Kerala HC sets aside Banking Ombudsman order closing complaint without consent
The Kerala High Court held on 10 November 2026 that the RBI Banking Ombudsman could not close a complaint against Standard Chartered Bank as settled when the customer never agreed to it.
Key points
- The Kerala High Court set aside a Banking Ombudsman order that closed a customer's complaint against Standard Chartered Bank as resolved.
- The bank paid Rs 6 lakh under the Ombudsman's advisory before the customer accepted it; the court held that this was not a settlement.
- The Ombudsman must now decide the complaint by passing an award within three months of receiving the judgment.
The Kerala High Court on 10 November 2026 set aside an order of the RBI's Banking Ombudsman in Thiruvananthapuram that had closed a customer's complaint against Standard Chartered Bank as "resolved". The court held that a complaint can be closed as settled only when the customer agrees, and directed the Ombudsman to decide it by passing a formal award within three months.
What Happened
A customer of the bank's Kochi branch complained under the Reserve Bank - Integrated Ombudsman Scheme, 2021. The customer's case was that the branch had assured that premiums on eight life insurance policies would be paid from returns on mutual fund investments, with the bank meeting any shortfall. The bank disputed this before the court and said it had acted only as an agent for the insurer.
On 23 March 2026 the Ombudsman issued an advisory for the bank to pay Rs 6 lakh: Rs 5 lakh towards the disputed premium and Rs 1 lakh for mental agony. The bank paid on 25 March 2026, and the Ombudsman closed the complaint the next day under Clause 14(9)(a) of the Scheme, treating it as settled.
The court noted that the Scheme defines a settlement as an agreement reached by the parties. The customer had no chance to accept or reject the advisory, the court held, so the complaint could not be treated as settled, and the Ombudsman acted illegally in closing it. Banks need to pay an amount in an advisory only if the complainant accepts it, the court said. It did not rule on the merits of the dispute, which turn on disputed facts. The Rs 6 lakh already paid will be subject to the Ombudsman's final award.
What It Means
The ruling matters for every bank customer who uses the RBI Ombudsman. As the court explained, a complaint closed as settled cannot be raised again before any other forum, while a customer who does not accept a formal award within 30 days remains free to pursue other remedies. A payment a bank credits on an advisory, without the customer's consent, does not end the complaint.
Customers can file complaints against banks with the RBI at https://cms.rbi.org.in.
Source: High Court judgment
Sources & Citations
- High Court judgment — Kerala High Court