Empower Internal Ombudsmen, use feedback to strengthen institutions: RBI DG

RBI Deputy Governor says boards and senior management should ensure Internal Ombudsmen function independently and use complaint data to improve governance and customer service

Reserve Bank of India (RBI) Deputy Governor Swaminathan J urged the boards, senior management and principal nodal officers of regulated entities to empower their Internal Ombudsmen, respect their independence and use their feedback to strengthen institutional processes.

 

Swaminathan was addressing the annual conference of Internal Ombudsmen on July 13.

 

He said the effectiveness of the Internal Ombudsman framework depends not only on the capability and independence of the ombudsman but also on the commitment of an institution's leadership to implement the framework "in both letter and spirit".

 

The board, he said, should view customer service as an integral part of good governance rather than merely a compliance requirement.

 

  

Swaminathan observed that a significant proportion of complaints eventually resolved in favour of customers by the RBI Ombudsman had not been referred to the Internal Ombudsman in the first place, calling it "a matter of serious concern" as it undermines the objective of the framework. 

He urged regulated entities to review their grievance redress systems to ensure every complaint that must be referred to the Internal Ombudsman is sent "promptly and without exception".

 

He also said complaint data should not be viewed merely as statistics but as valuable business intelligence.

 

According to him, rising complaints relating to a particular product, geography, delivery channel or process often serve as early warning signals of underlying weaknesses that require management attention.

 

Emphasising the role of Internal Ombudsmen, Swaminathan said they should function independently and not become "merely another part of the internal approval chain". "A mechanical concurrence with the institution's earlier decision does not fulfil the purpose for which the framework was established," he said.

 

He said the Internal Ombudsman should assess not only whether procedures were followed but also whether the customer was treated fairly, whether the outcome was reasonable, and whether the institution would reach the same conclusion if it examined the matter afresh with complete objectivity.

 

Swaminathan also stressed that regulated entities should distinguish between complaint closure and meaningful complaint resolution. "A complaint may be technically closed because a response has been provided or the prescribed process has been followed. But from the customer's perspective, the issue may still remain unresolved," he said, adding that institutions should assess grievance redress on the basis of timeliness, fairness of outcome and transparency of communication.

 

Swaminathan said complaints should also be used as a tool for institutional learning. Rather than focusing only on disposing of complaints quickly, institutions should identify recurring patterns through root cause analysis and strengthen processes, communication, products and internal controls to prevent similar grievances from arising.