Rural Banks Come Under Ombudsman

The Reserve Bank of India (RBI) has brought regional rural banks (RRBs) under the new banking ombudsman scheme, 2002. The scheme, which has come into effect from today, boasts of a wider coverage and enlarged authority/functions to the ombudsman.

The scheme also provides for the institution of a 'reviewing authority' to review the ombudsman's award. A bank against whom an award has been passed, may with the approval of the chief executive, file an application to the deputy governor-in-charge of the rural planning and credit department (RPCD) of the Reserve Bank of India (RBI) to seek a review.

"A bank can request for such a review only when the award appears to be patently in conflict with its instructions and/or the law and practice relating to banking," the RBI said in a statement.

The scheme has been revised to enable the ombudsman to function as an arbitrator on references to him of disputes either between banks and their customers or between two banks. The value of the subject matter of individual disputes under arbitration will not exceed Rs 10 lakh.

The earlier banking ombudsman scheme, 1995, that was formulated by the RBI to provide an expeditious redressal grievance mechanism to bank customers covered only commercial banks and scheduled primary co-operative banks.

The ombudsman scheme provides an institutional and legal framework to bank customers to resolve all their complaints relating to provision of banking services and other specified matters. The ombudsman attempts to resolve the customer complaints by settlement through agreement, recommendation for settlement and/or by passing an award.

Adjudication of pending complaints and execution of the awards already passed before coming into being of the banking ombudsman scheme, 2002 will continue to be governed by the provisions of the banking ombudsman scheme, 1995.