The Digital Banking Complaints To Be Redressed By Banking Ombudsman

Issues related to ATM/ debit cards, mobile/ electronic banking, credit cards, failure to meet commitments and non-observance of fair practices code were the top-five grounds of complaints received at the Office of Banking Ombudsman (OBO) during July 2020-March 2021, said an RBI report.

What Is Banking Ombudsman?

Banking ombudsman, a quasi-judicial authority is formed with an intent to resolve the complaints of the customers of the Bank. Section 35A of the Banking Regulation Act, 1949 deals with Banking Ombudsman Scheme. It came into effect in 1995 and presently the Banking Ombudsman Scheme 2006 is in operation. The scheme covers not just scheduled Commercial Banks but also Regional Rural Banks and Scheduled Primary Co-operative Banks. Recently, RBI also extended the concept of Banking Ombudsman to NBFC’s as well.

The Reserve Bank of India (RBI) has released the Annual Report of the Ombudsman Schemes for the year 2020-21, which has been prepared for the nine-month period from July 1, 2020, to March 31, 2021, in alignment with the change in the financial year of the RBI from ‘July-June’ to ‘April-March’ with effect from July 1, 2020.

It covers the activities under the Banking Ombudsman Scheme, 2006 (BOS), the Ombudsman Scheme for Non-Banking Financial Companies, 2018 (OSNBFC), and the Ombudsman Scheme for Digital Transactions, 2019 (OSDT).  

“Complaints related to (a) ATM/debit cards and (b) mobile/electronic banking (c) credit cards (d) failure to meet commitments and (e) non-observance of fair practices code (FPC) were the top-five grounds of complaints received at the OBOs,” it said.

The shares of ATM/debit card complaints, mobile/electronic banking and credit card complaints to total complaints received during July 1, 2020-March 31, 2021, stood at 17.40 per cent, 12.98 per cent and 12.36 per cent, respectively.

The report said during the period under review, the groundwork for the launch of Reserve Bank-Integrated Ombudsman Scheme 2021 (RB-IOS), along with accompanying changes in the CMS have been carried out. RB-IOS, 2021 will replace the three existing Ombudsman Schemes: BOS, OSNBFC and OSDT.

The scheme was launched by Prime Minister Narendra Modi on November 12, 2021. It has adopted a ‘One Nation-One Ombudsman’ approach, for all customers of RBI-regulated entities. It will ensure that all customers have one platform, one email and one address to lodge, track and monitor their complaints anytime and from anywhere.

What Is ‘One Nation-One Ombudsman’ Approach ?

1. One Nation One Ombudsman Scheme was announced by the Reserve Bank of India – RBI on 5th February 2021.
2. There are dedicated ombudsman schemes devoted to consumer grievance redressal in banking, non-bank finance companies and digital transactions, respectively, are in operation from 22 ombudsman offices of the RBI located across the country.
3. In line with the global initiatives on consumer protection, RBI has taken various initiatives to strengthen the Grievance Redress Mechanism of regulated entities.
4. The adoption of the ‘One Nation One Ombudsman is an approach to make the alternate dispute redressal mechanism simpler and more responsive to the customers of regulated entities, it has been decided to implement, inter alia, integration of the three Ombudsman schemes in one.
5. The RBI had operationalized the complaint management system portal as a one-stop solution. This portal will be used for the alternate dispute resolution of the customer complaints which are not resolved by regulated entities.
6. The Scheme is intended to make the process of redress of grievances easier by enabling the customers of the banks, NBFCs and non-bank issuers of PPIs to register their complaints under the integrated scheme, with one centralized reference point. Aspirants can read about the types of Banks in India on the given link. 
7. Financial consumer protection has gained significant policy priority across jurisdictions and the RBI has been taking a slew of initiatives on the same.
8. The RBI is targeting to roll out the e-integrated ombudsman scheme in June 2021.

One Nation One Ombudsman Scheme Significance

1. It will help in easy lodging of customer grievances and redressal. To know what the components of a Grievance Redressal Mechanism are, visit the linked article.
2. It is a step in the right direction for improving the customer service in banks, NBFCs and Non-Bank Prepaid Payments Issuers.
3. Through One nation One Ombudsman, RBI aims to integrate consumer grievances redressal under a single ombudsman as against three schemes.
4. It’s a big step to bring more effectiveness and speed similar to One Nation One Ration Card Scheme (ONORC).

Customers At Benefit

• The time taken in resolving the complaint was also an area of concern. The Committee recommended a reduction in the turnaround time (TAT) for complaint resolution to 30 days in a phased manner over a period of two years.
• The current ‘Integrated Ombudsman Scheme’ will provide cost-free redress of customer complaints involving deficiency in services rendered by entities regulated by RBI, if not resolved to the satisfaction of the customers or not replied within a period of 30 days by the regulated entity.
• In other words, the customers can escalate complaints to the Ombudsman if the financial institution fails to address the complaint within 30 days. Even when customers are not satisfied with the resolution offered or explanation given by the financial institution, they can approach the ombudsman.
• With the growing prominence of digital payments, the current ‘Integrated Ombudsman Scheme’ may come to the rescue of customers more efficiently. A grievance redressal mechanism that promotes financial consumer protection will boost customer confidence in the country.