Even as the Reserve Bank of India (RBI) has put in place an Internal Ombudsman (IO) mechanism for regulated entities to strengthen their internal grievance redress mechanism, the functioning of IO mechanism needs considerable improvement, governor Shaktikanta Das said at the Annual Conference of RBI Ombudsman here today.
“It has been observed that on a number of occasions, IOs tend to endorse the decision of the regulated entities mechanically. In several cases, rejected complaints are not being referred to IO,” Das said.
“The very foundation of an internal dispute resolution system relies on its capacity to provide fair, impartial and judicious adjudication, and the observed trend raises concerns about the robustness of the existing framework. I would urge all of you to ensure the overall integrity and efficacy of the internal grievance redress mechanism,” he added.
Under the RB-IO scheme, a total of 234,000 grievances were received during the first full year of its operation in FY23, followed by 268,000 grievances in the current financial year so far. The disposal rate in both the years has been about 98%. The average turnaround time for closure across all categories of complaints has come down to 33 days for FY23 from 57 days prior to the introduction of the new scheme.
Das said lenders must comprehend that they are the first touch points in the overall grievance redress framework and that re-directing the aggrieved customers to the alternate grievance machinery of the RBI ombudsman is not desirable. “As I can see from some of the complaints that land at my desk, many of the cases are such that they should have been resolved at the level of the regulated entities,” he said.
With the rise in fraudulent transactions, it also becomes critical for financial institutions to strengthen their monitoring systems and use technology to detect potential frauds before they materialise. Maintaining a focus on root cause analysis of consumer grievances can result in preventing such complaints to come up repeatedly.
Further, with the advent of Artificial Intelligence (AI), cybersecurity challenges can rise manifold. They can expose consumers to identity theft, fraud, and unauthorised access to personal information, which could affect consumer trust. Further, lenders must also engage in creating customer awareness about threats such as phishing, phone scams, deepfakes, among others.