RBI plans separate ombudsman for digital transactions

The Reserve Bank of India (RBI) proposes to set up a separate ombudsman to deal with complaints regarding digital transactions, considering the size and growth of digital transactions and the consequent increase in the number of complaints.

According to the RBI’s annual report for FY17-18, there has been an increase in the number  of complaints related to digital payments and prepaid payment instruments (PPIs) issued by the banks and non-banks.
The grievances relating to digital mode of financial transactions accounted for 19 per cent of the total complaints during 2016-17. This has gone up to 28 per cent till the end of June 2018.
According to RBI report, a total of 3.5 billion transactions took place with PPIs valued at Rs1,41,600 crore. Besides the share of electronic transactions in retail payments have also increased to 92.6 per cent in 2017-18 compared to 88.9 per cent in the previous year.
On the other hand, the report suggests that there has been a decline in the paper-based clearing instruments such as cheques to 7.4 per cent in the 2017-18.
Witnessing a growth in mobile banking services and electronic banking services, RBI had earlier expanded the scope of banking ombudsman. Effective 1 July 2017 banking ombudsman has been addressing complaints related to mis-selling of third party services and customer grievances on and mobile banking and electronic banking issues.
Now, in its annual report, the central bank has said that it will set up a separate ombudsman for redressal of digital transactions.
The ombudsman for digital transactions will set up their offices at selected centres. “Although a separate Ombudsman Scheme for complaints relating to digital financial transactions is not existing in other major jurisdictions, the growing trend and increasing complexity of such complaints along with the emergence of non-bank service providers in the digital payment space underlines the need for designing a dedicated Ombudsman Scheme for redressal of such grievances,” says the report.
The central bank in its bi-monthly monetary policy held in August 2018 had also decided to strengthen the existing internal banking ombudsman scheme and make them more independent. It has been taking many steps to protect the interest of consumers and has been spreading awareness via its RBISAY campaign on the caution to be taken while using electronic banking facilities.