UPSC Prelims 2010 Q137: Indian Economy – Banking & Financial Sector
- (a) The Banking Ombudsman is appointed by the Reserve Bank of India
- (b) The Banking Ombudsman can consider complaints from Non - Resident Indians having accounts in India
- (c) The orders passed by the Banking Ombudsman are final and binding on the parties concerned
- (d) The service provided by the Banking Ombudsman is free of any fee
Answer: (c) The orders passed by the Banking Ombudsman are final and binding on the parties concerned
Explanation
Banking Ombudsman: finding the incorrect statement
The Banking Ombudsman scheme provides a grievance-redressal mechanism for bank customers, with specific procedural rules.
| Option | Verdict | Reason |
|---|---|---|
| (a) Appointed by the RBI | Is correct | The Banking Ombudsman is indeed appointed by the Reserve Bank of India |
| (b) Can consider complaints from NRIs with Indian accounts | Is correct | NRIs with accounts in India can file complaints under this scheme |
| (c) Orders are final and binding on the parties | NOT correct | Ombudsman awards are not absolutely final; a complainant can reject the award and pursue other remedies, and the bank can appeal to an Appellate Authority — so they aren't unconditionally 'final and binding' |
| (d) The service is free of any fee | Is correct | The Banking Ombudsman service is free of charge to complainants |
Banking Ombudsman facts:
| Point | Detail |
|---|---|
| Appointed by | Reserve Bank of India |
| Covers | Including NRI account holders |
| Awards | Not absolutely final — appeal/rejection mechanisms exist |
| Fee | Free service |
Answer: (c) The orders passed by the Banking Ombudsman are final and binding on the parties concerned.
Why each option is right or wrong
- (a) Incorrect. This statement is true: the RBI does appoint the Banking Ombudsman, so it's not the answer.
- (b) Incorrect. This statement is true: NRIs with Indian accounts can file such complaints, so it's not the answer.
- (c) CORRECT. Ombudsman awards are not unconditionally final — a complainant can reject the award, and the bank has an appeal route.
- (d) Incorrect. This statement is true: the service is indeed free of charge, so it's not the answer.
Key point
Banking Ombudsman awards are NOT absolutely 'final and binding' — the complainant can reject the award, and the bank can appeal to an Appellate Authority — the other three statements about the Ombudsman scheme are accurate.
Remember
Banking Ombudsman: appointed by RBI, free service, covers NRIs — but its orders are NOT unconditionally final/binding (appeal and rejection routes exist).
Common mistakes
- Assuming any official grievance-redressal award must be automatically final and unchallengeable.
- Missing the question's framing: it asks for the NOT correct statement among several true ones.
- Not knowing the Ombudsman scheme's appeal/rejection mechanisms.
Exam tip
Banking Ombudsman awards are NOT unconditionally final — both the complainant (reject) and the bank (appeal) have further recourse options.
Sources
- Reserve Bank of India — The Banking Ombudsman Scheme, 2006
- Reserve Bank of India — Annual Report of the Banking Ombudsman Scheme 2009–10