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Highlights of the Annual Report of Ombudsman Scheme 2020-2021

Recently, the Reserve Bank of India (RBI) has come out with its annual report on the Ombudsman Scheme and the report highlights that the maximum number of complaints filed at the Banking Ombudsman relate to the following categories. The complaints that were lodged were related to deficiency in services by the banks in terms of electronic banking, non-fulfilment of commitments, debit and credit card issues, violations in following the fair practices code. The complaints were made by aggrieved customers at the Banking Ombudsman’s office.

Surprisingly, the Banking Ombudsman Scheme recorded that the major chunk of the total number of complaints filed stands at around 90 percent hovering at 2.73 million complaints. The percentage of the complaints under the schemes of OSNBFC and OSDT were calculated at around 8 percent and 1 percent of the total number of complaints filed.

What is a banking ombudsman?

A Banking Ombudsman is person who has been appointed by the Reserve Bank of India (RBI) with the objective of redressing the complaints of the customers relating to the deficiency in services of certain specified banking services on specific grounds that are mentioned under clause 8 of the Banking Ombudsman Scheme, 2006.

This is a forum for quicker redressal of complaints and also inexpensive unlike other forums for a customer who is aggrieved by the deficiency in specific banking services provided by the banks.

Highlights of the report on Ombudsman Scheme

The annual report has been released by the office of banking ombudsman for the financial year of 2020-21 for a nine month report from 1^st July, 2020 to 31^st March, 2021. The annual report has been prepared for a nine month period because the RBI has changed its financial year from July-June to April-March from 1^st July, 2020 onwards.

The annual report released by the RBI covers the following report:

• The Ombudsman Scheme for Digital Transactions, 2019 (OSDT)
• The Ombudsman Scheme for Non-Banking Financial Companies, 2018 (OSNBFC)
• The Banking Ombudsman Scheme, 2006 (BOS)

The annual report revealed the fact that the volume of complaints for the three concerned schemes increased on an annualised basis at 22.27 percent. The total number of complaints filed under all the three schemes stood at a whopping 3.03 million during the said period.

The Banking Ombudsman Scheme, 2006 (BOS)

Complaints under the following heads accounted for the majority of complaints filed under the above mentioned schemes:

• electronic banking/mobile banking
• non-fulfilment of commitments
• debit/ATM card
• violations in following the fair practices code
• credit card issues

The shares of complaints related to the credit cards, mobile banking/electronic banking and ATM/Debit cards received under the scheme during the period of 1^st July, 2020-31^st March, 2021 stood at around 12 per cent, 13 percent and 17 per cent respectively. However, the share of complaints under the same heads during period of 1^st July, 2019- 30^th June, 2020 stood at around 9 per cent, 13 per cent and 22 per cent respectively.

The complaints related to the following heads increased during the period of 1^st July, 2020-31^st March, 2021 in comparison to the duration of 1^st July, 2019 to 30^th June, 2020.

• Non-fulfilment of commitments
• Credit card issues
• Recovery Agents and Direct Selling Agents (DSAs)

Further, it must be noted that a significant increase was seen in the complaints related to recovery agents and DSAs where a surge of 60 per cent was observed.

Ombudsman Scheme for Non-Banking Financial Corporations (OSNBFC)

A slight increase in the number of complaints was observed in the Ombudsman Scheme for Non-Banking Financial Corporations (OSNBFC^[1]) where for the duration of 1^st July, 2020-31^st March, 2021, the complaints recorded reached upto 27 thousand in comparison to the duration of 1^st July, 2019 to 30^th June, 2020 where the complaints remained 19.5 thousand. There was increase in the number of complaints to the tune of 39 percent despite being a reduction of quarter in the year of 1^st July, 2020-31^st March, 2021.

Ombudsman Scheme for Digital Transactions (OSDT)

Again, an increase in the number of complaints was observed in the Ombudsman Scheme for Digital Transactions (OSDT) during the period of 1^st July, 2020-31^st March, 2021 in comparison to the duration of 1^st July, 2019 to 30^th June, 2020.

Following complaint claimed the top three spots in the 2019 OSDT with their respective percentages:

• Bharat QR Code/ Unified Payments Interface (UPI)/ Fund transfers/ Bharat Bill Payment System (BBPS) constituting 51 per cent
• Electronic/ Mobile fund transfers constituting 22 per cent
• Cases where reversal of debit is done improperly by the system participant due to the fault of beneficiary transfer constituting 8 per cent.

Improvement in the disposal rate

Because of the ease provided by the end to end Complaint Management System (CMS), improvement in the disposal rate of complaints could be observed where the disposal rate improvement stood at around 96 per cent in the year of 2020-21 compared to 93 per cent disposal rate observed in the previous year. This improvement was observed despite an increase in the number of complaints for which the reason is CMS.

Around 72 per cent of the complaints were seen to be resolved by the mutual consent. Interventions were made by the offices of Ombudsman or through conciliation or through the efforts of mediation.

Reserve Bank-Integrated Ombudsman Scheme (RB-IOS)

The annual report also declared the groundwork for the initiation of the ambitious scheme of Reserve Bank-Integrated Ombudsman Scheme (RB-IOS) which was undertaken by the RBI along with the necessary changes to be made in the CMS.

This new integrated scheme is set to replace the other three existing schemes of OSDT, OSNBFC and BOS to achieve the goal of One Nation-One Ombudsman.

Conclusion

The banking Ombudsman Scheme was launched by the Prime Minister of India in November of 2021. The government has adopted the approach of ‘One Nation One Ombudsman’ for all the customers availing the services of entities that are regulated by the RBI. This approach of ‘One Nation One Ombudsman’ will provide one platform, one address and one email to lodge, monitor and track complaints at anytime and anyplace.