Consumer Education and Protection - RBI - Reserve Bank of India
Consumer Education and Protection
About
The Reserve Bank’s approach to customer service focusses on protection of customers’ rights, enhancing the quality of customer service, spreading awareness and strengthening the grievance redressal mechanism in banks and also in the Reserve Bank.
Consumer education and protection is an integral component of RBI’s full-service central banking functions. The Consumer Education and Protection Department (CEPD), set up in 2006 as Customer Service Department (CSD), frames policy guidelines for consumer protection and oversees the functioning of the 22 Offices of RBI Ombudsman (ORBIOs) and 30 Consumer Education and Protection Cells (CEPCs). The major functions of CEPD include: (i) Administering the Reserve Bank – Integrated Ombudsman Scheme (RB-IOS), 2021, which was formulated by integrating the erstwhile Ombudsman Schemes for banks, Non-Banking Financial Companies (NBFCs) and Non-bank System Participants (NBSPs); (ii) Handling complaints regarding deficiencies in customer service in banks, received in RBI through the Centralized Public Grievance Redress and Monitoring System (CPGRAMS) portal of Government of India (GoI); (iii) Serving as the Secretariat to the Appellate Authority (AA) under the RB-IOS, 2021; (iv) Overseeing the grievance redress mechanism in respect of services rendered by various offices/departments of RBI; (v) Liaising with banks, Indian Banks’ Association, ORBIOs and the regulatory departments of RBI on matters relating to customer service and grievance redress, and providing policy inputs; (vi) Creating consumer awareness and disseminating information relating to customer service and grievance redress by banks and RBI; and (vii) Compiling and publishing the Annual Report of the RB-IOS.
The Reserve Bank’s focused initiatives in the field of consumer protection began with the (i) setting up of Complaints Redressal Cell in 1995, (ii) instituting an Alternative Grievance Redress (AGR) mechanism through launch of Banking Ombudsman (BO) Scheme in 1995-96, and (iii) creation of a full-fledged CSD from the erstwhile Rural Planning and Credit Department. CSD was rechristened as CEPD in 2014.
The BO Scheme was launched as an AGR mechanism with a view, inter-alia, to bring redress of customer grievances against banks, which till then rested with the respective regulatory and supervisory departments, under a single platform. AGR mechanism offers the parties in a dispute, an alternative channel to redress their disputes, without approaching regular courts. Initially, retired judges/ bureaucrats/ senior bank officials were appointed as BOs and the Scheme was funded by the banks, with manpower drawn from State Level Bankers’ Committee’s convener banks and RBI. The Scheme was amended in 2006 when RBI took over the staffing, funding, and appointment of the Ombudsmen, inter-alia, to increase accountability and reduce the level of pendency in disposal of complaints. Over the years, many changes were brought in the BO Scheme including the appeal mechanism and higher monetary limit for compensation to complainants. The BO Scheme had specified grounds of complaints (31) and the BOs who operated from 22 different offices had specified and mutually exclusive jurisdictions.
Due to the growing significance of the NBFCs in the financial system and with a view to extend AGR to their customers as well, the Ombudsman Scheme for the NBFCs was launched in 2018 and was operated from four metro centers with each covering their respective zone. Similarly, with the rising share of NBSPs in digital transactions, the Ombudsman Scheme for Digital Transactions (OSDT) was launched in 2019 with the BOs acting as Ombudsmen under the OSDT.
The three schemes, having evolved over different periods of time, had specified grounds of complaints which were not only different under each Scheme but also acted as a limiting factor and led to uneven redress across the customers of different entities. As such, a need was felt to integrate the three Ombudsman Schemes into one, simplify the scheme by covering all complaints involving deficiency in service, and centralise the receipt and initial processing of complaints at Centralised Receipt and Processing Center (CRPC) set up at RBI, Chandigarh to impart process efficiency, along with a Contact Center available at #14448 to provide information on grievance redress mechanism of RBI to complainants. Delegation was introduced, and a post of Deputy Ombudsman was also created in each Ombudsman Office to ensure expeditious redress of certain categories of complaints. The exclusive jurisdiction of each Ombudsman Office was also done away with under the concept of ‘One Nation - One Ombudsman’. Accordingly, the Reserve Bank – Integrated Ombudsman Scheme (RB-IOS) along with the CRPC and Contact Center was launched on November 12, 2021 by the Hon’ble Prime Minister.
Charter for Customer Rights
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Key Topics
Grievance Redress at RBI
Reserve Bank - Integrated Ombudsman Scheme, 2021, resolves customer grievances in relation to services provided by entities regulated by RBI
Grievance Redress at Regulated Entities
RBI has formulated a Charter of Customer Rights for banks, Internal Ombudsman Schemes for the Regulated Entities (REs) of RBI
Consumer Protection
RBI had set up the Committee for Review of Customer Service Standards in RBI regulated entities
Consumer Education & Awareness
Creates consumer awareness and disseminate information relating to customer service and grievance redress by the regulated entities of RBI
Some recent initiatives of the Reserve Bank in consumer education and protection are:
Other steps recently initiated for customer protection are:
- Charter of Customer Rights - The RBI has formulated a "Charter of Customer Rights" for banks based on global best practices in consumer protection. The Charter enshrines broad, overarching principles for protection of bank customers and enunciates the following five basic rights of bank customers:
1. Right to Fair Treatment
2. Right to Transparency, Fair and Honest Dealing
3. Right to Suitability
4. Right to Privacy
5. Right to Grievances Redress and Compensation - Banks are required to prepare their own Board approved policy, incorporating the five rights of the Charter, or suitably integrate their existing Customer Service Policy with the “Model Customer Rights Policy” formulated by IBA/BCSBI.
- Internal Ombudsman Scheme for Banks- With effect from September 03, 2018, all Scheduled Commercial Banks (excluding Regional Rural Banks) with 10 or more banking outlets have been required to appoint Internal Ombudsman at the apex of their grievance redress mechanism for an independent review of customer complaints that are rejected partly/ wholly by their internal grievance redress mechanism.
- Internal Ombudsman Scheme for Non-Bank System Participants (NBSPs), 2019 – On the lines of the Internal Ombudsman Scheme for banks, an Internal Ombudsman Scheme was introduced for NBSPs on October 22, 2019 to strengthen their internal grievance redress mechanisms. The scheme is applicable to NBSPs (issuers of Pre-Paid Payment Instruments - PPIs) with more than one crore outstanding PPIs as on March 31 of the previous year. The NBSPs covered are mandated to appoint an independent authority at the apex of their grievance redress system to review the partly/ wholly rejected complaints.
- Internal Ombudsman Scheme for Non-Banking Financial Companies (NBFCs) was launched on November 15, 2021, for all Deposit-taking NBFCs (NBFCs-D) with 10 or more branches and Non-Deposit taking NBFCs (NBFCs-ND) with asset size of Rs.5,000 crore and above having public customer interface. Such NBFCs shall appoint an Internal Ombudsman (IO) at the apex of their internal grievance redress mechanism to review the partly/ wholly rejected complaints.
- Complaint Management System (CMS) - RBI launched the CMS on June 24, 2019, a state-of-the-art web-based application integrating all stakeholders, i.e. customers, officials at Offices of the RBI Ombudsman, CEPCs, CEPD and Regulated Entities, on one platform for enabling end-to-end complaint processing through digital mode. CMS provides real time status of complaints and also hosts comprehensive material on e-learning based consumer education to enhance awareness on financial services and consumer rights.
- Strengthening of grievance redress mechanism in banks - A comprehensive framework for strengthening of the internal grievance redress mechanism in banks was put in place in January 2021 comprising of the following aspects: (a) Enhanced disclosures on complaints (b) Recovery of cost of redress of maintainable complaints received against the banks in excess of their peer-group averages based on certain parameters, and (c) Intensive review of grievance redress mechanism of banks and (d) initiation of required supervisory and regulatory actions.
- Abolition of penal charges on non-maintenance of minimum balances in inoperative accounts
- Streamlining penal charges levied for non-maintenance of minimum balances in savings bank accounts
- Uniformity in inter-sol charges
- Limiting the liability of customers in unauthorised electronic banking transactions
- Conduct of Root Cause Analysis based on complaints received at RBI to initiate the required remedial measures
- A Framework for Financial Education has been formulated from a consumer protection perspective with the following components – (i) Target Group, (ii) Content, (iii) Delivery Channels, (iv) Coordination Aspects, and (v) Impact Analysis
- Harmonisation of Turn Around Time (TAT) and customer compensation for failed transactions using authorised Payment Systems
- Online Dispute Resolution System for Digital Payments
- Formulating appropriate regulations pertaining to customer service for strengthened consumer protection.
- Enforcing ethical behavior by financial service providers under the regulatory purview of the Reserve Bank
- Improving the Internal Grievances Redress Mechanism of Regulated Entities for effectiveness and timely response
- Review Internal Ombudsman Scheme for extension to other Regulated Entities
- Harnessing advanced technological tools for strengthening customer protection and improving expediency of grievance redressal by RBI
- Enhanced nationwide awareness drive for protecting customers from financial frauds
- Efforts for inclusion of safe banking practices in educational curriculum
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Page Last Updated on: January 9,2023
