consumers beware!
Banking Ombudsman vs consumer courts
For your banking complaints, it is better to go to the Ombudsman for a quick solution
Pushpa Girimaji

For a complaint against a bank, which forum of redress is better the Banking Ombudsman or the consumer court? Can I file in both the forums?

Compared to the consumer courts constituted under the Consumer Protection Act, 1986, the procedure before the Banking Ombudsmen, instituted under Section 35A of the Banking Regulation Act 1949, is quicker and simpler. You can even file the complaint online. The Ombudsman tries to bring both the parties (the bank and the consumer) together for a settlement through conciliation and mediation, and if it is accepted, passes an order specifying the terms of the agreement, which is binding on both the parties. If the complaint is not resolved through such a settlement within a month, then he will proceed to pass an award, after giving both the parties an opportunity to put forth their points of view. The complainant can accept or reject the award. However, there is a ceiling of Rs 10 lakh on the compensation that the Ombudsmen can award. Also, barring complaints pertaining to credit card operations of banks, where it can award compensation up to Rs 1 lakh towards mental agony and harassment, in all other cases, the Ombudsman cannot award compensation for mental anguish. Even otherwise, the compensation is limited to the loss caused as a direct consequence of the bank's action or inaction. The consumer courts do not have these restrictions on the compensation and can award damages for any loss or injury suffered by the consumer as a result of the negligent or deficient service provided by the bank. The consumer courts can also award punitive damages and costs of litigation.

The Ombudsmen can hear complaints against deficiency in almost all banking services. They can also redress complaints pertaining to the banks' failure to follow the Reserve Bank of India's guidelines or directives or instructions and non-adherence to the Fair Practices Code for lenders or the code of Banks' Commitment to Customers issued by the Banking Codes and Standards Board of India.,

But before filing a complaint before the Ombudsman, you should first approach the bank and only on failing to get a reply within a month or a satisfactory response, can you file a complaint before the Ombudsman. Or else your complaint will be rejected. In 2012-2013, for example, 12.28 per cent of the complaints were rejected on the ground that they were 'first-resort complaints' or that the complainant had not approached the bank first. I must also mention that during 2012-2013, the largest percentage of complaints received by the Ombudsmen (26 per cent) pertained to non-observance of the Fair Practices Code by the banks. The next big chunk of complaints (25 per cent) was about the credit and debit card operations of banks. A total of 70,541 complaints were received by the Ombudsman during the year. (Annual report on the Banking Ombudsman Scheme, 2012-2013, released on January 31, 2014).

There is also a time limit for filing a complaint before the Ombudsman. Unlike the consumer courts, where it is two years, here the complaint must be filed within a year of your getting a negative reply from the bank.

I would suggest that if your complaint falls within the ambit of the Ombudsman and if the amount involved is not very huge, then go to the Ombudsman. Because the dispute resolution here is quick and simple - no lawyers are allowed before the Ombudsman. The process of adjudication before a consumer court, on the other hand, is long and time-consuming because of the repeated adjournments granted at the behest of lawyers. And if the decision at the district-level goes against the bank, it is sure to file appeals before the consumer court at the state and the national-level, thereby dragging on the case for years. But please remember that you cannot approach the Ombudsman and the consumer court at the same time. There are 15 ombudsmen in the country, located in various state capitals. You will have to file the complaint before the Ombudsman under whose jurisdiction the bank branch against which you have a grievance is located. In case of credit cards, where the operations are centralised, the jurisdiction is determined by your billing address.

Is there any appeal provision before the Ombudsman?

Yes, if you are not happy with the award passed by the Ombudsman or the rejection of your complaint, you can file an appeal before the Deputy Governor of RBI, who is the appellate authority. But the appeal has to be filed within 30 days of receiving the award. I must mention that the percentage of rejection of complaints by the Ombudsmen is very high. During 2012-2013, out of the maintainable complaints, 50 per cent were resolved through mutual settlement, 1 per cent through award, while 49 per cent were rejected. So I would suggest that before filing a complaint, visit www.bankingombudsman.rbi.org.in for all information on the scheme.





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