RBI Integrated Ombudsman Scheme

• 15 Nov 2021

Why in News

Recently, the Prime Minister has launched the integrated ombudsman scheme.

• In 2019 the Reserve Bank of India (RBI) had launched the Complaint Management System (CMS) in order to improve the customer experience in the grievance redressal process of banking services.
• The PM has also launched the RBI’s Retail Direct Scheme.

Ombudsman

• A government official who deals with complaints made by ordinary people against public organizations. This concept of Ombudsman arrived from Sweden.
• It means an officer appointed by the Legislature to handle complaints against a service or administrative authority.
• In India an Ombudsman is appointed to resolve grievances in the following sectors.
  
  • Insurance Ombudsman
  • Income Tax Ombudsman
  • Banking Ombudsman

Key Points

• About:
  • It amalgamates three ombudsman schemes of RBI - banking ombudsman scheme of 2006, ombudsman scheme for NBFCs of 2018 and ombudsman scheme of digital transactions of 2019.
  • The unified ombudsman scheme will provide redress of customer complaints involving deficiency in services rendered by RBI regulated entities viz. banks, NBFCs (Non banking Financial Companies) and pre-paid instrument players if the grievance is not resolved to the satisfaction of the customers or not replied within a period of 30 days by the regulated entity.
  • It also includes non-scheduled primary co-operative banks with a deposit size of Rs 50 crore and above. The integrated scheme makes it a “One Nation One Ombudsman’ approach and jurisdiction neutral.
• Need:
  • The first ombudsman scheme was rolled out in the 1990s. The system was always viewed as an issue by consumers.
  • One of the primary concerns was the lack of maintainable grounds on which the consumer could challenge the actions of a regulated entity at the ombudsman or a rejection of the complaint on technical grounds, resulting in a preference for the consumer court notwithstanding the extended timelines for redressal.
  • The move to integrate the systems (banking, NBFC, and digital payments) and expand the grounds for complaints is expected to see a positive response from consumers.
• Features:
  • The Scheme defines ‘deficiency in service’ as the ground for filing a complaint, with a specified list of exclusions.
    • Therefore, the complaints would no longer be rejected simply on account of “not covered under the grounds listed in the scheme”.
  • The scheme is jurisdiction neutral and a centralised receipt and processing centre has been set-up in Chandigarh for initial handling of complaints in any language.
  • RBI had created a provision for the use of Artificial Intelligence tools so that banks and investigating agencies could coordinate in a better way in the fastest time possible.
  • The bank customers will be able to file complaints, submit documents, track status, and give feedback through a single email address.
  • There will also be a multilingual toll-free number that will provide all relevant information on grievance redress.
  • The regulated entity will not have any right to appeal in cases where an award is issued by the ombudsman against it for not furnishing satisfactory and timely information.
• Appellate Authority:
  • RBI’s Executive Director-in charge of Consumer Education and Protection Department would be the Appellate Authority under the integrated scheme.
• Significance:
  • This will help in improving the grievance redress mechanism for resolving customer complaints against RBI's regulated entities.
  • It is expected to ensure uniformity and streamlined user-friendly mechanisms which will add value to the scheme and bring customer delight and financial inclusion.
  • 44 crore loan account holders and 220 crore deposit account holders would directly benefit from the single ombudsman, they would now be able to lodge a complaint and track their complaints on the same platform.

Source: TH