The Reserve Bank of India, on Monday, asked all scheduled commercial banks with more than 10 branches to appoint an internal ombudsman (IO). However, the central bank has exempted regional rural banks (RRB) from appointing an IO.
As a part of this customer-centric approach, to enhance the independence of the IO while simultaneously strengthening the monitoring system over functioning of the IO mechanism, the central bank has reviewed the arrangement and issued revised directions under Section 35 A of the Banking Regulation Act, 1949 in the form of Internal Ombudsman Scheme, 2018.
RBI, in May 2015, advised all public-sector and select private and foreign banks to appoint internal ombudsman as an independent authority to review complaints that were partially or wholly rejected by the respective banks.
The IO mechanism was set up with a view to strengthen the internal grievance redressal system of banks and to ensure that the complaints of the customers are redressed at the level of the bank itself. The IO shall, among other things, 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.