Complaints Under Banking Ombudsman Scheme

Subject :Economy

Context:

The Reserve Bank of India (RBI) has released the Annual Report of the Ombudsman Schemes for the period April 01, 2021 – March 31, 2022.
As per the report, volume of complaints received under the scheme stood at 4,18,184 in 2021-22, an increase of 9.39 per cent compared to the previous year.

Highlights of the report

RBI said that the volume of complaints received by the ombudsman schemes or consumer education and protection cells during the year 2021-22 increased by 9.39 per cent to 4,18,184.
Issues related to ATM/debit cards and mobile/electronic banking were the top grounds of complaints received at the Office of Banking Ombudsman (OBO).
About 90% of the total complaints were received through digital modes, including:
- the online Complaint Management System (CMS) portal,e-mail, and
- Centralised Public Grievance Redress and Monitoring System (CPGRAMS).
The report also said that the rate of disposal of complaints by ombudsmen improved to 97.9% in 2021-22 from 96.6% in 2020-21.

Banking Ombudsman Scheme

The Banking Ombudsman Scheme is an expeditious and inexpensive forum for bank customers for resolution of complaints relating to certain services rendered by banks.
The Scheme is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995.
The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking services.
All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.

The Reserve Bank – Integrated Ombudsman Scheme (RB-IOS)

The Reserve Bank – Integrated Ombudsman Scheme was launched in November 2021 by PM Modi.
The Scheme will provide cost-free redress of customer complaints involving deficiency in services rendered by entities regulated by RBI.
It comes into picture if the issue has not been resolved to the satisfaction of the customers or not replied within a period of 30 days by the regulated entity.
The Scheme integrates the existing three Ombudsman schemes of RBI:
- Banking Ombudsman Scheme, 2006;
- Ombudsman Scheme for Non-Banking Financial Companies, 2018; and
- Ombudsman Scheme for Digital Transactions, 2019.
In addition to integrating the three existing schemes, the Scheme also includes under its ambit Non-Scheduled Primary Co-operative Banks with a deposit size of ₹50 crore and above.
The Scheme adopts ‘One Nation One Ombudsman’ approach by making the RBI Ombudsman mechanism jurisdiction neutral.

Features of RB-IOS

It will no longer be necessary for a complainant to identify under which scheme he/she should file complaint with the Ombudsman.
The scheme includes a wider definition of deficiency of services which ensures complaints will not go unaddressed or rejected simply on account of not covered under the grounds listed in the scheme.
A Centralised Receipt and Processing Centre has been set up at RBI for receipt and initial processing of physical and email complaints in any language.
The Scheme has done away with the jurisdiction of each ombudsman office.
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.

Significance of RB – IOS

The first ombudsman scheme was rolled out in the 1990s. However, it was always viewed with suspicion 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.
Also, frequent rejection of the complaints on technical grounds was one among the reasons.
This resulted in a preference for the consumer court notwithstanding the extended timelines for redressal.