The Prime Minister of India recently launched the integrated ombudsman scheme, a unified platform created to enhance customer experience during the grievance redressal process in banking services. Building on the previous Complaint Management System (CMS) introduced by the Reserve Bank of India (RBI) in 2019, this new development is part of a broader initiative complemented by the launch of RBI’s Retail Direct Scheme.
Ombudsman: What it Means and its Origin
An Ombudsman, originating from Sweden, is an official appointed by the legislature to address complaints from common people against public organizations or services. In India, such a representative can be found within several sectors, including insurance, income tax, and banking, where they work to resolve grievances related to these sectors.
Key Points About the New Integrated Ombudsman Scheme
The integrated ombudsman scheme combines three separate schemes of RBI – the banking ombudsman scheme of 2006, the ombudsman scheme for non-banking financial companies (NBFCs) of 2018, and the digital transactions ombudsman scheme of 2019. This unification aims to streamline the customer complaint process for services offered by RBI regulated entities, including banks, NBFCs, and prepaid instrument players.
Under this new scheme, if a customer’s grievance isn’t addressed satisfactorily or responded to within 30 days by a regulated entity, the ombudsman steps in. This also applies to non-scheduled primary co-operative banks with a deposit size over Rs 50 crore, ushering in a “One Nation One Ombudsman” approach that cuts across jurisdictional boundaries.
The Need for an Integrated Ombudsman Scheme
Though ombudsman schemes first emerged in India in the 1990s, they faced criticism due to their complicated nature, making consumers wary and preferring consumer courts despite the extended timelines for redressal. The integrated ombudsman scheme aims to rectify this by expanding the grounds for complaints and integrating systems across banking, NBFCs, and digital payments.
Features of the Integrated Ombudsman Scheme
The scheme considers “deficiency in service” as grounds for complaints, with a specified list of exclusions. This prevents complaint rejections merely based on not aligning with listed grounds in the scheme. The scheme is jurisdiction-neutral and includes a centralized receipt and processing centre located in Chandigarh for complaint handling in all languages.
Artificial Intelligence tools are also integrated into the system to facilitate better coordination between banks and investigative agencies. Customers can file complaints, submit documents, track status, and provide feedback through a single email address, further streamlining the process. Moreover, a multilingual toll-free number will offer information on grievance redress, enhancing user accessibility.
Regulated entities will not have an appeal right in cases where an ombudsman awards against them, ensuring timely information provision.
Appellate Authority of the Scheme
RBI’s Executive Director-in charge of the Consumer Education and Protection Department will serve as the Appellate Authority under the integrated scheme.
The Impact of the Integrated Scheme
With improved redress mechanisms in place, customer complaints against RBI-regulated entities are expected to be resolved more efficiently. Streamlining these processes will contribute to customer satisfaction and financial inclusion. An estimated 44 crore loan account holders and 220 crore deposit account holders are predicted to benefit directly from this unified ombudsman, who can lodge a complaint and keep track of it on the same platform.
