The restrictions on Punjab and Maharashtra Co-operative Bank and the filing of an FIR against former HSBC India chief executive officer Stuart Milne and other executives for alleged mis-selling of insurance were some of the cases in 2019 that exposed things that could go wrong in the banking industry. Banks are an integral part of one’s financial life and that’s why it’s important to be aware about your rights as a customer, especially in the present scenario. The banking ombudsman plays a key role when it comes to your rights as a customer. Set up by the Reserve Bank of India (RBI) under the Banking Ombudsman Scheme, 2006, it looks into consumer complaints against banks for issues such as delay in the payment or collection of cheques, levy of charges without prior notice and mis-selling of third-party financial products, among others.
The banking ombudsman received 195,901 complaints in 2018-19 (1 July 2018 to 30 June 2019), an increase of 19.75% from the 163,690 complaints it received in 2017-18 which was a 24.90% leap from the previous year, according to the RBI Ombudsman Report 2018-19. The rising number of complaints indicates customers’ dissatisfaction with the banks. However, sadly, an extraordinarily high number of complaints (52.90% of 195,901) were rejected in 2018-19 as non-maintainable and on technical grounds such as approaching the wrong geographic jurisdiction or not approaching the concerned bank first, according to the report (see graph). We tell you the things you should keep in mind to avoid some common errors that can lead to the rejection of your complaint to the ombudsman.
Graphic: MintTypes of complaints
The vast majority of the complaints that the banking ombudsman received in 2018-19 were for violation of the fair practices code (which is adopted by each bank) at 19.17% of the total complaints, followed by ATM and debit card issues, which accounted for 18.65% of the complaints.
The number of complaints for mis-selling of third-party products such as insurance or mutual funds rose from 579 in 2017-18 to 1,115 in 2018-19, but still came at a relatively low level. Note that the ground of mis-selling was introduced relatively recently, in 2017. “Most people don’t even know that they have been mis-sold an insurance policy by a bank. Those who realize it rarely take the trouble of complaining,” said Mrin Agarwal, financial educator, founder director of Finsafe India Pvt. Ltd and co-founder of Womantra. “Within the small subset of those who complain, hardly anyone knows about the banking ombudsman,” she added.
RBI also established an ombudsman for non-banking financial companies (NBFCs) in February 2018. Complaints to this ombudsman can be made against NBFCs which accept public deposits or even NBFCs which do not accept public deposits but have assets above ₹ 100 crore. The complaints to this ombudsman rose from 675 in the four months of its operation in 2017-18 (RBI year ends in July) to 3,991 in 2018-19.
Things to keep in mind
You can complain to the banking ombudsman online at but do keep certain things in mind before doing so.
First, ensure that your complaint falls within one of the grounds of complaint listed under Section 8 of the RBI Ombudsman Scheme, 2006. These include non-payment or delay in the payment or collection of cheques, non-acceptance without sufficient cause of small denomination notes, non-adherence to the prescribed working hours, and levying of charges without adequate prior notice to the customer, among others (read the full list here ).
Second, remember that if your complaint is primarily about a third party product rather than mis-selling of it by a bank, you should approach the regulator of that product. “So if it is an insurance product, you need to approach the insurance ombudsman and the banking ombudsman in case of a banking product,” said Adhil Shetty, CEO, Bankbazaar. For instance, if an insurance company denied your claim unfairly, you need to complain to the insurance ombudsman even if a bank sold you the policy in question.
Third, you can only complain to the ombudsman branch within whose jurisdiction the bank branch in question is located. If the service in question is centralized, you can complain to the ombudsman within whose territorial jurisdiction your billing address is located.
Of the 195,901 complaints received by RBI, more than half (52.90%) were rejected as “non maintainable” or technical grounds such as not being represented properly or being made to the wrong RBI ombudsman office. Within this non maintainable category, an astonishing 21% were rejected simply on grounds of territorial jurisdiction, where the complaint was sent to the wrong RBI banking ombudsman office. It is not very difficult to identify which RBI ombudsman office you fall under—the list of such offices and the areas under their jurisdiction can be found here .
Fourth, ensure that before approaching the ombudsman, you make a complaint to the relevant bank first. If no reply is received within a month of the complaint or the reply is not satisfactory, you can approach the ombudsman. 14% of all non-maintainable complaints were rejected because they were “first resort complaints”. This means that the customer had not approached the bank first.
Fifth, remember that you cannot take too long to make up your mind. A complaint to the ombudsman must be filed within a year of getting a reply from the bank. In case you haven’t received a reply from the bank, you should move within a year and one month of filing the complaint.
Also, you can’t approach the ombudsman if you have approached another authority such as a consumer or criminal court with your complaint. Note that there is no bar to approaching a court if your complaint fails with the ombudsman. Hence, it may be a prudent strategy to go to the ombudsman first. “There are two aspects to this. The first is that not all cases may be admissible in a criminal court and, similarly, there may be matters that don’t come under the purview of the ombudsman,” said Shetty.
Resolution process
Once the complaint is received, the ombudsman will first try to settle the complaint through mediation and conciliation. The vast majority of complaints (69.88%) with the ombudsman are, in fact, settled by “mutual agreement”. If the complaint cannot be settled through this procedure, the ombudsman will allow both parties to present their cases and then pass an award. Note that it is very rare for cases to come to award stage. Only 98 of the 92,264 cases disposed by ombudsman in 2018-19 saw an award being passed, 69.88% were settled through mutual agreement and 29.16% were rejected.
You can also appeal against the decision of the ombudsman within 30 days of the verdict. The deputy governor-in-charge of the Consumer Education and Protection Department of RBI, the designated appellate authority, received 78 appeals in 2018-19 compared to 125 appeals in 2017-18.
Don’t hesitate to complain if your bank has been unfair to you, but follow the correct procedure when doing so.
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