The concept of ‘Ombudsman’ finds its origin in Sweden. The Swedish Parliament conceived the idea of creating a Parliamentary Ombudsman to keep a check on the executive. The concept of the Ombudsman spread globally in the 20th century. The Indian variant of Ombudsman is the Lokpal, which means a ‘Caretaker’ to address cases of corruption. Dr L M Singhvi, a well-known jurist, coined the terms ‘Lokpal’ and ‘Lokayukta’ in the 1960s. In India, the concept of Ombudsman was first proposed by former Law Minister Mr Ashok Sen. Ombudsman is a government official who deals with the complaints of the general public against the government / government agencies / public organisations. An Ombudsman acts as an independent and impartial representative of the people who investigates and resolves complaints from the general public about government / government agencies, ensuring fair and lawful treatment and seeking resolution through recommendations and mediation. The Reserve Bank of India (RBI) came out with the Banking Ombudsman Scheme in the year 1995 in order to redress the grievances of customers relating to deficiencies in service rendered by the banks. Before the enactment of the Banking Ombudsman Scheme 1995, the aggrieved customer/s relating to deficiency in service had to either approach the civil court or the Consumer Protection Act (after its enactment in the year 1986). RBI has amended the Banking Ombudsman Scheme from time to time and also came out with new schemes in order to redress the grievances of customers in accordance with changes in the situation.

Need for reinvigoration of the existing scheme

A few decades ago, the financial services rendered by banks and financial institutions were simple and less diversified. With the introduction of more financial products / services, the Indian financial sector has been flooded with financial intermediaries, paving the way for the provision of a diverse range of financial products. This has led to complex digital financial services. In this backdrop, there has been a corresponding rise in customer grievances regarding services rendered by banks/NBFCs/other financial intermediaries. The RBI has supervisory and regulatory powers over banks and other financial institutions. In order to ameliorate the plight of customers, the RBI has been making all-out efforts to streamline the redressal mechanism from time to time. One such step is to rejuvenate the existing integrated Ombudsman scheme/s. The proposed scheme, which is to take effect from July 01, 2026, is aimed at further revitalisation or say improvement, of the existing integrated Ombudsman scheme, 2021. As per Clause 1, the scheme shall be called (RB-IOS), 2026. The scheme has been formulated for the resolution of grievances of customers relating to the services provided by regulated entities in an expeditious and cost-effective manner. The aim of the scheme is to provide a non-adversarial alternative grievance redressal mechanism for the resolution of complaints. It would be seen that the emphasis of the scheme is on resolution of the grievances by way of a non-confrontational approach wherein the focus shall be on negotiation and mediation rather than win-lose litigation / legal battle. In other words, the focus shall be on exploring a mutually beneficial and amicable solution to the grievance.

Institutional structure

The scheme provides for the appointment of an Ombudsman and Deputy Ombudsman. Clause 4 of the scheme provides that the RBI shall appoint one or more of its officers as RBI Ombudsman and RBI Deputy Ombudsman to carry out the functions entrusted to them. The tenure of such an appointment shall generally be for three years at a time. Furthermore, it has been provided under Clause 6 that for receipt and processing of complaints under the scheme, a Centralised Receipt and Processing Centre (CRPC) shall be established. The complaints under the scheme shall be made online and shall be registered on the portal. It has further been provided that complaints received via e-mail and on physical forms shall be addressed and forwarded to the CRPC. The provision for lodging the complaints with the CRPC has been made so that the complaints may first be assessed in respect of compliance / maintainability. This aspect has been discussed hereinafter.

Application of the scheme

The scheme is applicable to the following regulated entities, as defined under Clause 3(h) of the scheme:

All commercial banks and regional rural banks
State and central co-operative banks;
Scheduled primary (urban) co-operative banks;
Non-scheduled primary (urban) co-operative banks with a deposit of INR 50 crores and above;
All non-banking finance companies authorised to accept deposits or have a customer interface with an asset size of INR 100 crores or above. However, housing finance companies and core investment companies stand excluded from the schemes;
All non-bank prepaid payment instrument issuers and credit information companies.

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