Banking complaints and Ombudsman

Banking complaints are grievances raised by customers or stakeholders against banks for issues related to their services, products, or conduct. These complaints can arise due to various reasons, such as improper handling of transactions, delayed services, unauthorized charges, discrepancies in statements, and customer service-related problems. To address these grievances and ensure fair resolution, many countries have established a specialized body known as the Banking Ombudsman.

Banking Ombudsman:

A Banking Ombudsman is an independent and impartial authority appointed by the government or central bank of a country to investigate and resolve banking-related complaints. The primary objective of the Ombudsman is to provide a simple, cost-effective, and efficient mechanism for resolving disputes between customers and their banks.

Roles and Functions of the Banking Ombudsman:

  • Complaint Handling: The Banking Ombudsman receives, reviews, and investigates complaints filed by customers against banks. The Ombudsman ensures that all complaints are addressed in a fair and transparent manner.
  • Mediation and Resolution: The Ombudsman acts as a mediator between the bank and the customer, attempting to resolve the dispute through negotiation and conciliation. If a resolution is reached, the Ombudsman facilitates the implementation of the solution.
  • Recommendations and Decisions: In cases where a resolution cannot be reached through mediation, the Ombudsman may issue recommendations or make decisions based on the evidence and merits of the case. These decisions are binding on the bank, but the customer has the option to accept or reject them.
  • Awareness and Education: The Ombudsman also plays a role in educating customers about their rights and responsibilities. They provide information to the public about the complaint handling process, the avenues available for redressal, and steps to prevent disputes.
  • Systemic Issues: Apart from individual complaints, the Ombudsman may also identify systemic issues and recommend changes to banking practices or regulations to prevent similar grievances in the future.
  • Fair Practices Code: The Ombudsman ensures that banks adhere to the Fair Practices Code, a set of guidelines issued by the central bank that outlines fair and transparent banking practices.
  • Timely Resolutions: The Banking Ombudsman aims to resolve complaints within a specified time frame, ensuring quick and efficient redressal for customers.

Jurisdiction of the Banking Ombudsman:

The jurisdiction of the Banking Ombudsman typically covers all scheduled commercial banks, regional rural banks, and cooperative banks operating in the country. The Ombudsman has authority over a wide range of banking-related complaints, including those related to ATM and debit card transactions, internet banking, loans, deposits, and credit cards.

It is essential for customers to exhaust the grievance redressal process of their bank before approaching the Banking Ombudsman. If the customer is dissatisfied with the bank’s response or if the bank does not resolve the complaint within a specified period, the customer can then escalate the matter to the Ombudsman.


In India, the Banking Ombudsman Scheme was established by the Reserve Bank of India (RBI) to provide a mechanism for addressing and resolving customer complaints against banks. The scheme is governed by specific rules and regulations laid down by the RBI. Let’s delve into the key rules and regulations governing the Banking Ombudsman Scheme in India:

Scope and Coverage:

The Banking Ombudsman Scheme covers all scheduled commercial banks, regional rural banks, and scheduled primary cooperative banks. It applies to a wide range of complaints related to deficiencies in banking services, non-adherence to the Fair Practices Code, disputes arising out of ATM and debit card transactions, internet banking, mobile banking, loans, deposits, and credit cards.

Appointment of Banking Ombudsman:

The RBI appoints the Banking Ombudsman for different regions across the country. The Ombudsman is typically a senior officer with experience in the banking sector or financial services. The appointment is made by the RBI with the approval of the Central Government.


Each Banking Ombudsman has jurisdiction over specific geographical areas and banking entities operating in that region. The RBI designates the jurisdiction of each Ombudsman to ensure proper coverage and efficient handling of complaints.

Role and Functions:

The primary role of the Banking Ombudsman is to facilitate the resolution of complaints between the bank and the customer. The Ombudsman acts as a mediator and attempts to resolve the dispute through conciliation or other alternative dispute resolution mechanisms.

Grievance Redressal:

Customers must first approach their respective banks to resolve their complaints. If the bank does not respond satisfactorily within a specified period or if the customer is dissatisfied with the bank’s response, the customer can then escalate the matter to the Banking Ombudsman.


The Banking Ombudsman ensures that complaints are resolved within a specified time frame. The Ombudsman has the authority to extend the time period based on the complexity of the complaint.

Powers of the Ombudsman:

The Banking Ombudsman has the power to investigate complaints, summon witnesses, call for records, and conduct inquiries as necessary. The Ombudsman may also pass awards or issue directions to the bank for resolution.

Award and Compliance:

If the Banking Ombudsman passes an award in favor of the complainant, the bank is bound by the award. The bank is required to comply with the award within the stipulated time period.

Appeal Mechanism:

If either the complainant or the bank is dissatisfied with the Ombudsman’s award, they have the option to appeal to the Appellate Authority. The Appellate Authority is designated by the RBI and is generally a Deputy Governor or an officer of equivalent rank.

Non-binding Nature:

The Banking Ombudsman Scheme is non-binding on the complainant. The complainant has the option to accept or reject the award. However, the bank is legally bound to comply with the Ombudsman’s award.

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