Banking Ombudsman

 

RBI, plays a crucial role in protecting the interests of bank customers. RBI introduced the Banking Ombudsman Scheme (BOS) on June 14, 1995, to protect customer's interests. This scheme acts as a quick and affordable way to resolve customer complaints about shortcomings in banking services. The scheme has gained wider acceptance among bank customers over the years.

An Ombudsman known as the grievance-man, or someone who deals with complaints. This is a senior official appointed by the RBI for a maximum of three years at a time, to investigate and resolve customer complaints against banks. As of November 2023, there were 24 Ombudsmen with offices mainly in state capitals at RBI locations. The Banking Ombudsman Scheme is administered by RBI through different Banking Ombudsman Offices across the country, including rural and semi-urban areas, to make it accessible to more people. The scheme has been revised five times since it started, with the most recent updation in July 2017.

 

The Ombudsman Scheme covers Commercial Banks, Regional Rural Banks, and Scheduled Primary Co-operative Banks. RBI introduced two more schemes: one for Non-banking Financial Companies (NBFCs) in 2018 and another for digital transactions in 2019. However, on November 12, 2021, RBI consolidated all three schemes into a single comprehensive scheme called the Reserve Bank-Integrated Ombudsman Scheme, 2021 (IOS 2021). This new scheme covers all entities regulated by RBI, including Non-Scheduled Primary Co-operative Banks with a deposit size of Rs. 50 crore and above. This simplified scheme promotes a "One Nation One Ombudsman" approach.

Key features of the Bank-Integrated ombudsman scheme, 2021

·        This Scheme offers a free resolution of customer complaints related to service issues with RBI-regulated banks. If a customer doesn't receive a satisfactory response from the bank within 30 days of filing a complaint and wants to explore other options for resolving grievances, they can approach the banking ombudsman appointed by RBI for further assistance. Now, Customers no longer need to figure out where to file a complaint with the Ombudsman. Complaints won't be rejected just because they don't fit under a specific scheme.

·        Under this scheme, all complaints are initially received at the Central Receipts and Processing Centre (CRPC) in Chandigarh. After a preliminary scrutiny, the CRPC forwards the complaint to the relevant ombudsman.

·        RBI designates the geographical jurisdiction for each ombudsman. The Ombudsman has the authority to handle and resolve all grievances. Every year, on March 31st, the Ombudsman submits a report to the RBI Deputy Governor outlining all activities from the previous financial year.

·        The complaints against the bank will be handled by the Principal Nodal Officer or a high-ranking official in the bank. Banks must provide information about complaints to the ombudsman.

·        The ombudsmen aim to resolve complaints through agreement, conciliation, or mediation between the bank and the aggrieved parties. If a mutual agreement cannot be reached, the banking ombudsman resolves the complaint by issuing an AWARD in accordance with the scheme's provisions, unless rejection is necessary. Now, Banks can't appeal against ombudsman decisions if they don't provide information. The Appellate Authority for the scheme is the Executive Director in charge of Consumer Education and Protection at RBI.

·        It is important to note that Complaints can be filed anywhere, not just at a specific ombudsman office. A person with a grievance can complain to CRPC either personally or through an authorized representative. It can be filed through[1]

o   On line portal

o   Electronic mode through e-mail

o   Physical Mode by post, courier, or hand delivery

 

Other initiatives of RBI for Customers' Rights:

•         The first initiative is the Charter of Customer Rights: In 2014-15, the RBI developed a "Charter of Customer Rights" to strengthen consumer protection measures. This charter outlines fundamental principles for safeguarding bank customers' rights. The Charter consists of these five rights –

o   Right to Fair Treatment

o   Right to Transparency, Fair and Honest Dealings

o   Right to Suitability

o   Right to Privacy

o   Right to Grievance Redress and Compensation

In compliance with the RBI's instructions, individual banks have developed and implemented Customer Rights Policies that align with the principles outlined in the Charter. The RBI continuously monitors the implementation of the Charter to ensure effective regulatory oversight.

•         The second is the Internal Ombudsman in Banks. The RBI introduced the Internal Ombudsman (IO) scheme in 2015 to strengthen internal grievance redressal for bank customers. The Internal Ombudsman, also known as the Chief Customer Service Officer (CCSO), provides an initial grievance redressal mechanism before customers approach the Banking Ombudsman. The IO examines all grievances wholly or partially rejected by the banks. In 2018, the RBI updated the Internal Ombudsman Scheme to make the Internal Ombudsman more independent and improve the monitoring of the IO system.

•         The third initiative is Consumer Education and Protection Cells at Regional Offices. In 2015-16, Consumer Education and Protection Cells (CEP Cells) were established in every Regional Office of RBI. Their purpose is to help customers in resolving the problems with entities regulated by the RBI that are not covered in the Ombudsman Scheme. •

•         The next initiative focuses on Consumer Education. RBI aims to increase consumer awareness about grievance redressal mechanisms and protect them from fraudulent activities in the name of the bank. This awareness is spread through Town Hall events, Awareness Campaigns, and participation in Melas and Exhibitions, providing information in Hindi and local languages. RBI's efforts aim to educate the public about Ombudsman Schemes, secure banking practices, grievance redressal channels, and various loan schemes. Additionally, the 'RBI Kehta Hai' Public Awareness Initiative by RBI educates consumers about banking regulations and facilities through SMS. The initiative includes sending cautionary messages to warn against unsolicited offers via emails, SMSes, or phone calls through RBI's SMS gateway.

 

L.Raguraman (22UCM034)

III B.Com