How effective is the Banking Ombudsman?
As of 2015, this system handles a vast array of complaints related to banking services. In the year 2009-2010, the team successfully addressed an impressive 94% of the 79,266 complaints received. Currently, there are 15 Banking Ombudsmean across India. Customers file complaints with the Ombudsman whose jurisdiction covers the location of their bank branch. For example, a Bangalore-based customer would contact the Bangalore Ombudsman. If either the bank or the customer finds the Ombudsman's decision unsatisfactory, they have 30 days to appeal to the Appellate Authority, a Deputy Governor of the RBI.
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What are the roles and responsibilities of a banking ombudsman?
By now, you should have a clear understanding of the role and importance of the RBI banking ombudsman. With this authority comes a defined set of responsibilities aimed at protecting customers and ensuring fair banking practices. Some of the key responsibilities of a banking ombudsman include the following:
Handling service deficiencies
A banking ombudsman addresses complaints related to deficiencies in banking services, such as non-acceptance of small denomination notes or coins, failure to issue drafts, pay orders or banker’s cheques, and similar service-related issues.
Acting as a mediator
In cases involving grievances such as non-adherence to the Fair Practice Code, unjustified refusal to open bank accounts, or charging customers without prior notice, the banking ombudsman acts as an independent mediator between the bank and the customer.
Protecting customer rights
The ombudsman ensures that banks comply with regulatory guidelines and prescribed policies, while safeguarding the rights and interests of customers through oversight and corrective measures.
Taking action against misconduct
The banking ombudsman has the authority to take appropriate action in cases of negligence, misconduct or unethical practices by banking officials.
Investigating complaints
An important function of the banking ombudsman is to investigate complaints by seeking information from banks and examining relevant records. Based on the findings, the ombudsman can direct banks to provide compensation of up to Rs. 20 lakh, as per applicable regulations.
Who is eligible to become a banking ombudsman?
To be appointed as a banking ombudsman, an individual must meet certain eligibility criteria. These requirements ensure that the role is held by someone with the necessary expertise and integrity. The key eligibility conditions include:
The individual should have relevant experience in fields such as banking, financial services, law or public administration.
The individual must be a person of integrity and professional repute.
How to file a complaint with the Banking Ombudsman?
There are two ways to file your complaint:
1. Online:
- Visit the Banking Ombudsman website and access the online complaint form.
- Complete the form with all necessary details.
- Upload any supporting documentation (e.g., bank rejection letter, bank's reply) in PDF or TXT format.
2. Offline:
Download the complaint form from the Banking Ombudsman website.
Provide the following information:
- Your name, address, and contact details.
- The name and address of the bank you have a complaint against.
- Details of your complaint, including any supporting documents (like letters or account statements).
- The compensation or resolution you are seeking.
Send it to the Banking Ombudsman within your jurisdiction.
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Types of complaints the banking ombudsman can address
Here are some common reasons you might file a complaint:
Delays: unreasonable delays in processing loans, opening accounts, or providing other banking services.
Fees and interest:
- Unexpected charges or fees without proper notification.
- Interest rate changes on loans that are unfair or unclear.
Fraud and errors:
- Lost or stolen credit cards resulting in fraudulent transactions.
- Inaccurate credit reports (CIBIL score) due to bank errors.
- Unauthorised online banking activity.
Account issues:
Customer service:
- Bank staff misrepresenting insurance policies or linking them to loan approvals.
- Negligence in basic banking duties.
- Unjustified loan rejections.
- Harassment or rude behaviour from bank representatives.
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Financial institutions covered under the banking ombudsman scheme
A. Banks covered under RB-IOS, 2021:
- Public sector banks
- Private sector banks
- Foreign banks
- Local area banks
- Small finance banks
- Payment banks
- Regional rural banks
- Scheduled primary (urban) co-operative banks
- Non-scheduled primary (urban) co-operative banks with a deposit size of Rs. 50 crore and above
B. Non-Banking Financial Companies (NBFCs):
- NBFCs with asset size of Rs. 100 crore and above (excluding housing finance companies
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Can my complaint be rejected by the ombudsman?
Yes, your complaint might be rejected by the ombudsman under the following circumstances:
- You did not contact the bank: You must attempt to resolve the issue directly with your bank before filing with the ombudsman.
- Time limit expired: You generally have one year from the date the bank responds (or fails to respond) to your complaint to file with the ombudsman.
- Other legal action: The ombudsman might not handle your complaint if it is already being addressed by a court or another dispute resolution body.
- Frivolous complaints: Complaints that are frivolous or intended to cause trouble may be rejected.
- Previously settled: The ombudsman will not re-open a case with the same subject matter that has already been resolved through their office.
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Points to remember about banking ombudsman
1. Compensation limit
The compensation awarded to the complainant by the bank for any losses suffered will be the lower of the following amounts:
- The actual loss incurred due to the bank's actions or inactions.
- Rs. 20 lakh.
2. Compensation for mental agony and harassment
In cases involving mental agony and harassment, the Banking Ombudsman can award up to Rs. 1 lakh in compensation. While deciding on the compensation amount, the Ombudsman will consider the following factors:
- Time lost by the complainant.
- Expenses incurred by the complainant.
- The degree of harassment and mental agony suffered by the complainant.
3. Resolution process
Upon receiving a complaint, the Banking Ombudsman will attempt to resolve the issue through conciliation (a mutual agreement) between the involved parties. If no agreement is reached within one month, the Ombudsman will proceed to pass an award, ensuring both the complainant and the bank are given a fair chance to present their case.
4. Appeals
If either party is dissatisfied with the Banking Ombudsman's decision, they have the option to file an appeal with the Appellate Authority within 30 days of receiving the award. The Appellate Authority may grant a 30-day extension if deemed necessary.
Conclusion
The Banking Ombudsman Scheme is an empowering initiative that protects consumers from unfair banking practices. By providing a free, impartial, and efficient dispute-resolution system, it strengthens trust between banks and customers.
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