Bank problems? Approach the Banking Ombudsman, it helps
Moneylife Digital Team 06 March 2012

In many cases like wrong reporting to CIBIL, upgrading credit card without consent, mis-selling and blank clause in loan agreement by banks, the Ombudsman has ruled in favour of the customer

Banking customers continue to run from pillar to post to resolve their grievances, however, many of them fail to approach the Banking Ombudsman, who over the last year has ruled in customers’ favour on several occasions. According to the Reserve Bank of India’s (RBI) annual report on Banking Ombudsman (BO), during 2010-2011, total number of cases registered with the BO fell by 10% to 71,274 cases from 79,266 cases a year ago.

Interestingly, of the total complaints received, 31% belonged to the State Bank of India (SBI) group, followed by 29% of other nationalised banks. While complaints relating ATM, debit and credit cards continue to dominate the list, the report has explained some of the interesting cases dealt by the BO in favour of the customers.

Moneylife brings you some of these cases

Wrong reporting to CIBIL

Pinky (named changed) was not given a home loan as her CIBIL score was not good. She had made full and final settlement of her outstanding dues on her earlier personal loan. However, she learnt that the payment made was credited to the usual account and the account was not closed. This resulted in accumulation of charges and she was denied the home loan. Despite complaining to the bank, the issue remained unresolved and she approached BO. The BO observed that the bank made the outstanding amount as ‘Nil’ but updated CIBIL as ‘Settled’. It held bank guilty of deficiency in service and ordered to pay Pinky a compensation of Rs5,000 as expenses. The BO observed that since a CIBIL report is crucial parameter in sanctioning loans, banks should regularly update it.

Upgrading credit cards without consent

Mr Nair (name changed) a senior citizen is a credit card holder. Seeing a bank’s offer on platinum credit cards, he asked the bank to send him the related literature which will allow him to take a buying decision. However the bank, without his consent, sends him the platinum card along with the literature. It later sends him a bill of around Rs5,500. Mr Nair was not interested in this card and requested the bank to cancel it. The bank, instead of resolving the issue, harassed him for the outstanding amount on the platinum card. Mr Nair approached the BO. The ombudsman directed the bank to reverse the card fees and related charges and confirm Nil on the card account. It also asked the bank covert the platinum card into a lifetime free card.

Cheques dropped in drop box

To avoid the long rush at the counter to deposit his cheque, Rahul (name changed) dropped it in bank’s drop box. Surprisingly, his cheque was not credited and on inquiring it was revealed that the bank did not receive it. Later he learns that the cheque was paid to some other bank. On complaining to the other bank, he finds that a new account was opened in his name and the amount was withdrawn soon after it was credited. He complained to the BO, who found that the bank, which had opened the account, was lax in monitoring the account and the KYC (know your customer) norms and the account holder was not traceable. Rahul was paid his cheque amount by the other bank on the direction of the BO.


Ashok (name changed) bough two insurance policies, each of Rs50,000 from his bank. Later he realized that he has to pay a premium of Rs50,000 on half-yearly basis. Considering his weak financial position, he approached the bank, which in turn asked him to contact the insurance company.

The insurance company assured Ashok that nothing was payable on these polices. But later when he asked them to cancel his polices, he was informed that the policies have lapsed due to non-payment of premiums and no amount is payable to him. The matter went to BO. Representatives of the insurance company and bank’s branch manger were present. The insurance company argued that they had sent repeated reminders to the policyholder on premium payment but were unable to produce any document. Meanwhile, the bank manager confirmed that he had sold the policy on the condition that it required one-time payment as explained by the insurance company. The BO observed that policy was sold to Ashok without even considering his financial status and education level and insurance company did not produce any evidence. The BO concluded that the company mis-sold insurance policy and bank was party to it. The company agreed to refund the collected amount of Rs1 lakh.

Blank clause in the loan agreement

An education loan was sanctioned to Veena (name changed) against the collateral of JDA patta of a property by the bank. Veena wanted to construct house on the plot and thought of foreclosing the loan. However bank insisted on the payment of foreclosure charge of Rs38,960. Veena paid the said amount but also complained to the BO office. While hearing the matter, the BO found that that the relevant clause in the loan agreement was left blank. It directed the bank to refund the foreclosure charges.

1 decade ago
-----------Harassment by Royal Bank of Scotland, New Delhi-------------- I am a current account customer and my account was put on freeze without any reason & my cheque was refused payment, when I contested I was told the freeze will be removed within 48 hours till then none of your cheque will not be paid. This has become a common practice of Royal Bank of Scotland in INDIA. Some strong action should be taken and this RBS bank should be penalised by RBI/Govt. of India.
arun adalja
1 decade ago
nowdays i am getting sms for week end balance information from psu bank namely indian bank but other psu banks such as sbi and bank of india is not sending the same why suchthings?if it is as per rbi s guidlines then all psu bank must send.please share if you have this problem.
secondly icici bank allows to deposit cash in non home branch without any charge while psu are asking charges if you deposit cash in non home branch but withdrawl is alloweded free.why such things?unable to understand logic.
P M Ravindran
1 decade ago
In my own case I had a good experience with the BO long back because just by reporting the deficiency in service to the BO the bank resolved the issue. But my latest experience has been negative. This was in 2010. I had requested for some Re 1 coins from a SBI branch. I was told that the cash officer had not taken them out from the strong room. I complained to the branch manager who was not helpful either. I complained to the BO who refused to intervene! The e mail I had sent to the BO subsequently is reproduced at the end for the information of the readers.

Yes, this comment would be incomplete without stating that there have been allegations of the bank giving the coins in bulk to traders (with or without kickbacks?) at the cost of individual customers.

to [email protected]

date Fri, Aug 20, 2010 at 6:45 AM
subject Complaint NoA/14379/SBI/I

Refer your letter No OBO/776/14379/2009-10 dated 8/8/10.

In this context your attention is invited to para 8(1)(g), (r), (s) and (u) of the Banking Ombudsman Scheme 2006 which states as follows:

(g) 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

(r) non-adherence to the fair practices code as adopted by the bank;

(s)non-adherence to the provisions of the Code of Bank's
Commitments to Customers issued by Banking Codes and Standards
Board of India and as adopted by the bank ;

(u) any other matter relating to the violation of the directives issued by
the Reserve Bank in relation to banking or other services.

The crux of my complaint was non-issue of coins and non-effective action taken by the authorities while addressing the complaint.

It is ridiculous that the Ombudsman has abdicated his/her responsibility in such an obnoxious/idiotic manner.

Further it goes without saying that any complaint against any service provider will invariably be due to incompetance/indifference/misbehaviour of a member of the staff of the service provider. So, if 'complaint against staff' doesn't come under the purview of the Banking Ombudsman Scheme 2006, then it is sheer waste of public money to have the institution of the Banking Ombudsman itself.

Parminder Pal Singh
1 decade ago
i was drawn the amount 1000rs from ATM(united bank of india ) but amount was not recived however balance is deduct from my account. i contact to my home branch but they redirect to me on sbi helpline but each time getting busy & call not connected on helpline. kindly resolve the issue.
Replied to Parminder Pal Singh comment 1 decade ago
First thing you must do is to report this to your branch, in writing. The bank is supposed to reimburse within 7 (working) days, as per RBI regulation. If the reimbursement still does not happen after follow ups with branch, then write to their Nodal Officer and if you still fail here to get your reimbursement, then contact BO.
Deepak R Khemani
1 decade ago
It certainly helps and really fast, I had an issue with ICICI Bank a few years ago on charges on non maintenance of minimum balance on a ZERO balance account and was made to run from pillar to post to no avail, a single email to the ombudsman resulted in ICICI Bank calling me apologizing and reversing all charges, The account was immediately closed and have had no banking relationship with ICICI since.
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