INTERNAL OMBUDSMAN

Background:

• in 2015, Reserve Bank of India (RBI) had advised all public-sector and select private and foreign banks to appoint Internal Ombudsman (IO) as an independent authority to review complaints that were partially or wholly rejected by the respective banks.
  
  
• The IO mechanism was set up to strengthen the internal grievance redressal system of banks.
  
  

Internal Ombudsman Scheme, 2018:

• Now, RBI has introduced ‘Internal Ombudsman Scheme, 2018’ under Section 35 A of the Banking Regulation Act, 1949.
  
  
• Objective of Scheme: To enhance the independence of the IO while simultaneously strengthening the monitoring system over functioning of the IO mechanism.
  
  
• Coverage: All Scheduled Commercial Banks in India having more than ten banking outlets (excluding Regional Rural Banks), are required to appoint IO in their banks.
  
  
• Roles and responsibilities: The IO will examine customer complaints related to deficiency in service provided by the bank, that are partly or wholly rejected by the bank.
  
  
• Procedural guidelines: As the banks will internally solve all complaints, the customers of banks need not approach the IO directly.
  
  
• Oversight Mechanism: The implementation of this scheme will be monitored by the bank’s internal audit mechanism apart from regulatory oversight by RBI.