RBI Instructs Banks to appoint Internal Ombudsman

Reserve Bank of India has directed all leading banks to appoint internal ombudsman to improve their customer service and to ensure that customer complaints in banks get resolved fast.

The internal ombudsman :

• The internal ombudsman would be designated as Chief Customer Service Officer (CCSO).
• CCSO should not have worked in the bank in which he/she is appointed as CCSO.
• This initiative is to further boost the quality of customer service.
• To ensure that there is undivided attention to resolution of customer complaints in banks”.
• This is similar to the post of chief vigilance officer in a bank, where a candidate is brought in on deputation from another bank.
• The internal ombudsman will be a forum available to a bank’s customers for grievance redressal before they approach RBI’s banking ombudsman.
• All public and private sector banks, as well as foreign banks, will have to appoint an internal ombudsman
• Among private lenders, ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, IndusInd Bank, Standard Chartered Bank, Citi Bank and HSBC are asked to follow the rule.
• These banks have been selected on the basis of their asset size, business mix .
• RBI said that it will shortly issue detailed operational guidelines in this regard.

Banking Ombudsman :

• The Banking Ombudsman Scheme is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995.
• The RBI had introduced the Banking Ombudsman Scheme (BOS) in 1995 to provide an expeditious and inexpensive forum to bank customers for resolution of complaints relating to deficiency in banking services provided by

1. Commercial banks,

2. Regional rural banks and

3. Scheduled primary co-operative banks.

• Currently, it provides for 27 Parameters of complaints/deficiencies in bank services.
• The RBI operates the BOS at free of cost
• Accessible to all.
• The current scheme became operative from 1 January 2006, and replaced and superseded the banking Ombudsman Scheme 2002.
• From 2002 until 2006, around 36,000 complaints have been dealt by the Banking Ombudsmen.

The appellate authority :

• If one is not satisfied with the decision passed by the Banking Ombudsman, one can approach the appellate authority against the Banking Ombudsmen’s decision.
• Appellate Authority is vested with a Deputy Governor of the RBI.