The Reserve Bank of India (RBI) in a recent move has announced that it will be integrating consumer grievances redressal under a single ombudsman as against three schemes working at present. The move comes at a time when there is an increase in digital transactions and the consumers have to face a lot of problems while getting their complaints redressed. The move is a step forward in the direction of customer empowerment and is an initiative towards providing speedy and inexpensive redressal to millions of users of India’s banking and non-banking infrastructure.
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What is an ombudsman?
An ombudsman is an official, usually appointed by the government, who investigates complaints (usually lodged by private citizens) against businesses, financial institutions, universities, government departments, or other public entities, and attempts to resolve the conflicts or concerns raised, either by mediation or by making recommendations.
Present status of financial sector ombudsman in India
- There are dedicated ombudsman schemes devoted to consumer grievance redressal in banking(Banking Ombudsman Scheme), non-bank finance companies (Ombudsman Scheme for Non-Banking Financial Companies ) and digital transactions(Ombudsman Scheme for Digital Transactions), at present.
- The RBI had operationalised the complaint management system portal (CMS) as a one-stop solution for alternative dispute resolution of customer complaints not resolved satisfactorily by the regulated entities.
A banking ombudsman is a quasi-judicial authority to redress complaints of customers of banks relating to certain services rendered by the banks.
Banking Ombudsman Scheme
- The Banking Ombudsman Scheme is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995.
- The scheme was revised in 2002.
- Presently, the Banking Ombudsman Scheme 2006 (As amended up to July 1, 2017) is in operation.
- The banks covered under the scheme are all Scheduled Commercial Banks, Regional Rural Banks(RRBs), and Scheduled Primary Co-operative Banks.
NBFC (non-banking financial company) ombudsman
An NBFC ombudsman is a quasi-judicial authority to redress customer complaints against NBFCs for deficiency in certain services.
The Ombudsman Scheme for Non-Banking Financial Companies, 2018
- It is an expeditious and cost-free apex level mechanism for the resolution of complaints of customers of NBFCs, relating to certain services rendered by NBFCs.
- The Scheme was introduced under Section 45 L of the Reserve Bank of India Act, 1934, with effect from February 23, 2018.
- The NBFCs covered under the scheme include NBFCs, as defined in Section 45-I (f) of the Reserve Bank of India Act, 1934 and registered with the RBI under Section 45-IA of the Reserve Bank of India Act, 1934, which (a) are authorised to accept deposits; or (b) have customer interface, with assets size of one billion rupees or above, as on the date of the audited balance sheet of the previous financial year, or of any such asset size as the RBI may prescribe.
- The Scheme initially covers NBFCs authorized to accept deposits and would be gradually extended to cover other identified NBFCs.
Digital transactions ombudsman
It is a quasi-judicial authority to redress complaints regarding digital transactions undertaken by customers.
The Ombudsman Scheme for Digital Transactions, 2019
- It is an expeditious and cost-free apex level mechanism for the resolution of complaints regarding digital transactions undertaken by customers of the System Participants as defined in the Scheme.
- The Scheme is being introduced under Section 18 Payment and Settlement Systems Act, 2007, with effect from January 31, 2019.
- The Scheme has been made applicable to System Participants as defined in Clause 3 (11) of the Scheme.
What is ‘One Nation, One Ombudsman’?
The e-Integrated Ombudsman Scheme is a scheme where all the consumer grievances redressal forums will be integrated under a single ombudsman as against three schemes working at present.
The objective of the scheme is to make the process of redressal of grievances easier by enabling the customers of the banks, non-banking financial companies (NBFCs) and non-bank issuers of prepaid payment instruments (PPIs) to register their complaints under the integrated scheme, with one centralised reference point.
- A speedy resolution to complaints filed by customers in a standardized format.
- It will make the grievance redressal mechanism more efficient and simpler.
- It will reduce the hassle for customers in choosing the right ombudsman.
- It will also help in streamlining the processes with better coordination among various entities, which will help in quicker resolution of complaints.
- Quicker decision-making.
- Optimal utilization of manpower.
- It will help in improving the overall customer experience.
Integrating the ombudsman schemes will not only help the customers in getting quicker resolutions but also make the Indian financial sector ombudsman ecosystem match the global scenario.
- What role does RBI play in maintaining a healthy financial ecosystem in India?
- One nation one ombudsman: RBI to integrate consumer grievance redressal scheme – The Hindu