining to his bank accounts with various banks including that with ABC Bank were seized. The credit balance in his current account with ABC Bank at the time of seizure of the documents wasRs.44, 769.10. He stated that it had taken thirteen years for the Income Tax Dept.to finalize his case and to exonerate him. The Income Tax Dept. did not to return the chequebook and passbook seized by them, as they were not traceable. The complainant had approached the ABC Bank for withdrawing the amount lying in his current account but the bank refused to allow him to withdraw the amount without chequebook and the passbook. The Income Tax Dept. by its letter No.GIR No.V- 715 dated 11.09.2003 addressed to ABC Bank certified that during search operations conducted in the premises of Mr.XYZ on 11.09.1990, the department had seized a chequebook in respect of current account No.929 in the name of Mr.XYZ showing a credit balance of Rs.44,647.10 as on the date of seizure adding that the chequebook and passbook were not readily traceable and the department had no objection in allowing operations in the account by the complainant. DECISION When the complainant had approached the bank on 12.09.2003 for refund of the amount lying to his credit, the bank had refused to allow him to withdraw the amount. Article 90 of the Limitation Act clearly mentions that limitation would start running from the date of demand. The complaint filed with the office of the Banking Ombudsman is not barred by limitation and is maintainable in law. It is general rule that the party who affirms any proposition shall prove it. It is also general rule that the onus lies upon the party who seeks to support his case by a particular fact to prove it. If this basic principle of law of evidence is applied, it is for the bank to prove conclusively as to when and how the account was closed and

to produce the documents supporting such payment and closure, which ought to have been in its custody. It may also be pertinent to note that the Asst. Director of Income Tax [Inv.] had served an order under Sec.132 [3] of the Income Tax on the branch manager directing him not to part with the funds lying to the credit of the complainant in current account No.929. When the bank asserts that the account was closed it is for the bank to bring proof of such closure and it cannot excuse itself stating that records were destroyed or its tapes were not readable. The submission that the bank had permitted closure when there was prohibitory order against it is not credible as in the normal course there is no chance of any bank allowing operations in an account when there is a prohibitory order in force. All the facts and circumstances of the case point out to an irrefutable conclusion that there was no chance that the complainant could have received the refund of the current deposit prior to 2003. Therefore it was decided to direct the bank that it should refund to the complainant Rs.44, 647.10 which was lying to his credit as on11.09.1990 when the passbook and chequebook were seized by Income Tax authorities. ANALYSIS OF THE CASE This case is about a customer Mr.XYZ, who is a current account holder with theABC Bank. Mr.XYZ was having a balance of Rs.44, 647/- in his current account when the income tax department conducted a raid in his premises. While the investigations the income tax department confiscated his passbook, chequebook, FDRs and other document of all the banks including the ABC Bank. After thirteen years the income tax department was not able to trace his documents. So he decided to withdraw his balance amount and close the account, but the bank refused to close the account without the cheque book and the passbook. Mr.XYZ was able to prove his statement by providing the letter from the income tax department mentioning that Mr.XYZs passbook having a balance ofRs. 44,647/- as on 11.09.1990 was misplaced by them. The bank refused to refund of the amount lying to his credit even after showing the evidence to them. Therefore the customer approached the Banking Ombudsman to complaint the ignorance of the bank and to get his account closed. As soon as the complaint was lodged to the Banking Ombudsman he founded that the evidence provided by the

complainant was true. So the Banking Ombudsman directed the bank to refund the complainant the amount of Rs. 44,467/- that was lying to his credit since11.09.1990 as per the passbook.

CONCLUSION Though the Banking Ombudsman Scheme was introduced in the year 1995, with a view to do away with the banking customer complaints, the scheme was amended in subsequent years of 2002 and 2006. But the banks do not seem to have adopted the norms for their efficient functioning, that is the reason behind the increasing consumer cases against the banks, which are governed under the scheme. In the system of Banking Ombudsman, the results are delivered very soon; the procedures are fair together with cost, and proportionate to the nature of the issues involved. The system deals with cases at reasonable speed, is understandable to those who use it, is responsive to the needs of those who use it, and provides as much certainty as the nature of particular cases allows. This is true because over the past five years nearly 36000 complaints are being resolved by the Banking Ombudsman under this Banking Ombudsman Scheme. Though the Banking Ombudsman is eligible enough to deliver the bank customer complaints at the earliest yet the Consumer Redressal Forum/Commission is being taken resort of by most of the bank customers for their redressal of grievances with the bank. The reason is they are well popular among the common public which is lacking with the banking ombudsman and its working. Definitely the Scheme needs popularity in the society for its more appropriateness and effectiveness so that the aggrieved

bank customer with the services of the bank prefers to knock the door of the banking ombudsman for redressal. The scheme should provide more powers and levy more duties on the banking ombudsman so that they can easily be approachable by the aggrieved bank customer.

http://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=159 http://www.rbi.org.in/Scripts/PublicationsView.aspx?id=11113#2 http://www.nos.org/Secbuscour/25.pdf http://www.indbank.com/ombudsman.htm http://www.ucobank.com/ombudsman.htm

Annual Report by the Reserve Bank of India Banking Ombudsman Scheme 2007-2008. Booklet of The Banking Ombudsman Scheme 2006. RBI Journals.