We report the observation of biaxial nematic phase in a bent-core molecular system in which the biaxiality exists on a microscopic scale using polarizing microscopy, electro-optics and dielectric spectroscopy. An application of electric field induces a macroscopic biaxiality and therefore electro-optic switching. The observed electro-optic switching is explained in terms of the interaction of the ferroelectric clusters with the electric field. Dielectric spectra of the sample shows existence of low-frequency collective processes related to the microscopic polar clusters. The dielectric constant changes its sign from positive to negative and again to positive values.