Global Economy

RBI asks banks to look at setting up central fund to pay internal ombudsmen

The Reserve Bank of India (RBI) has asked lenders to examine the possibility of establishing a central fund to pay the salaries of banks’ internal ombudsman (IO). This move seeks to enhance their independence to further protect customer rights.

The banking sector regulator has also asked lenders to look at appointing sign language interpreters in banks to facilitate hearing and speech-impaired customers.

A government official confirmed the development and said the RBI is in discussion with lenders on measures to enhance customer service and protect their rights.

“The idea is to create a structure, as it is in the government, where the salaries and pensions of key officials like Supreme Court judges are paid from the Consolidated Fund of India,” he said.

An email sent to RBI did not receive any response until press time.

Customer complaints with the Reserve Bank ombudsman were up 68% in 2022-23, according to the Annual Report of Ombudsman Schemes released by RBI in March.A senior bank executive said while the intentions of the RBI are right, there are implementation issues in such a structure.”The compensation structure and working contracts are different at each bank. It will be impossible to create a separate cadre of IOs across banks with the same salaries and working conditions,” he said.

Last year, a committee headed by former RBI deputy governor BP Kanungo for the Review of Customer Service Standards in RBI Regulated Entities observed in its report that in order to address the conflict of interest and to increase the effectiveness of internal ombudsman appointed in the REs, the Reserve Bank may nudge the Indian Banks’ Association (IBA) to create a fund to directly pay the salary or compensation to the IOs of the banks.


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