Understanding the Rejection Criteria for Complaints by the Banking Ombudsman

The Banking Ombudsman is one of the most accessible and cost-free avenues available to bank customers in India for resolving grievances. Established under the Banking Ombudsman Scheme, 2006 and later consolidated under the Reserve Bank – Integrated Ombudsman Scheme, 2021 (RB-IOS, 2021), this mechanism was designed to offer a quick, informal, and inexpensive route to redress. But the Ombudsman is not a court of law, and it does not function like one. It operates within a defined procedural framework – which means not every complaint that walks in through the door is eligible to walk out with a resolution. Understanding when and why the Ombudsman can reject a complaint is crucial for any banking customer or law student studying grievance redressal mechanisms.

The Ombudsman’s role: quick resolution, not lengthy litigation 🔗

The Banking Ombudsman is not equipped – nor intended – to replace civil courts or consumer forums. Its strength lies in providing speedy, cost-effective, and informal redressal for routine banking grievances: failed transactions, unauthorised charges, delayed remittances, and similar service deficiencies. The moment a complaint crosses the boundaries of this streamlined framework – whether in terms of monetary scale, evidentiary complexity, or procedural compliance – the Ombudsman has the authority to step back and reject it. This is not a failure of the system; it is the system working as intended.

Grounds for rejection under the Banking Ombudsman Scheme 🔗

Under Clause 13 of the Banking Ombudsman Scheme, 2006, the Ombudsman may reject a complaint at any stage – not just at the time of filing – if certain conditions are met. The scheme explicitly lists the grounds on which this power can be exercised. These grounds carry forward in substance under the RB-IOS, 2021 under Clause 16 as well.

Not on the prescribed grounds of complaint 🔗

The first and most fundamental basis for rejection is that the complaint simply does not fall within the recognised grounds of grievance as specified under Clause 8 of the Banking Ombudsman Scheme. These grounds include issues like non-payment or delay in payment of cheques, unauthorised debits, failure to issue a passbook, non-compliance with RBI directives on interest rates, and similar service failures. If a customer’s complaint relates to a matter outside these listed categories – for instance, a purely commercial dispute about a bank’s business decision – the Ombudsman will not entertain it. Under RB-IOS, 2021, the approach is slightly broader: the ground is now defined as any deficiency in service, but there remains a list of exclusions that function similarly.

Beyond the pecuniary jurisdiction (compensation limit) 🔗

One of the most practically significant grounds for rejection is when the compensation sought exceeds the Ombudsman’s award power. Under the Banking Ombudsman Scheme (as amended up to July 2017), the maximum award that the Ombudsman can pass is the actual loss suffered or ₹20 lakh, whichever is lower. An additional compensation of up to ₹1 lakh may be awarded for mental agony and harassment. Under RB-IOS, 2021, the Ombudsman similarly cannot award compensation beyond ₹20 lakh for consequential loss.

If the complainant is seeking a sum that goes beyond this ceiling, the complaint is beyond the Ombudsman’s pecuniary jurisdiction and can be rejected. In such cases, the appropriate forum would be a civil court or the Consumer Disputes Redressal Commission under the Consumer Protection Act, 2019, where no such monetary cap applies. This rejection is not arbitrary – it reflects the Ombudsman’s limited mandate as a summary redressal body.

Requiring elaborate documentary and oral evidence 🔗

Perhaps the most conceptually important ground of rejection is when a complaint requires consideration of elaborate documentary and oral evidence and the proceedings before the Ombudsman are not appropriate for its adjudication. This ground is expressly listed under Clause 13(d) of the Banking Ombudsman Scheme, 2006, and mirrors Clause 16(2)(e) of RB-IOS, 2021.

The Ombudsman’s proceedings are summary in nature. There are no full trials, no extensive cross-examination of witnesses, no prolonged examination of voluminous financial records. The Ombudsman promotes settlement primarily through conciliation and mediation, and where that fails, passes an award based on available records and the principles of banking law. When a dispute is so factually complex that it cannot be justly resolved without a detailed examination of competing evidence – such as a complicated fraud allegation involving multiple parties, a disputed large loan disbursement with conflicting documentation, or a multi-party financial transaction – the Ombudsman is simply not the right forum. Forcing such matters through an informal mechanism could lead to injustice. The appropriate recourse in these cases is a court of civil jurisdiction or a Debt Recovery Tribunal, depending on the nature of the dispute.

Without sufficient cause 🔗

A complaint may also be rejected if it is frivolous, vexatious, or without sufficient cause. This protects the system from being misused to harass banks or to file complaints with no genuine grievance at the core. The Ombudsman exercises discretion here, and a complaint that is clearly lacking in substance or is filed merely to cause inconvenience will not proceed.

Not pursued with reasonable diligence 🔗

Even after a complaint is filed, the complainant has a responsibility to actively pursue it. If the complainant does not respond to queries, fails to submit required documents, or becomes unresponsive during the process, the Ombudsman can treat the complaint as abandoned and reject it. This condition ensures that the Ombudsman’s office is not burdened with stale or inactive matters.

No financial loss, damage, or inconvenience 🔗

The Ombudsman’s function is remedial. If the facts of the case reveal that the complainant has suffered no actual financial loss, damage, or inconvenience, there is nothing to remedy, and the complaint may be rejected on this ground as well. Under RB-IOS, 2021, this is stated as: if in the opinion of the Ombudsman there is no financial loss or damage, or inconvenience caused to the complainant, the complaint does not proceed.

Non-maintainable complaints: rejected before they reach the Ombudsman 🔗

It is important to distinguish the grounds for rejection by the Ombudsman from complaints that are declared non-maintainable at the initial stage. Under Clause 10 of RB-IOS, 2021, certain complaints are filtered out at the Centralised Receipt and Processing Centre (CRPC) itself because they fail basic eligibility criteria:

The complainant must first approach the bank (the Regulated Entity) with a written complaint. If no written complaint was made to the bank, or if fewer than 30 days have passed since doing so without a response, the complaint to the Ombudsman will not be maintainable. Similarly, a complaint filed more than one year after receiving the bank’s reply – or more than one year and 30 days after the date of the original complaint if no reply was received – will be time-barred. Complaints already settled by the Ombudsman in a previous proceeding, or matters pending before any court or tribunal, are also non-maintainable.

What happens after rejection: the appeal route 🔗

A rejection by the Ombudsman is not necessarily the end of the road. Under RB-IOS, 2021, a complainant who is aggrieved by a rejection may prefer an appeal within 30 days of receiving communication of the rejection before the Appellate Authority, which is the Executive Director in-charge of the Consumer Education and Protection Department of RBI.

However, it is important to note that not all rejection orders are appealable. Under Clause 16(2)(a) and (b) of RB-IOS, 2021 – rejections on the grounds of ‘no deficiency in service’ or ‘compensation sought being beyond the Ombudsman’s award power’ – are specifically listed as non-appealable before the Appellate Authority. In such cases, if the complainant wishes to pursue the matter further, the path leads to a civil court or an appropriate consumer forum.

Why these rejection criteria matter 🔗

The rejection criteria collectively serve a purpose that goes beyond procedural gatekeeping. They define the character and boundaries of the Ombudsman’s jurisdiction. The Banking Ombudsman is meant to be a quick, accessible, expert body for resolving day-to-day banking grievances – not a substitute for civil litigation. By keeping complex, evidence-heavy, or high-value disputes outside its ambit, the system ensures that the Ombudsman can focus on the cases it is actually designed to handle: service failures that can be assessed promptly, resolved informally, and remedied efficiently.

For banking customers, this means that before approaching the Ombudsman, it is wise to honestly assess the nature of the complaint. Is the dispute something that can be resolved on the basis of available records and simple factual verification? Or does it involve contested facts, multiple witnesses, and voluminous documentation? The answer to that question will often determine not just whether the complaint is maintainable, but which forum is most appropriate for seeking justice.

What do you think? If a bank customer suffers a substantial financial loss that exceeds ₹20 lakh due to clear banking negligence, does the existing compensation cap under the Ombudsman scheme offer adequate protection – or does it leave a significant gap in consumer justice? And should the procedural simplicity of the Ombudsman’s framework be expanded to accommodate more complex disputes, or would that risk undermining the very speed and accessibility that makes it valuable?

References

1. https://rbidocs.rbi.org.in/rdocs/Content/PDFs/BOS2006_2302017.pdf
2. https://financialservices.gov.in/beta/en/banking-ombudsman
3. https://www.societegenerale.asia/fileadmin/user_upload/Societe_Generale_websites/Asia/India/Regulatory_Information/Information/Banking_Ombudsman_Scheme_2006.pdf
4. https://respo.co.in/ombudsman-scheme/
5. https://cleartax.in/s/banking-ombudsman
6. https://webassets.rblbank.com/document/banking-ombudsman/banking-ombudsman-scheme-faq.pdf