Integrated Ombudsman Scheme 2021

Ombudsman is an independent official or organization which is appointed to investigate complaints and grievances made by individuals or groups against an organization or government agency. The term “ombudsman” originated in Sweden and is derived from the Old Norse word “umboðsmaðr,” which means “representative.” Ombudsmen are appointed by a government, a regulatory agency, or an organization to ensure that complaints are investigated fairly and impartially, and that appropriate action is taken to address any issues or concerns. The main goal of an ombudsman is to help resolve disputes and improve the quality of service provided by an organization or government agency.

What is RBI Integrated Ombudsman Scheme?

• The Reserve Bank of India launched the Integrated Ombudsman scheme recently. The Reserve Bank of India integrated its three Ombudsman schemes to make this scheme. The erstwhile schemes of the reserve Bank of India are : 
         1. The banking Ombudsman Scheme, 2006 
         2. The Ombudsman Scheme for non–banking financial companies, 2018.
         3. The Ombudsman scheme for digital transactions,2019.
• This integrated scheme seeks to simplify the grievance redressal process at the Reserve Bank of India by enabling customers of regulated entities (REs) such as banks, non-banking financial companies (NBFCs), payment system participants (PSPs), and credit information companies.
• By introducing this scheme, the Reserve Bank of India aims to address complaints and grievances including ‘deficiency in service’ on the part of regulated entities. And that too in a fast, economical, cost-effective, and satisfactory manner.
• The Reserve Bank of India is the central bank of India that continuously tries to minimize consumer complaints regarding banking services. Transparency is essential for ensuring the consumer’s trust in the central bank and ultimately in the government. Consumer satisfaction becomes an important point while delivering services because this is the only way to increase the banking habits of people. The Reserve Bank of India is also claiming that this scheme will make the redressal process much faster and more cost-effective.

History of RBI Integrated Ombudsman Scheme:

The Reserve Bank of India launched the Banking Ombudsman Scheme In 1995. The scheme aimed to protect the rights of bank customers and promote transparency and accountability in the banking system. Over the years, the RBI has introduced several other Ombudsman Schemes to cover different sectors under its purview.

1. The Banking Ombudsman Scheme, 2006;
2. The Ombudsman Scheme for Non-Banking Financial Companies, 2018;
3. The Ombudsman Scheme for Digital Transactions, 2019.

Finally, The RBI Integrated Ombudsman Scheme was launched on July 1, 2021, to replace the earlier multiple ombudsman schemes that were operating in different financial sectors. The RBI Integrated Ombudsman Scheme covers all financial services regulated by the RBI and aims to provide a one-stop solution for consumers to seek redressal of their grievances across all financial services regulated by the RBI.

Appointment and Tenure of Ombudsman and Deputy Ombudsman:

The Reserve Bank may appoint one or more of its officers as Ombudsman and Deputy Ombudsman, to perform the functions given to them under the Scheme. The appointment of the Ombudsman or the Deputy Ombudsman shall be made for a period not exceeding three years at a time.

Reserve Bank of India Ombudsman (RBIO ):

As defined under Clause 3(1)(g) of the RBI-IOS,2021, an RBI ombudsman is a senior official of the Reserve Bank of India appointed by the central bank. Its main duty is to redress the complaint from the customers of the Regulated Entity’s “ deficiency in service”.

Here, by “deficiency in service“ Reserve bank means any shortcoming or inadequacy in any financial service which the Regulated Entities is required to provide. This inadequacy does not necessarily reflect the financial loss or any kind of damage to the customer. Thus, we can see the broad coverage of complaints this Scheme strives to provide.

Complaints Not Covered Under the RBI-IOS, 2021:

• Any such complaint is made after one year of receiving the receipt. Or after 30 days of filing a complaint.
• Any complaints related to the commercial decision of the Regulated entity. For example grant or a loan.
• Complaints related to any dispute between a vendor and a Regulated entity;
• Any complaints which are raising general grievances against the management or executives of Regulated entities.
• Complaints with inadequate details and those that are vague or unactionable.
• Complaints are lodged through an advocate or lawyer.
• Any complaint which is in the nature of offering suggestions or seeking guidance or explanation.

Need of the Ombudsman Scheme

Before the Integrated Ombudsman Scheme of the Reserve Bank of India, multiple ombudsman schemes were operating in different financial sectors which made it very difficult and time-consuming for customers to get their problems resolved.

Therefore RBI Integrated Ombudsman Scheme was launched by the RBI. Its aim is to provide a one-stop solution for consumers to seek redressal of their grievances across all financial services regulated by the RBI. This scheme also promotes transparency and accountability in the financial system.

Significance of the Ombudsman Scheme

• The ombudsman scheme is designed to protect the rights of consumers. It provides a forum for consumers to voice their grievances and seek redressal for any wrongful conduct by regulated entities.
• This scheme promotes transparency and accountability in the financial system by holding regulated entities accountable for their actions.
• The Ombudsman scheme provides a quick and cost effective resolution mechanism for consumer complaints. This helps to improve their confidence in the financial system.

Criticism of the Ombudsman Scheme

• The ombudsman scheme has a limited scope because it only covers complaints against regulated entities under the purview of the RBI.
• Consumers who have complaints against unregulated entities or those outside the RBI’s jurisdiction may not be able to use the scheme.
• Some consumers are not aware of the Ombudsman Scheme, so it becomes difficult for them to get redressal of their complaints.

But overall this scheme is in favor of the consumer, so there was not much criticism of this scheme. Besides this, the RBI Integrated Ombudsman Scheme is a positive step towards addressing customer grievances and strengthening the financial system’s regulatory framework.

FAQs on Ombudsman Scheme

Q1. Is there any time limit for filing an appeal?

Ans: Within 30 days of filling out a form.

Q2. What are the minimum details required to file a complaint with the RBI Ombudsman?

Ans: Name of the complainant, age and gender, Full postal address, personal e-mail ID, mobile number, Name and address of the branch, and Complete facts giving rise to the complaint, including, transaction date and details.

Q3. Is there any charge or fee to be paid for filing a complaint with the RBI Ombudsman?

Ans: No. There is no charge or fee for a customer.

Q4. which prime minister launched the Integrated Ombudsman Scheme?

Ans: Hon’ble Prime Minister Shri Narendra Modi.

Q5. When was the Integrated Ombudsman Scheme launched?

Ans: The RBI Integrated Ombudsman Scheme was launched on July 1, 2021