LITERATURE REVIEWS, CASES, REPORTS, ON BANKING

OMBUDSMAN SCHEME

There have been numerous explorations which have been conveyed on studying the
functioning of services of the banking ombudsman schemes for redressal of
grievances faced by customers. Some of them are as follows:

Malyadri and Sirisha (2012) in their study appraised the performance of the
Banking Ombudsman Scheme 2006 in the affair of complaints admitted on Deposits,
Loans, ATM Debit cards and credit cards,- adherence of fair practices, total
complaints, and region-wise complaints and in this study we have broke down the
impact of Banking Ombudsman Scheme on service quality furnished by banking
establishments. applying the Trend analysis approach, the study denoted that the
number of complaints against banking institutes has been continuously raising
under the Banking Ombudsman Scheme in some regions and de-escalating in some
regions, likewise sum of complaints against foreign banks have been de-escalating
while the total complaints against private sector banks have been raising. Also, they
expounded that through some foresighted measures grasped by the RBI and
awareness drives administered by the Ombudsman, the situation looks
comparatively brighter now. Not merely this but also again, a lot needs to be done to
make the Scheme perform more effectively.

Malyadri and Sirisha( 2012) acclaim that the amount of complaints filed in the
Banking Ombudsman are much lower in contrast to the quantum of business in the
banking organizations. Nevertheless , they correspondingly raise concern that the
complaints are substantially urbanised and this prodigy could subsist as a result to
a difficulty in obtaining the Ombudsman services being majorly located in
urbanized regions, lack of mindfulness and knowledge among rural people that
they the accessory of redressal. A absence of mindfulness conjoined with a scare
of lack of redressal could be one rationale why the formal banking practices are
minimal in rural regions, beside other rationales resemblant as absence bank

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penetration, lack of knowledge ,etc. In a research rested on a considerable sample
of Malaysian bank clients, applying multitudinous reversion analysis it was
constituted that along with confidence, devotedness and communication, conflict
regulation was also a crucial agent that influences the customer’s allegiance.

Tejinderpal Singh( 2011) has made a elaborate study on the functioning of the
Banking Ombudsman Scheme. The functioning of the Banking Ombudsman is set
rested on many parameters to name such as complaints admitted by ombudsman
record of record of complaints, nature of complaints maneuvered, disposition of
complaints, mode of disposition of complaints, the pendency of complaints,
expenditure occurred administrating the scheme,etc.

Tejinderpal Singh found that there has been a considerable growth in the amount of
complaints admitted by the Bank Ombudsman services which shows the boosted
faith of customer in the Bank Ombudsman. The Scheduled Commercial Bank
manifests this trend, nonetheless primary cooperativee Banks and Regional Rural
Banks form a remarkably minuscule share of the thorough amount of complaints.
Among different kinds of complaints, complaints related to credit cards were the
substantial part of the total number of complaints. It was observed that most of the
complaints were dissolved by the mutual settlement done by the parties and thus
subsisting pendency of complaints de-escalated rapidly.

Ashwini Yadav (2011) with regards to his studies asserts that banking Ombudsman
is a quasi judicial authority performing under India’s Banking ombudsman Scheme
2006, and the authority was created pursuant to the a decision by the Indian
Government to enable resolution of clients or customer’s grievances and complaints
of customers of banks relating to certain services rendered by the banks. The
Banking Ombudsman Scheme is set in motion in the provisions of Section 35 A of the
Banking Regulation Act, 1949 by RBI with enforcement from 1995 and was then
revised in 2002. The current scheme went operative from 1Ist January 2006, and

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replaced and displaced the banking Ombudsman Scheme 2002. From 2002 until
2006, around 36,000 complaints have been dealt by the Banking Ombudsman, the
2006 scheme is applicable to all marketable banks, commercial indigenous banks
and scheduledprimary Co-operativee banks holding business in India.

Goyal and Thakur( 2008) concludes that public sector banks that hold no monopoly
licenses as they are to be given to new public sector banks and foreign banks.
However, as a result when it came to realization by the public sector that
government was no longer with them ,they started constructing whatever strategies
they deemed fit for their survival and growth. The Researchers in the present study
have taken 3 public and private sector banks.

Kamakodi( 2007) examines how cybernation has impacted the banking habits and
preference of Indian customers, and which factors impact these preferences.
Changing of domicile, payment and non- availableness of technology based services,
were given as the three main reasons for revising bank.

Jain and Jain( 2006) show that the Indian banking Organizations has underwent
radical changes due to liberalization and globalization measures accepted since
1991. There has been a great wave in retail banking. The study rested on responses
admitted from 200 customers of HDFC bank and ICICI bank along with this banks
other nationalized and private banks in Varanasi associated the numerous types of
services offered by banks, the status of satisfaction about distinct types of services,
prospects about these services and the position of segmentation among the services
offered to the banking customers.

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Patil( 2011), in his study aimed out that the observance of the Banking Ombudsman
Scheme furnished by RBI is vastly low and the need is to bring observance of the
scheme. The most concrete observation the study laid down it shall be applicable if
the individual UCBs have their ombudsman for snappy disposition of the customers’
complaints and grievances.

P. Suganya, andR. Eswaran, raise, through their study, some elemental queries,for
ex- Can we reach Banking Ombudsman’s assistance in case of any occurred
grievances against the banking organizations in India? Absolutely ,because The
Banking Ombudsman is a chief entity created by Reserve Bank of India to look into
complaints and grievances faced by customers due to banks transgressions . We
can’t visualize the situation when the scene appears where – while an ATM card is
placed to withdraw 500 if the withdrawal of money fails, but then our account is
debited byRs. 500. It leads to hassle and aggravation; not simply this but
correspondingly even if we have complained to the bank about the sum being
debited after the failed withdrawal . The bank tells you that your sum will soon be
credited to the account, but nothing happens for weeks and even 6 months went by,
seesawing with getting stuffs done and even with everything done nothing is fixed or
solved! Can we even visualize a scene of getting a indemnification ofRs. 16,200
because of the bank’s incapacity to fete the guidelines set by Reserve bank of India ?
Can a person even visualize a situation of not receiving rupees 500 within some
days and he will be amended and be given rs 100 for each awaited 162 days. Yes, it
can be! And it has occurred.

Reserve Bank of India( 2015) in their composition deals with Over 9,500 complaints
of deficient services by nationalized and private sector banks are pending with
banking ombudsmen, the Reserve Bank of India( RBI) has stated. The remodeled
Banking Ombudsman scheme 2006 allows a customer to seek requital of complaints
against banks in relation to credit cards and home loans, among others. The Sum of
complaints pending for redressal as on December 13, 2015 was 9,508, the RBI
brought out in reply to an RTI query.” No time limit is laid down for redressal of

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complaint under Banking Ombudsman Scheme, 2006,” it stated. The composition
ofcomplaints admitted by banking ombudsmen across the India from January 1 to
December 13 this year was 87,683, the RBI stated. As per the central bank’s periodic
report on the scheme for 2014- 15, atotal of 85,131 complaints were admitted by it
during the last financial year.

Singh Rajdeep( 2016) in his study constitute that the rural region is not performing
as the metro and semi-metro regions. The primary reason for this trend is the lack of
knowledge and competence among the rural region peoples to file complaints
against the bank’s transgressions. He also constitute that complaints against Public
Bank are large. still, the grievance resolving proportion has accelerated from 94 to
96 from 2010- 11 to 2014- 15.

Prakash and Badiger( 2014) studied the effect of banking ombudsman scheme in
Bangalore and to dissect the reasons for the discontent of customers and the banking
ombudsman action to requital the grievances of customers and to study about the
means for creating mindfulness. Questionnaire system was used for the study. The
parameters used for analysis are base of high charges without proper notice, any
loss suffered due to negligence etc. They set up that detention in services handed by
the bank is the major reason for dissatisfaction of guests and only 45 of population
which belongs to civic area were apprehensive about the banking ombudsman
scheme whereas pastoral or rural population are still not apprehensive about the
banking ombudsman. They suggested that advertence should be created about the
banking ombudsman so that needless threat or risk should be dodged it would be
advantageous for the customer if each bank’s head office has a different ombudsman
to maneuver complaints.

R.K. Uppal( 2010) says that the utmost complaints are in the public sector banksand
are continuously building up, and as correspondent, they negatively affected
customers ’ contentedness and performance. The complaints and all the exertion

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carried out by banks are in deposit, credit cards and home loans. It’s imperative to
relieve these complaints to make the customer satisfied. Each and every bank should
form a customer care centre to unravel the complaints of the customers. Private
sector and foreign banks are taking the lead in making guests happy. likewise,
Indian public sector banks are still not taking the action insolving the complaints of
their customers. Accordingly, if the Indian public sector banks won’t enhance
themselves to relieve the complaints of the bank customers, their survival will turn
problematic in the competitive period. Nevertheless, the ‘ reserve bank ’ of India
should instruct all the public sector banks to unravel the complaints of the customers
at the foremost .

Basically Auhor Uppal has analysed in his studies in regards to the extent of
customers grievances and complaints in respect to 3 types of bank groups, as to
name:Private sector, foriegn banks and public sector banks. It was discovered that
nearly all of the grievances and complaints were received in public sector banks and
even them most of them were related to home loans, deposits,and credit cards.

Dr. Singh( 2011) in his observation found that the banking ombudsman is a primary
base on resolution of customers grievances and complaints .. There has been a
significant boost in the number of grievances and complaints admitted by the Bank
Ombudsman departments. This shows the good faith of banking customers in Bank
Ombudsman. Bank group wise, there has been an boost in the number of grievances
in form of complaints filed in relation to numerous scheduledd commercial banks.
even so there’s an increase in the number of complaints from the rural regions but
it doesn’t appear to be up to the mark. Enhancing and avalablility of the
ombudsmen scheme for the rural areas is the heavily requisite and is need of the
day.

Corporate Bank v. Navin Shah, AIR 2000 SC 7

In the case of Corporate Bankvs. Navin Shah( 12), Respondent contended that the
bank had stalled to admit money in foreign currency, and he asked for damages for

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the it. It was held that there existed no inadequateness of service on behalf of the
bank and that it had completed all the liabilities under the contract. It’s important
for the Ombudsman to be impartial when addressing controversies, thereupon as to
not allow customers exploit the bank in the pretense of compensation.

Two notions were demonstrated in the case of United Commercial bankvs. the
banking nevertheless, the plaintiff is time- barred for this action under Clause 16( 3)(
b), If one chooses to displace the Ombudsman eight years after the foremost
declination of the bank on that issue. When a series of proceeding is pending in
courts on the same subject matter, so the Ombudsman has no governance on that
matter.

Durga Hotel Complex Vs. Reserve Bank of India and Others-

Judgement:

Civil Banking ombudsman Jurisdiction Clause 13 (b) of the Banking

ombudsmanScheme, 1995 Respondent-Bank questioned jurisdiction of Banking
ombudsman(BO) to entertain Appellants complaint BO rejected the contention and
passed anaward in Appellants favour Whether the subject matter of complaint
within the purview of the BO Held, Clause 13(b) of the Scheme provides that
ombudsman couldentertain complaints concerning loans and advances only insofar
as they relate to non-observance of directives of Reserve Bank on interest rates,
delays in sanction/non-observance of prescribed time schedule for disposal of loan
applications and non-observance of any other directives of Reserve Bank, as may be
specified from time totime It was not the case where Respondent bank was guilty of
non-observance of theabovementioned directives of the Reserve bank Directions
issued by BO while passing the award outside the jurisdiction as given under Clause
13 (b) Accordingly,BO had no jurisdiction to deal with matter Appeal dismissed.

❖ Ratio Decidendi:

1. 1 The jurisdiction of Banking ombudsman is laid down in Clause 13 (b) of the

Bankingombudsman Scheme and it would not have jurisdiction on subject
matters outside the purview of that provision.

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 2. When the subject matter of complaint lying before Banking ombudsman is
taken toCourt, Tribunal, Arbitrator or any other competent forum, Banking
ombudsman losesthe jurisdiction to deal with that matter.

The Annual Report 2007- 08 covers the operations of the 15 Banking Ombudsman
departments, with special reference to the composition and nature of complaints
admitted, the banks complained against and the manner of disposition of
complaints.

The Report also highlights certain definitive conclusions given by Banking

ombudsman. During the time 2007- 08, the Banking Ombudsmen admitted 47887
complaints as against 38638admitted in the preceding time( an increase of 24) and
disposed of 89 of the total complaints84 in the preceding time), with only 11 carried
forward to the succeeding time. Of the 11 of-complaints carried forward to the
succeeding time, only 6 were longer than 2 months old. Although there have been
compelling and successful operations, in resolving and redressing customers
grievances and complaints. One of the challenges that Banking patrons or clients still
continue to face is assuring fair treatment from banks. The cases negotiated by the
Banking Ombudsmen disclose that bankers need to deal with customers in a
further-crystal clear manner, particularly in making them ware of the terms and
conditions of concurrence and the specific connotation associated with them right at
the outset. Reasonableness in-pricing of products by banks and their dealing with
negligence situations are other areas which demand added focus, as 92 complaints
on these foreheads persist to advance to the Banking ombudsman.

The Office of the Banking Ombudsman has evolved over the times in guaranteeing
better customer service in the banking organization .

Annual Report (2019-2020) - Reserve Bank of India( RBI) has declared the Annual
Report of the Ombudsman Schemes for the period 2019- 20. There existed an
increment of about 65 per cent in the invoice of complaints out of which nearly 92
per cent have been deposed of. RBI has three Ombudsman- Banking,Non-Banking

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Finance Company( i.e. NBFC) and digital deals. A ordinary man can proceed toward
this Ombudsman for their grievances.

As per the RBI’s report, all three admitted in entire complaints in 19- 20 as in
comparison to in 18- 19. Banking Ombudsman admitted considerable complaints
observing ATM & Debit Cards, Mobile & Electronic Banking while NBFC’s
Ombudsmen entered most complaints aboutnon-observance of regulatory
guidelines, absence of translucency in contract/ loan agreement and tax of charges
without notice.

Some key points are as follows:-

• The Banking Ombudsman entered major complaints eyeing ATM & Debit
Cards, Mobile & Electronic Banking.

• NBFC’s Ombudsman entered most complaints aboutnon-observance of

regulatory guidelines, lack of translucency in contract/ loan agreement and tax
of charges without notice.

• Digital Deals Ombudsmen entered most complaints about fund transfer. RBI
has taken varied steps for creating advertency among varied stakeholders to
minimise the grievances.

• As proclaimed in the Monetary Policy Statement , the three Ombudsman

Schemes are being intermingled and integrated into a single scheme which
will be rolled out starting from June this time.

THE ANNUAL REPORT (2021-2022)

Annual Report of the Ombudsman Schemes for the annual period April 01, 2021 –
March 31, 2022 was delivered by the Reserve Bank of India. Significant highlights of
the Annual Report of Ombudsman Scheme are:-

❖ The amount of complaints entered under the Ombudsman Schemes Consumer

Education and Protection chambers during the period 2021- 22 boosted by9.39
per cent over the preceding time and stood at during the reported period.

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 ❖ Of these, complaints were addressed by the 22 departments of RBI
Ombudsman( ORBIOs) .

❖ Since establishment of Centralised Receipt and Processing Center( CRPC)

under the RB- IOS, 2021, of the complaints maneuvered at the CRPC,
complaints had been disposed as at the end of March 31, 2022.

❖ Complaints in relation to the digital modes of payment and deals were the
topmost in number, comprising42.12 per cent of the total complaints admitted
during the period.

❖ The rate of disposition of complaints by RBIOs enhanced to97.97 per cent in

2021- 22 from96.59 per cent in 2020- 21.

❖ Maximum(63.63 per cent) of the justifiable complaints were decided through

collective agreement/ concession/ agreement.

❖ Complaints related to ATM/ debit cards were the topmost at14.65 of the
aggregate, followed by mobile/ electronic banking at13.64..

➢ From the study of above literature review it can be inferred that the customers
grievance redressal has beenwidely accepted as one of the key factors of customer
satisfaction/loyalty and service quality. Although no research is beingcarried out
covering all the areas covered in this research (complaints, preferred
complaintmodes,effectiveness,awareness).Thus, the need arises to undertake an
empirical study on analyzing the grievances dealt by the customers, preferred mode
of redressal and also their awareness and knowledge about the banking ombudsman
scheme.

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 A REVIEW ON

BANKING OMBUDSMAN SCHEME IN INDIA

SUBMITTED TO:
PROF. SUDHANSU MOHAPATRA
&
DR. SAGAR KUMAR JAISWAL
SUBMITTED BY:
SPANDAN CHOUDHARY
B.COM LLB

SEMESTER Ⅸ
ROLL NO. 19002360
ENROLLMENT NO. GGV/19/2124

SESSION 2023-24
SCHOOL OF LAW