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How to use bank ombudsman

Abhay Rao  |  Mumbai 

Two in every three complaints was turned down as the customer was ignorant about rules.

In the last financial year, the (BO) received 79,266 complaints from unsatisfied consumers. Shockingly, as many as 51,847 or 62 per cent of these were rejected due to procedural mistakes.

The BO’s office has recently being dealing with issues regarding banking regulations, interest rates on loans, penalty interest on credit card usage and ATM withdrawal penalties. The office was started by the Reserve Bank of India (RBI) as an alternate dispute resolution (ADR) mechanism, to settle those that could not be solved at the bank's level. Supposed to be impartial, the BO listens to arguments from both the bank and the aggrieved customer. When both parties acknowledge the decision, they need to sign an agreement and the case is considered settled.

Fresh complaints made in 2009-10: 79,266 
Total cases cleared in 2009-10: 83,336 
(including brought forward from 2008-09)
Complaints rejected: 51,847 (62%)
Complaints dealt with: 31,489 
Complaints dealt through settlements: 31,278 (99.33%)
Complaints dealt through awards: 211 (0.67%)
  • First resort complaints: 31%
  • Complaints outside scheme jurisdiction: 23%
  • Incomplete address: 12% 
  • Insufficient cause: 12%
In 2009-10, the most number of complaints were made in Chennai, Delhi and Mumbai. Kolkata and Bhopal have been more active in 2010-11
PNB 2,800 HDFC Bank 7,542
Canara Bank 2,153 HSBC 3,388
ICICI Bank 10,328 Standard Chartered 2,263

However, approaching the BO has to be done in the prescribed manner. Typically, most people complain directly to the BO, thinking their case will then be considered a priority by the bank. However, such a step is considered as a 'first resort' complaint, not entertained by the BO's office. One must first contact the bank or its nodal officer; if still dissatisfied, then approach the BO.

To some extent, banks could be blamed for this confusion. While they do display the contact details of both the bank's nodal officers and the for the customers' benefit, there is no mention of whom to contact first and how.

"There are many reasons for rejections. Most people do not follow up on their complaints or mention their contact detail or complain about non-banking. Often, the complaints have come without even first contacting the bank," says D G Kale, general manager, customer service department,

There are various steps to approaching the BO. When you feel the bank has been cheating you, you can approach its nodal officer. If the officer cannot help or does not satisfactorily resolve the issue, then the BO's office should be approached. If, one approaches the BO directly, the complaint will be sent back to the bank's nodal officer, a delay of 15-20 days.

One also needs to be certain about whom the complaint can be raised with. For instance, those regarding mutual fund products, structured products and other investment schemes you have made via your personal banker or should be made to the Securities and Exchange Board of India. Similarly, complaints regarding an insurance product or unit-linked insurance product bought from your bank should be taken up with the Insurance Regulatory and Development Authority, not the BO.

The BO's office tries to handles most of its cases within the first three months itself. Having the requisite documents to prove your side of the argument will go a long way in securing a verdict in your favour.

According to Kale, "Since the BO's office puts out its findings in the public domain, banks run a risk to their reputation. Bigger banks have, as a result, become more customer-savvy and try to take care of problems before customers reach the BO."

The BO's decision, however, is not the law as it has no judicial, semi-judicial or even quasi-judicial role in the system. The options are a consumer court, civil court and even the criminal court in case of cheque-bounce issues. The BO cannot be approached if these forums have been. The other condition to approaching a BO is the amount in contention; it should be less than Rs 10 lakh.

First Published: Thu, August 11 2011. 00:14 IST