Previous Year Question
With reference to the institution of Banking Ombudsman in India, which one of the statements is not correct?
The Banking Ombudsman is appointed by the Reserve Bank of India.
The Banking Ombudsman can consider complaints from non-resident Indians having accounts in India.
The orders passed by the Banking Ombudsman are final and binding on the parties concerned.
The service provided by the Banking Ombudsman is free of any fee.
Correct Answer: C
Detailed Solution
Such complaints were governed by the Banking Ombudsman Scheme, 2006. Statement (c) is incorrect because an appellate remedy was available against an Award of the Banking Ombudsman. Therefore, such decisions were not invariably final without any possibility of appeal.
Statement-wise examination:
Statement (a) is correct: Banking Ombudsmen were appointed by the Reserve Bank of India. The RBI could appoint officers in the rank of Chief General Manager or General Manager as Banking Ombudsmen.
Statement (b) is correct: Non-resident Indians could lodge complaints concerning their bank accounts maintained in India, provided the complaint related to a banking service covered under the Scheme.
Statement (c) is incorrect: An eligible aggrieved party could appeal against an Award before the Appellate Authority, subject to the prescribed conditions, within 30 days. Therefore, every order of the Banking Ombudsman could not be described as absolutely final.
Statement (d) is correct: No fee was charged to a complainant for filing or pursuing a complaint under the Banking Ombudsman mechanism.
The Banking Ombudsman initially attempted to resolve a complaint through settlement or mediation. If a settlement could not be reached, the Ombudsman could pass an Award in accordance with the Scheme. Once the complainant accepted the Award and communicated the acceptance to the bank, compliance became obligatory for the bank, subject to the appellate provisions of the Scheme.
Present position: The Banking Ombudsman Scheme, 2006 and two other Ombudsman schemes were integrated into the Reserve Bank–Integrated Ombudsman Scheme, 2021, effective from November 12, 2021. The present question, however, must be answered according to the scheme prevailing in 2010.