Internal Ombudsman (IO) Scheme, 2018
Banks in India have been instructed by Reserve Bank of India (RBI) to appoint an Independent Internal Ombudsman (IO) under the Banking Ombudsman Scheme. As per the revised guidelines consolidated under Internal Ombudsman Scheme, 2018, all Scheduled Commercial Banks in India having more than ten banking outlets must appoint Internal Ombudsman. Regional Rural Banks are exempted from appointing Internal Ombudsman.
As per the Banking Ombudsman Scheme of RBI, a customer aggrieved by the deficiency in banking services can approach the banking ombudsman for satisfaction of the complaint. However, the aggrieved customer must initially lodge a written complaint with the concerned bank. If the bank rejects the complaint or no reply is given within thirty days of submission of the complaint, the customer is at liberty to approach the Banking Ombudsman. Click for details of Banking Ombudsman Scheme of RBI
What are the objectives of Internal Ombudsman (IO) mechanism?
According to a press release by RBI, all public-sector and select private and foreign banks were directed in May 2015 to appoint Internal Ombudsman (IO). The Internal Ombudsman was envisaged as an independent authority to review all the complaints that were not fully settled in favour of the complainant. The Internal Ombudsman is thus required to review complaints that were partially or wholly rejected by the respective banks.
Internal Ombudsman mechanism was set up to ensure the following objectives:
a. Strengthen the internal grievance system of banks
b. Ensure that customer complaints are redressed at the Bank level itself by an independent authority placed at the highest level of bank’s grievance redressal mechanism
c. Minimize the need for the customers to approach Banking Ombudsman and other fora for redressal of genuine grievances.
Internal Ombudsman Scheme, 2018 (IO Scheme , 2018)
A review of the IO scheme was carried out by RBI recently. Revised guidelines are announced for Internal Ombudsman and the guidelines are covered under ‘Internal Ombudsman Scheme, 2018’. The guidelines are issued under the powers conferred on RBI under Section 35 A of the Banking Regulation Act, 1949.
IO Scheme, 2018 aims to achieve twin objectives:
i. Enhance the independence of the Internal Ombudsman
ii. Strengthen the monitoring system over functioning of the Internal Ombudsman mechanism.
The guidelines issued under Internal Ombudsman Scheme, 2018 covers among other things, aspects like qualifications required for appointment of IO, tenure of IO, roles and responsibilities of Internal Ombudsman, procedural guidelines to be followed by IO and banks, reporting to RBI and oversight mechanism for the IO.
What are the roles Internal Ombudsman (IO)?
The major role of Internal Ombudsman is examining the customer complaints received by the bank related to deficiency in the banking service and that are partly or wholly rejected by the bank. Clause 8 of the Banking Ombudsman Scheme, 2006 lists the nature of customer complaints that are examined under Banking Ombudsman Scheme. Click for details of nature of customer complaints Types of Complaints To Banking Ombudsman
Under the guidelines related to IO, banks must escalate all complaints that are not fully redressed to Internal Ombudsman (IO) before communicating the final decision of the bank to the complainant. The IO can concur with or reject the views of the Bank. If the Internal Ombudsman disagrees with the decision of the bank, the bank can review the decision or stick on to the decision. If rejected, it shall be approved by placing the matter to higher officials in the bank designated for the purpose. Bank must also give an appropriate indication of this position while conveying the final decision on the complaint to the customer.
