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RBI tightens ombudsman scheme
Why in the news ?
- The Reserve Bank of India has tightened the banking ombudsman scheme with the objective to strengthen the grievance redressal mechanism for customers.
Details
- The Reserve Bank of India (RBI) asked all scheduled commercial banks with over 10 branches to appoint an internal ombudsman (IO).
- The central bank has, however, excluded regional rural banks (RRBs) from appointing ombudsman.
- As banks should internally escalate complaints that are not fully redressed to their respective IOs before conveying the final decision to the complainant, customers need not approach the IO directly, the RBI said.
- The scheme was introduced to strengthen the internal grievance of banks and to ensure that the complaints of the customers are redressed at the level of the bank itself by an authority placed at the highest level of bank’s grievance redressal mechanism so as to minimise the need for the customers to approach other fora for redressal.
The Ombudsman
- The IO should examine customer complaints which are in the nature of deficiency in service on the part of the bank that are partly or wholly rejected by the bank.
- According to bankers, the Internal Ombudsman Scheme of 2018 mandates banks to grant a fixed term of three to five years, which cannot be renewed, to the IO.
- The IO can be removed only with prior approval from RBI.
- The remuneration would have to be decided by the customer sub-committee of the board and not by any individual.
Source
The Hindu