Thursday, 2 May 2013

Banking Ombudsmen to Accept Complaints Involving Amounts Exceeding Rs. 10 Lakh

One area of confusion relating to the Banking Ombudsman Scheme has been the ceiling on the amount involved in a complaint that can be entertained by a Banking Ombudsman (BO) in India. Some believe that a Banking Ombudsman in India shall not accept a complaint if the amount involved in the transaction leading to the complaint is more than Rs. 10 Lakh (One Million). Factual position, however, is different. The Annual Report of the Banking Ombudsman Scheme for the year 2011-12 released by RBI's Customer Service Department contains a clarification in this regard. It says, "Clause 12(5) and 12(6) establish pecuniary jurisdiction of the BO i.e. the ceiling upto which BO can award monetary compensation. Under Clause 12(5), BO has powers to pass an award directing payment of an amount, not more than the actual loss suffered by the complainant as a direct consequence of an act of omission or commission of the bank, or Rs. 10 Lakh, whichever is lower." This, however, does not mean that a BO will not accept a complaint where the amount of transaction leading to the complaint exceeds Rs. 10 Lakh.  Read more below...

The Annual Report clarifies that pecuniary jurisdiction of the BO here applies to the amount of compensation that a BO can grant and not to the amount of transaction. Thus, the BO will take up complaints involving amounts exceeding Rs. 10 Lakh; however, the amount that he can award as compensation will be restricted to Rs. 10 Lakh or the amount of actual loss suffered by the complainant, whichever is lower.

Clause 12(6) refers to Credit Card related complaints where the BO can award compensation not exceeding Rs. 1 Lakh (0.1 Million) for loss of complainant's time, expenses incurred, harassment, etc.

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All information given in this blog is obtained from sources in the public domain, RTI applications, discussions with bankers, bank customers in India and also with some employees of Reserve Bank of India having knowledge of the working of various Offices of Banking Ombudsman in India. All information in this blog is presented on a best effort basis and is not claimed to be complete information on any of the subjects covered in this blog. Use of any information given in this blog is purely voluntary on the part of the readers. Author of this blog does not assume any responsibility for any action of the readers related to any matter discussed in this blog or any consequences thereof. Readers of this blog are advised to consult a legal practitioner before taking any action related to any matter discussed in this blog.