The Reserve Bank of India has strengthened the process for selection and operating procedure for internal ombudsman (IO) in banks. It has now made it mandatory for banks with more than 10 branches to have an independent authority to review complaints that were partially or wholly rejected by the respective banks. RBI issued a statement on its website, which said bank ombudsmen have to be appointed for a fixed tenure, directly reporting to the bank’s customer service committee and they must be people from outside the bank, giving this post an independent standing in a bank hierarchy. Banks had an internal ombudsman, but they were mostly appointed from within the bank staff and did not have statutory powers. This amendment gives ombudsman statutory powers under section 35 A of the Banking Regulation Act, 1949. RBI said as the banks shall internally escalate all complaints, which are not fully redressed to their respective IOs before conveying the final decision to the complainant, the customers of banks need not approach the IO directly. The implementation of IO Scheme, 2018 will be monitored by the bank’s internal audit mechanism apart from regulatory oversight by RBI, it added.
