BANKING OMBUDSMAN
Ombudsman
means 'Grievance man' — an official appointed to investigate complaints against
administration. Ombudsman is an independent Arbitrator for fair settlement of
dispute arising between the Banker and the Customer. Consumer Protection Act,
1986 deal with goods and services. Since banking is one of the many service
industries, it was felt necessary to form separate redressal machinery for
complaints against banks. Thus the Banking Ombudsman Scheme was started on 14th
June 1995 u/s 35A of the BR Act. The Banking Ombudsman Scheme is an effective
alternative for quick impartial method for settling dispute. This scheme
extends to the whole of India.
Appointment of Ombudsman
The Ombudsman appointed
by the Reserve Bank of India is a person of high standing in the legal,
banking, financial services and administration. The period of appointment is
for three years and is eligible for another two years. The overall age limit is
65 years.
Role of Ombudsman
The ombudsman tries to
arrive at a settlement of the compliant by an agreement through conciliation or
mediation. He has to send his recommendations to the complaint within one
month.
RBI
widens scope of Banking Ombudsman The RBI has decided to introduce the Banking
Ombudsman Scheme (2002), with wider coverage and enlarged authority/ functions
to the Ombudsman after a review of the Banking Ombudsman Scheme, 1995. The new
Scheme came into effect from June 14, 2002.
The
Banking Ombudsman Scheme, 2002 additionally provides for the institution of a
"Review Authority" to review the Ombudsman's award. A bank against
whom an award has been passed, may with the approval of the Chief Executives,
file an application to the Deputy Governor-in-charge of Rural Planning and
Credit Department (RPCD) of the RBI to seek a review of the award. The bank can
request for such a review only when the award appears to be patently in
conflict with the banks' interest and/or the law and practice relating to
banking. The new Banking Ombudsman Scheme (2002) will cover all the Regional Rural
Banks in addition to all Commercial Banks and Scheduled Primary Cooperative
Banks. The value of the subject matters of individual disputes under
Arbitration does not exceed Rs. 10 lakhs. The scheme has been revised to enable
banking Ombudsman to function as an Arbitrator on reference of a dispute either
between banks and their customers or between two Banks.
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