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Integrated Ombudsman scheme: Find what it means and how it works today

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Integrated Ombudsman scheme: Find what it means 2021

In the past two days, we looked at Retail Direct Scheme. What are government bonds, and how a retail investor will benefit from this initiative? In this article, we explain another customer-centric initiative announced last week – Integrated Ombudsman Scheme.

Before we understand this initiative, know what an Ombudsman means.

An ombudsman is a government elected official who investigates complaints private citizens lodge against businesses, financial institutions, universities, government departments, etc. They attempt to resolve the conflicts or concerns raised, either through mediation or recommendations.

Know the Integrated Ombudsman Scheme

After the government’s “One Nation, One Ration Card,” the Reserve Bank of India (RBI) announced the Integrated Ombudsman Scheme on the concept of “One Nation, One Ombudsman”.

This initiative will help strengthen the complaint redress mechanism for banks, NBFCs, and payments system operators. The scheme will roll out in June.

The idea here is to integrate the existing three Ombudsman schemes: (i) The Banking Ombudsman Scheme, 2006: (ii) the Ombudsman Scheme for Non-Banking Financial Companies, 2018; and (iii) the Ombudsman Scheme for Digital Transactions, 2019 into a single Integrated Ombudsman Scheme, 2021.

Think of it like a consumer court, where you file complaints against any fraud and seek redressal. 

The need to integrate three different Ombudsman schemes

Currently, there are three Ombudsman schemes. These three schemes have evolved over different periods with varied grounds of complaints. Each scheme had different compensation structures, so complainants received unequal treatment.

Combining these schemes, streamlining grievance redress, letting the customers file their complaints about deficiency in service under the integrated scheme, with a single centralized reference point was the need of the hour.

Moreover, under RB-IOS, the central bank withdrew the exclusive jurisdiction of each ombudsman’s office under the one nation, one ombudsman initiative. A deputy ombudsman will address certain categories of complaints, giving the ombudsman’s office a greater adjudicating power.

Benefits under the Integrated Ombudsman Scheme

RBI has set up a complaint management system with a centralized receipt and processing center (CRPC) at Chandigarh. It will enable a one-point interface for customers to file complaints, submit documents, track status, and get pertinent information.

There will be a single point of reference with the integration of three schemes into one. Moreover, the RB-IOS allows for better coverage.

Initially, the number of entities covered will go up from 1,091 under the current Ombudsman bodies to 1,975. But, the scheme will cover 11,352 entities in phases. Entities here refer to banks, NBFCs, etc.

The scheme will cover the customers of all scheduled commercial banks, regional rural banks, scheduled urban co-operative banks, other UCB’s with deposits of Rs. 50cr and above, all the NBFCs accepting deposits and those with assets worth Rs. 100 crore and above, and non-bank system participants and complaints about deficiency of service.

An easier way to file complaints

Currently, customers must file their complaints under the correct scheme and with the correct ombudsman’s office, based on the territorial jurisdiction referring to the branch of the entity being complained against.

If a customer files a complaint in the wrong jurisdiction, the complaint gets rejected. The current mechanism has specific options for complaint dispensation. The customer has to ensure that the complaint falls under the specified and limited grounds under the respective schemes. The complaint gets rejected if a complainant fails to choose the correct dispensation.

With the new RB-IOS, customers can file any complaint involving poor service using a single email address or one office -CRPC, RBI, Chandigarh. The team will process each complaint and check if it maintains a few parameters such as first resort complaints, sub judice matters, or repeat complaints before allocation to ombudsman offices based on the residential address.

The CMS portal will have all the communication from/to the customer and the regulated entity, including auto intimations for registration and closure of complaints.

Final Words

A single point Ombudsman will help bring all the information related to the customer, his/her complaint, requests for guidance, and help to allow for greater focus on adjudication. Speeding up the redress process will help the complainant and the regulated entity spend less time finding a solution.

The integrated Ombudsman is a positive step towards better governance; however, there are several issues like the complexity of the cases, the volume of complaints in the offices, delayed submission of documents from the entities, and others. Whether the rejection of complaints reduces or adds to customer woes is to be seen.

Let us wait and see what happens once it goes live.

In the meanwhile, subscribe to 5 in 5 strategy and start your wealth creation journey.

Read more:

Retail Direct Scheme – Democratizing The Ownership Of Sovereign Securities

Bonds –All You Need To Know About Government Bonds And Securities Today!

Read more: About Research and Ranking.

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