RBI governor asks regulated entities to improve grievance redress mechanism
Mumbai, Mar 15, 2024
RBI had established an Internal Ombudsman (IO) Mechanism in regulated entities to bolster their internal grievance redress processes
The Reserve Bank of India (RBI) has urged regulated entities to enhance their grievance redress mechanisms as 'certain gaps' have been identified in the systems and procedures of these entities.
"Our analysis of the grievances received at the offices of the RBI ombudsman reveals certain gaps in the systems and procedures of the regulated entities," said RBI Governor Shaktikanta Das at the Annual Conference of RBI Ombudsman on Friday.
"We have brought these deficiencies to the notice of individual banks and non-banking financial companies (NBFCs). Our effort is to work with the regulated entities and rectify such deficiencies," he added.
The regulator had established an Internal Ombudsman (IO) Mechanism in regulated entities to bolster their internal grievance redress processes. Das noted that the functioning of the IO requires 'considerable improvement.'
"It has been observed that on many occasions, IOs tend to merely endorse the decision of the regulated entities. In several instances, rejected complaints are not being referred to the IO," Das commented.
"The very foundation of an internal dispute resolution system depends on its ability to provide fair, impartial, and judicious adjudication. The observed trend raises concerns about the robustness of the existing framework. I urge all of you to ensure the overall integrity and efficacy of the internal grievance redress mechanism," he emphasised.
"There is also a need to further strengthen the internal grievance redress systems, including the internal ombudsman framework, within the regulated entities," Das stated.
Das stressed that regulated entities must understand that they are the first touchpoints in the overall grievance redress framework, and re-directing the aggrieved to the alternate grievance machinery of the RBI ombudsman is not advisable.
"As I can see from some of the complaints that reach my desk, many of the cases are such that they should have been resolved at the level of the regulated entities," Das observed.
Commenting on the performance of the Reserve Bank's Integrated Ombudsman Scheme, Das mentioned that 2.34 lakh grievances were received during the first full year of its operation (2022-23), followed by 2.68 lakh grievances in the current financial year (2023-24) so far.
"The disposal rate in both years has been about 98 per cent. The average turnaround time for resolving complaints across all categories has reduced to 33 days in 2022-23 from 57 days prior to the introduction of the new scheme," he noted.
In the context of the rise in fraudulent transactions, Das stated that it is crucial to strengthen monitoring systems and employ technology to preempt potential frauds.
"With the advent of Artificial Intelligence (AI), cybersecurity challenges can increase significantly. They can expose consumers to identity theft, fraud, and unauthorised access to personal information, which can affect consumer trust," he said, adding that financial institutions must make significant efforts to protect customer information and ensure that vulnerabilities exposing customers to risk are promptly identified and addressed.
The RBI had established a working group under Das's chairmanship to review the functioning of the RBI Integrated Ombudsman Scheme (RB-IOS) and suggest measures to further enhance the efficacy of this mechanism. The Working Group is expected to submit its report by April 2024, Das informed.
[The Business Standard]
