DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

VISAKHAPATNAM, A.P., INDIA

INSTITUTION OF OMBUDSMAN

SUBJECT: ADMINISTRATIVE LAW

FACULTY: DR. P SRIDEVI

PRAKHAR JAIN

2014081

SEMESTER VI

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 ACKNOWLEDEGEMENT

I would like to take this opportunity to thank Dr. P. Sri Devi, Dean, Academic Affairs & Research,
and Faculty of Administrative Law at Damodaram Sanjivayya National Law University for giving me
this golden opportunity to do a research on “Institution of Ombudsman”. The research has been of
great significance in understanding the exhaustive aspects of the subject matter and for helping and
guiding me in completing my project.

Lastly I would like to thank my friends for their efficient help and co-operation in helping me
complete my project work.

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 TABLE OF CONTENTS

ACKNOWLEDGMENT…………………………………………………………………….……I

OBJECT AND AIM OF THE STUDY………………………………………………………….1

SIGNIFICANE AND BENEFIT OF THE STUDY…………………………………………….4

SCOPE OF THE STUDY………………………………………………………………………..4

REVIEW OF LITERATURE……………………………………………………………………4

RESEARCH METHODOLOGY………………………………………………………………..4

HYPOTHESIS ……………………………………………………………………………………4

CHAPTER I:- OMBUDSMAN INDIA………………………………………………………….5

1.1 Introduction……………………………………………………………………………………5

CHAPTER II:- OMBUDSMAN AND ANALYSIS…………………………………………….6

2.1 The Extraordinariness Of Ombudsman: A Comprehensive Analysis…………………………6

2.2 Independence Of Ombudsman And Its Relevance…………………………………………….7

2.3 Ombudsman As A Strategy For Dealing With Corruption……………………………………8

CHAPTER III:- OMBUDSMAN AND INSTITUTIONS……………………………………..10

3.1 Ombudsman In Insurance Regulatory And Development Authority Of Inida……………….10

3.2 Banking………………………………………………………………………………………13

CHAPTER IV: OMBUDSMAN AND ITS PROVISIONS IN OTHER COUNTRIES…….20

4.1 Ombudsman For Banking Services And Investments (OBSI)……………………………….20

4.2 Swiss Banking Ombudsman………………………………………………………………….20

4.3 Financial Ombudsman Service……………………………………………………………….20

4.4 The Office Of The Comptroller Of The Currency (Occ)……………………………………..20

CHAPTER V:- CONCLUSION………………………………………………………………..22

BIBLIOGRAPHY………………………………………………………………………………I

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 OBJECT AND AIM OF THE STUDY

The object of the author is to look into the origin of ombudsman, as in institution. Further,
comprehensive analysis of ombudsman’s functions, rolesand objective will be discussed
along with its functions and role in Insurance Regulatory Development Authority and the
Banking Sector. The aim of the project is to analyse the ombudsman in different spheres,
while concentrating mainly on IRDA and Banking sectors.

SIGNIFICANE AND BENEFIT OF THE STUDY

The project is significant as well as beneficial, as it studies and analyses the institution of
ombudsman, in the present scenario, along with special reference to IRDA and Banking
sectors, which is very pertinent today. Further it is also significant because it also discuss
some case studies.

SCOPE OF THE STUDY

The scope of the study is limited to study of ombudsman, as an institution, in the modern era,
with regard to tis historical background, evolution etc. Further its scope will extend to
analysis of the role of ombudsman in the IRDA and Banking sectors.

REVIEW OF LITERATURE

The literature available on the subject is not ample. The literature under various books,
articles, magazines, web sources is good and reliable. The literature in regard to the historical
background, evolution, origin, there is ample literature. However, literature in regard to, role
of ombudsman in IRDA and Banking Sectors, the literature is very limited.

RESEARCH METHODOLOGY

The author has followed the doctrinal research methodology, by referring to books, journals,
articles, magazines, case laws etc.

HYPOTHESIS

The hypothesis of the author is that, the institution of ombudsman, it plays a very vital role in
various other institutions. In IRDA and Banking sectors, the role of ombudsman is significant
as it keeps check and measures on day to day grievances and dispute settlement.

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 CHAPTER I: OMBUDSMAN IN INDIA

1.1 INTRODUCTION

A democratic system of governance is always preferred to any other system because of

thereverence it attaches to cardinal principles such as ‘rule of law’ and ‘fairness in
administrativeactions’ and due to its equally disapproving approach to arbitrariness &
unreasonable exercise ofpower. In such a system, good governance is vital. However, it can
only be assured if there areelements of accountability and transparency present in the actions
and policies of the government.

In a bureaucratic set up of the governments, every department may be given complaints

regardingvarious actions or inactions by administrative agencies. There will necessarily be
politically delicatematters among these complaints. In light of this issue, the significance of
an impartial grievanceresolving system is definitely crucial to achieve remedies against
arbitrary administrative actions ofthe government and its agencies. This is where the office of
an ombudsman claims limelight.1

Theinstitution came up for the first time in Sweden in the 19th century as a mechanism to
deal withthe abuse of power by government officials. Thereafter, this alternate system of
grievanceredressing grew all over the world, especially after the effects of globalization
started to spreadinternationally transgressing all the boundaries. With globalization, the scale
of operations of everygovernment grew very fast, gradually resulting in increased powers
with the government agencies.The ombudsman is a control mechanism that helps in
restricting administrative excess and ensures fair play in the exercise of administrative
powers.2

1
Robin K. Matsunga, The Ombudsman, National Conference of State Legislature, Louisiana, United States of
America, 1999, viewed on March, 1, 2015.
2
ATM Obaidullah, Democracy and Good Governance Role of Ombudsman, Bangladesh Institute of
Parliamentary Dhaka, 1st Ed., 2001.

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 CHAPTER II: - OMBUDSMAN AND ANALYSIS

2.1 THE EXTRAORDINARINESS OF OMBUDSMAN: A COMPREHENSIVE

ANALYSIS

An ombudsman is usually appointed by the government under a specific statute. However, as

stressed earlier, it has to be attached with significant independence which otherwise will
render the institution futile. Basically, the ombudsman on the basis of a complaint or on a suo
moto basis represents the interests of the people who are aggrieved that their rights have been
violated by any administrative action. Therefore, as it is concerned with the nature of the
exercise of power by administrative authorities, it can be clearly said that as a model, the
ombudsman is a part of administrative law. Its ultimate end is to protect and uphold natural
justice and the rule of law in the state/nation. Coming to the necessity of having such an
institution may be provoked by various situations that may occur in an administrative set up.
Firstly, it is universal that administrative actions affect the lives of citizens. In a huge country
like India with overabundance of people, administrative authorities, and laws and regulations
coupled with complex facts and figures, it is highly probable that public officials may take
decisions based on inappropriate and correct documents. It is either the result of their
unawareness or sheer non-commitment. However, to a certain extent, the administration has
to be discounted for the complexity of systems like that in India. Secondly, delay in decision-
making is one of the most common factors in every government.

It is generally agreed that in a complex administrative organization which is hierarchically

classified, delay is unavoidable. But it cannot be conceded that if the officials put in more
effort and commitment, there would not be any improvement in the situation. Thirdly, it is
accepted that the legislature is not composed of individuals with godly vision who can
provide measures in legislation for all the circumstances that may arise in the future. Also,
unlike the judges of courts of law, administrative officers do not have any case laws or
precedents for making a decision. Therefore, there is a great amount of discretion that is
present in the administrative decision making process. In such situations, it is again highly
probable that the administrative officers may be influenced by their policy notions and faulty
hypothesis, thereby, leading to incorrect decisions. Finally, many public officials are
statutorily given enforcement powers in order to compel the individuals to obey their

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directions. For example, the power to seize an individual’s goods by a Customs Officer in
India is one such power of coercive nature that it can be very well misused.

History has shown that such powers have always been abused everywhere in the world.
These measures need to be controlled to be kept within the limits so that constitutionally
guaranteed rights of citizens are not exploited by the government easily. These circumstances
definitely make an institution like the ombudsman the need of the hour. It cannot be claimed
that the ombudsman can drastically bring back everything into normalcy. In today’s
complicated web of government-citizen relationship, there cannot be an overhaul of any
system. Only improvisations within the system can be practically implemented, provided
there is cooperation from all the wings of the society. Fundamentally, the ombudsman serves
three related purposes:

 Redressing individual grievances

 Improving the quality of administration
 Helping the legislature to supervise the bureaucracy. 3

For the public, the institution of ombudsman is a big relief as the services of looking into the
complaint and taking necessary remedial measures is performed cost free. Apart from that,
the complainant is not affected by the fear of departmental biases that may have occurred if
complaint resolution was in the hands of the administrative authorities itself. Even if a
person’s grievance would not be fully resolved, the related actions may result in an
enhancement in the quality of government actions. This will necessarily result in recreating in
the people, the lost confidence in governments as a protector of citizen rights.

2.2 INDEPENDENCE OF OMBUDSMAN AND ITS RELEVANCE

As mentioned earlier, the crux on which the significance of this institution lies is its
independent nature. The ombudsman is ought to be apolitical so as to impartially act as a
middleman between the government and the citizens. It is also a matter of fact that according
to the primary idea of an ombudsman, this office is not accorded any executive
authority.4Prima facie, even though this deficiency may be thought as reducing the utility of

3
Article on Ombudsman, Encyclopedia Britannica, Vol. 16, 15th Ed. 1986, pp. 960-61
4
Gary Pienaar, The Role of Ombudsman In Fighting Corruption, The 9th International Anti-Corruption
Conference, Durban, South Africa, 1999

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this office, it is not completely true. The lack of executive bonding and its independence
gives the ombudsman a very wide ambit to function. This apparent absence of coercive
power allows greater operational flexibility and informality.5 A related advantage that comes
with this feature of the ombudsman is that it assists in increasing public access to address
complaints with the ombudsman. A public friendly institution of such a nature can really be
utilised to deal with various administrative faults, especially corruption.

2.3 OMBUDSMAN AS A STRATEGY FOR DEALING WITH CORRUPTION

It is a hardened fact of human life that greed and self -preservation are the basic features of
every person’s character. It only varies in its intensity. Apart from that, today’s materialistic
world has reduced into a small island in the sense that people do not think beyond their own
personal interests. These societal and psychological concepts have indirectly led to corruption
and maladministration within the governments at all levels. Political corruption has serious
ramifications. The confidence of citizens in their leaders gets deeply affected due to deep-
rooted corruption.6 No bureaucracy is free from corruption and maladministration.7 In such a
system, it is the common man who is at the receiving end and is rendered helpless.

Corruption takes many forms. In the eyes of the common man, corruption is receiving bribes
in return of some favour by government officials. This interpretation of corruption reflects
only the criminal aspect of this evil. In a broader sense, corruption would include
maladministration by officials without integrity and degradation in the standards of service
delivery by the State. Therefore, the nature of the functions of the ombudsman will
necessarily attract investigation of cases which contain elements of corruption. Considering
the sensitivity of corruption in today’s world, the set of tools that is necessary to combat this
global scourge8 effectively must be dynamic.

It is worthy to consider the other side of the discussion as well. Against the role of
ombudsman in looking into corruption issues, it may be argued that as most of the corruption
cases involve criminal proceedings that necessitate police investigation, the ombudsman is
not the competent authority to handle such matters. It is not denied that the ombudsman shall

5
Ibid.
6
PreetiDileepPoheka, A Study of Ombudsman System in India, Gyan Publishing House, New Delhi, 2010.
7
Ibid.
8
Supra Note 3.

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not interfere with the normal proceedings under various anti-corruption statutes and general
criminal laws of the country. Definitely, it would not be in the interests of democracy and its
principles to allow the ombudsman a huge ambit that allows him to encroach into the
jurisdiction of other government and constitutional authorities. However, in this context, we
are discussing about the broader sense of corruption. As mentioned, morality and ethics with
respect to administration are also covered under the ambit of corruption. In that light, what is
suggested is that the ombudsman may inspect issues that fall into such imprecise area of
ethical standards of administration and recommend steps to correct those defective actions or
policies.

It is important to remember that corruption undermines democracy because it disregards the

will of people for securing the interests of just a few individuals. Unfortunately, corruption
alsoperpetuates discrimination as it results in unfair advantage and undeserved benefit.9

2.4 INCIDENTS OF COMPLAINTS FILED BEFORE OMBUDSMAN

The Banking Ombudsman (BO) handled 75,183 complaints, which include 4,642 complaints
brought from previous year. Out of the total 75,183, it found 56% or 39,400 complaints
maintainable. However, even in maintainable complaints, it rejected almost 49% or 19,205
complaints while passing awards in just 1% or 312 cases and resolved 50% or 19,833 through
mutual settlement. This also highlights the need to have certain norms that can make bank
staff accountable for the suffering of customers.

According to a Reserve Bank of India (RBI) report on BO scheme for FY13,10 complaints
related with failure to meet commitments, non-observance of fair practices code or BCSBI
codes were a major ground of complaint. The BO received 18,130 complaints or 26% of the
complaints received during the year.

"A large volume of complaints on this ground indicates lack of awareness about these Codes
among bank staff as also the customers. Banks need to devote special attention to this aspect
and provide ongoing training to their staff on the Codes," the report said.

9
Ibid.
10

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 CHAPTER III: OMBUDSMAN & INSTITUTIONS

3.1 OMBUDSMAN IN INSURANCE REGULATORY AND DEVELOPMENT

AUTHORITY OF INIDA

The institution of Insurance Ombudsman was created by a Government of India,11 with the
purpose of quick disposal of the grievances of the insured customers and to mitigate their
problems involved in redressal of those grievances. The institution is of great importance and
relevance for the protection of interests of policy holders and also in building their confidence
in the system. The institution has helped to generate and sustain the faith and confidence
amongst the consumers and insurers.12

Appointment of Insurance Ombudsman

The governing body of insurance council, which comprises of members of Life Insurance
Council and General Insurance Council,13 issues orders of appointment of the insurance
Ombudsman on the recommendations of the committee comprising of:

 Chairman, Insurance Regulatory and Development Authority of India,

 Chairman, Life Insurance Corporation of India,
 Chairman, General Insurance Council, and
 A representative of the Central Government.

The governing body of insurance council consists of representatives of insurance

companies.14

Eligibility

Ombudsman are drawn from Insurance Industry, Civil Services and Judicial Services.

11
Notification Dated November 11th, 1998
12
Available at
https://www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo233&mid=7.1
13
It is formed or constituted under Section 40C, Insurance Act, 1938.
14
Ibid.

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Terms of office

An insurance Ombudsman is appointed for a term of three years or till the incumbent attains
the age of sixty five years, whichever is earlier. Re-appointment is not permitted.

Territorial jurisdiction of Ombudsman

The governing body has appointed twelve Ombudsman across the country allotting them
different geographical areas as their areas of jurisdiction. The Ombudsman may hold sitting
at various places within their area of jurisdiction in order to expedite disposal of complaints.
The offices of the twelve insurance Ombudsmen are located at (1) Bhopal, (2) Bhubaneswar,
(3) Cochin, (4) Guwahati, (5) Chandigarh, (6) New Delhi, (7) Chennai, (8) Kolkata, (9)
Ahmedabad, (10) Lucknow, (11) Mumbai and (12) Hyderabad. The areas of jurisdiction of
each Ombudsman has been mentioned in the list of Ombudsmen.

Office Management

The Ombudsman has a secretarial staff provided to him by the insurance council to assist him
in discharging his duties. The total expenses on Ombudsman and his staff are incurred by the
insurance companies who are members of the insurance council in such proportion as may be
decided by the governing body.

Removal from office

An Ombudsman may be removed from service for gross misconduct committed by him
during his term of office. The governing body may appoint such person as it thinks fit to
conduct enquiry in relation to misconduct of the Ombudsman. All enquiries on misconduct
will be sent to Insurance Regulatory and Development Authority which may take a decision
as to the proposed action to be taken against the Ombudsman. On recommendations of the
IRDA, the Governing Body may terminate his services, in case he is found guilty.

Power of Ombudsman

An Insurance Ombudsman has two types of functions to perform

1. conciliation,
2. Award making. The insurance ombudsman is empowered to receive and consider
complaints in respect of personal lines of insurance from any person who has any
grievance against an insurer.

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 The complaint may relate to any grievance against the insurer i.e.

a. Any partial or total repudiation of claims by the insurance companies

b. Dispute with regard to premium paid or payable in terms of the policy,
c. Dispute on the legal construction of the policy wordings in case such dispute
relates to claims;
d. Delay in settlement of claims and
e. Non-issuance of any insurance document to customers after receipt of premium.

Ombudsman's powers is restricted to insurance contracts of value not exceeding Rs. 20 lakhs.
The insurance companies are required to honour the awards passed by an Insurance
Ombudsman within three months.

Manner of Lodging Complaint

The complaint by an aggrieved person has to be in writing, and addressed to the insurance
Ombudsman of the jurisdiction under which the office of the insurer falls. The complaint can
also be lodged through the legal heirs of the insured. Before lodging a complaint, the
following criteria must be met:

 The complainant should have made a representation to the insurer named in the
complaint and the insurer either should have rejected the complaint or the
complainant have not received any reply within a period of one month after the
concerned insurer has received his complaint or he is not satisfied with the reply of
the insurer.
 The complaint is not made later than one year after the insurer had replied.
 The same complaint on the subject should not be pending with before any court,
consumer forum or arbitrator.

The Settlement Process

The settlement procedure is divided into three steps, which are mention below:

Recommendations of the Ombudsman

When a complaint is settled through the mediation of the Ombudsman, he shall make the
recommendations which he thinks fair in the circumstances of the case. Such a
recommendation shall be made not later than one month and copies of the same sent to

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complainant and the insurance company concerned. If the complainant accepts
recommendations, he will send a communication in writing within 15 days of the date of
receipt accepting the settlement.

Award

If the settlement by recommendation does not resolve the dispute,15 the ombudsman shall
pass an award within a period of 03 months from the receipt of the complaint. The awards
shall be speaking awards in nature, will all the details.16 The award is binding upon the
insurance company but not upon the policy holder.17 At the same it is also pertinent that an
ombudsman can also make an ex gratia payment.18

However, if the policy holder is not satisfied with the award of the Ombudsman, he can
approach other venues like Consumer Forums and Court of Law for redressal of his
grievances.As per the policy-holder's protection regulations, every insurer shall inform the
policy holder along with the policy document in respect of the insurance Ombudsman in
whose jurisdiction his office falls for the purpose of grievances redressal arising if any
subsequently.

Once the Award Is Passed

The complainanthad to accept the award in writing and the insurance company has to be
informed of it within 30 days andThe Insurance Company has to comply with the award in 15
days after that.

Presently, a steady increase in number of complaints received by various Ombudsman makes

it apparent that the policy-holders are reposing their confidence in the institution of Insurance
Ombudsman.

3.2 BANKING

An ombudsman is a person who has been appointed to look into complaints about an
organization. Using an ombudsman is a way of trying to resolve a complaint without going to
court. Banking Ombudsman is a quasi-judicial authority functioning under India's Banking
Ombudsman Scheme, and the authority was created pursuant to the a decision by the

15
Available at http://www.policyholder.gov.in/Ombudsman.aspx. Last visited March 07, 2015.
16
Supra Note 10.
17
Supra Note 13.
18
Ibid.

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Government of India to enable resolution of complaints of customers of banks relating to
certain services rendered by the banks.19

The institution of Banking Ombudsman was introduced in 1995 in India, through the Banking
Ombudsman Scheme 1995. The Scheme was implemented through direction issued by the
Reserve Bank in terms of Section 35A of the Banking Regulation Act, 1949,20 to protect the
banking in public interest and in the interest of banking policy. It was a mechanism to look
into the banking customer grievances. After the review of the scheme, a new scheme came
into picture in 2002 and further in 2006. Over the past five years, around 36,000 complaints
have been dealt by the Banking Ombudsmen.

In the wake of the failure in the efficient services of the banks, the RBI brought the Banking
Ombudsman Scheme for the prompt, efficient and courteous services and also to protect the
rights of the customers. The Banking Ombudsman is an official authority to investigate the
complaint from the customers and address the complaint and thereby bring the solution
among the aggrieved parties. So the Banking Ombudsman plays the role of a mediator and
serves the purpose of reconciliation.

Appointment and Tenure

The Banking Ombudsman has been defined under clause 4 of the Banking Ombudsman
Scheme, 2006. Clause 4 lays down that:

The Reserve Bank may appoint one or more of its officers in the rank of Chief
General Manager or General Manager to be known as Banking Ombudsmen
to carry out the functions entrusted to them by or under the Scheme.

The appointment of Banking Ombudsman under the above Clause may be made for a period
not exceeding three years at a time.21

Provisions of the Scheme:

The Banking Ombudsman Scheme 2006 provides a wide scope and extent to the schemes of
1995 and 2002.22 Many new changes have been made in the old scheme. The most essential
provisions of the scheme are as follows:

19
Pragya Mishra, A Brief Analysis Of The Banking Ombudsman Scheme In India,
20
Act No. 10 of 1949.
21
Available at http://www.manupatrafast.com/articles/PopOpenArticle.aspx?ID=42b81d8e-b2ae-4c91-8a0c-
085a3cd84eda&txtsearch=Subject%20Banking#f13. Last visited March 20th, 2015.

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Appointment and Tenure:

Section 4 of the scheme provides for the appointment of one or more of the officers of the
Reserve Bank of India of the rank of Chief General Manager or General Manager known as
Banking Ombudsmen to carry out the functions entrusted to them by or under the Scheme.
Their tenure would not be more than a period of five years.

Location of the office:

Generally, the office of the banking ombudsman is located at the place specified by the
Reserve Bank of India. For the expedite disposal of the complaints, a banking ombudsman
may hold office at such places, under his jurisdiction which he deems fit for the disposal of
the complaints.23

Powers and Jurisdictions:

The scheme lays down the following provisions24 dealing with powers and functions of the
Banking Ombudsman

Authority:

The authority of each Banking Ombudsman extends to the territorial limits entailed by the
Reserve Bank of India.The Banking Ombudsman has power to receive and consider
complaints relating to the deficiencies in banking or other services filed on the grounds of
complaints. He has to facilitate their satisfaction or settlement by agreement or through
conciliation and mediation between the bank concerned and the aggrieved parties or by
passing an Award in accordance with the Scheme. He has the power to exercises general
powers of superintendence and control over his Office and is responsible for the conduct of
business thereat.

The Office of the Banking Ombudsman draws up an annual budget for itself in consultation
with Reserve Bank and exercises the powers of expenditure within the approved budget on
the lines of Reserve Bank of India Expenditure Rules, 2005.The Banking Ombudsman has to
send to the Governor, Reserve Bank, a report, as on 30th June every year, containing a general
review of the activities of his Office during the preceding financial year. He has to furnish

22
Supra Note 20.
23
Clause 5 of the Banking Ombudsman Scheme, 2006
24
Clause 7 of the Banking Ombudsman Scheme, 2006

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such other information as the Reserve Bank may direct and the Reserve Bank may, if it
considers necessary in the public interest so to do, publish the report and the information
received from the Banking Ombudsman in such consolidated form or otherwise as it deems
fit.

The case Balla Rama Rao vs. the Office of Banking Ombudsman,25 relates to the issue of
jurisdiction of a banking ombudsman. In this case, a house in the name of B. Narayanama
was given on lease to the bank in 1982. Subsequently, the lady died. The Bank did not pay
rent from June 1992 to Feb. 1997. Balla Ramarao, the appellant approached the bank. Bank
immediately paid around Rs. 3 lacs. Balla contended that the interest should also be paid for
the period of 1992 to 1997. The bank refused to pay interest. The appellant approached to the
banking ombudsman. But he rejected the complaint, holding no merit in the case as it was
outside the jurisdiction of the banking ombudsman. Balla approached to the Andhra Pradesh
high court. The high court rejected the appeal, finding that it was outside the jurisdiction of
the banking ombudsman.

Grounds of Complaints:

Clause 8 of the scheme lays down the following grounds on which a banking customer may
seek the redressal from the banking ombudsman:

1. Non-payment or inordinate delay in the payment or collection of cheques, drafts, bills,

etc.;
2. Non-acceptance, without sufficient cause, of small denomination notes tendered for
any purpose, and for charging of commission for this service;
3. Non-acceptance, without sufficient cause, of coins tendered and for charging of
commission for this service;
4. Non-payment or delay in payment of inward remittances;
5. Failure to issue or delay in issue, of drafts, pay orders or bankers' cheques;
6. Non-adherence to prescribed working hours;
7. Failure to honour guarantee or letter of credit commitments;
8. Failure to provide or delay in providing a banking facility (other than loans and
advances) promised in writing by a bank or its direct selling agents;

25
2003 117 Comp Cas 201 AP

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 9. Delays, non-credit of proceeds to parties' accounts, non-payment of deposit or non-
observance of the Reserve Bank directives, if any, applicable to rate of interest on
deposits in any savings, current or other account maintained with a bank
10. Delays in receipt of export proceeds, handling of export bills, collection of bills etc.,
for exporters provided the said complaints pertain to the bank's operations in India;
11. Refusal to open deposit accounts without any valid reason for refusal;
12. Levying of charges without adequate prior notice to the customer;26
13. Non-adherence by the bank or its subsidiaries to the instructions of Reserve Bank on
ATM/debit card operations or credit card operations;
14. Non-disbursement or delay in disbursement of pension to the extent the grievance can
be attributed to the action on the part of the bank concerned, (but not with regard to its
employees);
15. Refusal to accept or delay in accepting payment towards taxes, as required by Reserve
Bank/Government;
16. Refusal to issue or delay in issuing, or failure to service or delay in servicing or
redemption of Government securities;
17. Forced closure of deposit accounts without due notice or without sufficient reason;
18. Refusal to close or delay in closing the accounts;
19. Non-adherence to the fair practices code as adopted by the bank; and

Any other matter relating to the violation of the directives issued by the Reserve Bank in
relation to banking or other services.27

Procedure for Filing Complaint:

Clause 9 of the Banking Ombudsman Scheme, 2006 lays down the procedure to file a
complaint before the Banking Ombudsman as well as the conditions in which a complainant
cannot approach the banking ombudsman.

Any person who has a grievance against a bank on any one or more of the grounds mentioned
in the Scheme may, himself or through his authorized representative (other than an advocate),
make a complaint to the Banking Ombudsman within whose jurisdiction the branch or office
of the bank complained against is located. But the complaint arising out of the operations of
credit cards, has to be filed before the Banking Ombudsman within whose territorial

26
See Clause 8, Banking Ombudsman Scheme, 2006.
27
See Clause 8, Banking Ombudsman Scheme, 2006.

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jurisdiction the billing address of the card holder is located and not the place where the bank
concerned or the credit card processing unit is located.

The complaint in writing has to be duly signed by the complainant or his authorized
representative.28 The complainant has to show the copies of the documents, which he
proposes to rely upon and a declaration under Clause 9(3) of the scheme. He has to mention
the following things in the complaint:

 the name and the address of the complainant,

 the name and address of the branch or office of the bank against which the complaint
is made,
 the facts giving rise to the complaint,
 the nature and extent of the loss caused to the complainant, and
 The relief sought for.

The Banking Ombudsman also entertains complaints covered by this Scheme received by
Central Government or Reserve Bank and forwarded to him for disposal. But the following
conditions have to be fulfilled for making a complaint before the Banking Ombudsman:

 Before making a complaint to the Banking Ombudsman, the complainant had to,
make a written representation to the bank. If the bank rejects the complaint or the
complainant had not received any reply within a period of one month after the bank
received his representation or the complainant is not satisfied with the reply given to
him by the bank.
 The complaint should be made before one year, from the day the complainant has
received the reply of the bank to his representation or, where no reply is received,
before one year and one month from the date of the representation to the bank;
 The complaint does not touch upon matter which was settled or dealt with on merits
by the Banking Ombudsman in any previous proceedings whether or not received
from the same complainant or along with one or more complainants or one or more of
the parties concerned with the subject matter;
 The complaint does not pertain to the same subject matter, for which any proceedings
before any court, tribunal or arbitrator or any other forum is pending or a decree or
Award or order has been passed by any such court, tribunal, arbitrator or forum;

28
See Clause 9, Banking Ombudsman Scheme, 2006

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  The complaint is not frivolous or vexatious in nature; and
 The complaint is made before the expiry of the period of limitation prescribed under
the Indian Limitation Act, 196329 for such claims.

Appeal:

If the customer is not satisfied with the award of the Banking Ombudsman, he can approach
to the RBI, to the appellate authority called Deputy Governor. Still he is not satisfied, after
approaching to the RBI, he can go to the High Court.30

29
Act No. 36 of 1963.
30
See Clause 14, Banking Ombudsman Scheme, 2006

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 Chapter IV: OMBUDSMAN AND ITS PROVISIONS IN OTHER COUNTRIES

4.1 OMBUDSMAN FOR BANKING SERVICES AND INVESTMENTS (OBSI)

The OBSI was founded in 1996 in Canada as the Canadian Banking Ombudsman to review
complaints by small business against the chartered banks.31Today, there are more than 600
participating firms across the banking services and investment sectors.32 Any regulated firm
of the banking services and investment fields is eligible to join OBSI. It resolves disputes
between participating banking services and investment firms and their customers if they are
not able to solve them on their own.

4.2 SWISS BANKING OMBUDSMAN

The Swiss Banking Ombudsman deals with specific complaints which are raised against
banks based in Switzerland. The institution took up its duties in April 1993. Since then it
deals with an increasing number of enquiries (currently about 1,400 a year). The office of the
Swiss Banking Ombudsman is supported by the Swiss Banking Ombudsman Foundation,
established by the Swiss Bankers Association. As per the annual report of 2011, a total of
1889 cases were submitted, which represents a small decrease as against 2010.33

4.3 FINANCIAL OMBUDSMAN SERVICE.

This is the institution based in the UK, which deals with the consumer complaints regarding
banking services. It deals with financial complaints related to banking, insurance, pensions,
loans, stocks, shares etc.In the annual report for the financial year 2010-11, it was found that
the number of banking complaints fell by 9%.34

4.4 THE OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC):

It is the institution of the USA, which charters, regulates, and supervises all national banks
and federal savings associations. It also supervises the Federal branches and agencies of
foreign banks35. Its function also includes conducting onsite reviews of national banks and

31
Website of OBSI, http://www.obsi.ca/en/about-us/history there are more than 600 participating firms across
the banking services and investment sectors
32
Available at http://www.obsi.ca/en/about-us. Last visited March 20th, 2015.
33
Annual Report of 2011, p.2, available at
http://www.bankingombudsman.ch/fileadmin/download/pdf/jahresberichte/bom_Summary%20JB2011_EN .pdf
34
Website of Financial Ombudsman Service, http://www.financial-ombudsman.org.uk/about/ind. Last visited
March 20th, 2015
35
Website of the Office of the Comptroller of the Currency (OCC),
http://www.helpwithmybank.gov/about/index-about.html Last visited March 19th, 2015.

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federal savings associations (or federal thrifts) and providing sustained supervision of their
operations. In regulating national banks and federal savings associations, the OCC has the
power to examine the banks and thrifts, approve or deny applications for
newcharters,branches, capital, or other changes in corporate or banking structure, take
supervisory actions.36

36
Ibid.

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 CHAPTER V:CONCLUSION

To conclude, it is clear that the ombudsman is not a lawmaker or a draconian authority, which
strikes down every action of the administrative agencies. Positively, the ombudsman is a
citizen friendly institution to ensure that government and its agencies work according to law,
justice and equity. An ombudsman may not be necessary for the influential or powerful, but
is extremely relevant as an alternate, or a final, recourse for those individual citizens who do
not have powerful friends to intervene on their behalf, or who do not have sufficient funds or
time to contest an administrative decision and who do not have sufficient knowledge about
the administrative system to cope with it.

All said and done about the role of ombudsman to fight corruption and correct other
malpractices within the administrative authorities, it is worthy to note what Judge Learned
Hand of the United States of America said in his book ‘The Spirit of Liberty’: “I often
wonder whether we do not rest our hopes too much upon constitutions, upon laws and upon
courts. These are false hopes, believe me. They are false hopes. Liberty lies in the hearts of
men and women; when it dies there, no constitution, no law, no court can save it; no
constitution, no law, no court, can even do much to help it.”

At the end of the day, it all depends on the mind-set of individuals. Institutions like that of
ombudsman can only be rendered useful if right set of people are willingly ready to put in
their best efforts to correct the imperfections in our system.

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 BIBLIOGRAPHY

ARTICLES AND BOOKS

1. Article on Ombudsman, Encyclopaedia Britannica, Vol. 16, 15th Ed. 1986, pp. 960-
61

2. ATM Obaidullah, Democracy and Good Governance Role of Ombudsman,

Bangladesh Institute of Parliamentary Dhaka, 1st Ed., 2001.

3. Gary Pienaar, The Role of Ombudsman In Fighting Corruption, The 9th International
Anti-Corruption Conference, Durban, South Africa, 1999

4. Pragya Mishra, A Brief Analysis Of The Banking Ombudsman Scheme In India,

Manupatra Article

5. PreetiDileepPoheka, A Study of Ombudsman System in India, Gyan Publishing

House, New Delhi, 2010.

6. Robin K. Matsunga, The Ombudsman, National Conference of State Legislature,

Louisiana, United States of America, 1999, viewed on March, 1, 2015.

WEBSOURCES

1. http://www.manupatrafast.com/articles/PopOpenArticle.aspx?ID=42b81d8e-b2ae-
4c91-8a0c-085a3cd84eda&txtsearch=Subject:%20Banking#f13.

2. http://www.obsi.ca/en/about-us.

3. http://www.policyholder.gov.in/Ombudsman.aspx

4. https://www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo2
33&mid=7.1

CASE LAW

1. Balla Rama Rao v. the Office of Banking Ombudsman 2003 117 Comp Cas 201 AP

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