The essence of any democracy is hollow without accountability and transparency. The idea of the administration being answerable to the public is the valve of a functioning system. The administrative agencies and the citizenry share an intricate relationship that permeates through every aspect of the latter's life. The rights of the individual get compromised as a consequence of the administrative mechanism overlooking the public sentiment. Thus, an efficacious structure that guarantees accountability is a prerequisite to protect the citizen's rights from the administration's fallibility.

This has resulted in feeling the need for a watchdog of the administration. The idea of law is to protect the Little Man' and that protector is the institution of Ombudsman.[1] The inception of this system was in Sweden, in 1809[2]. This idea eventually traveled across the globe and was adopted by several administrative paradigms. Ombudsman is a quasi-judicial organization that functions as the shield against bureaucratic hegemony.

The ombudsman is an official who has been granted the duty to investigate the complaints and allegations made by individuals against a government associated organization, with respect to maladministration and corrupt practices by public authorities. Refuge in the ombudsman may be sought due to the administrative action, colored by indecorous concerns like bias, hostility, or arbitrariness. The idea of an ombudsman is rooted in the need to build a democratic control mechanism to check the powers of a state and create a culture of an open government.'

Dr. Massey, has analyzed that the primary objective that the Ombudsman aims to achieve is to improvise the functioning of the government apparatus by modifying its very perception.

...Its main catch is its apparent effectiveness despite minimal coercive capabilities. It has its own role to play by bringing renaissance' and humanism' in the working of modern governments which have tended to develop an attitude to look to the paper rather than the person behind it.[3]

The Ombudsman functions as a substitute for the central system for dispute resolution between citizens and the administrative agency. However, it is imperative to note, that as per the hierarchical structure, a Court of law is undoubtedly at a higher ranking and a decision made by it will supersede a decision by the Ombudsman. Thus, if a matter is pending before a court, it is understood that the jurisdiction of the Ombudsman stands frustrated.[4]

Brief History
During the 1960s, the banking sector was subject to a lot of criticism by the press, public and by the Public and Estimate committees of Parliament due to the inadequate system of grievance redressal by banks. The Reserve Bank of India (RBI) was repeatedly questioned and faced a lot of critique.

They forwarded those complaints to all concerned banks and asked them to come up with a strategy to combat the issue. This led to the formation of advisory bodies and committees who had the prerogative to draft policy for tackling the dissatisfaction prevalent in the banking sector. Since 1972, the banking commission saw a shift in leadership from Sri R G Saraiya to RK Talwar and then Goipora. All of them pressured the RBI to look into improving the quality of service provided by banks.

Though many recommendations were taken into account, along with banks implementing new strategies, there still was no significant change in the standard of services. The Narasimham Committee drafted a report on Banking and Financial Sector Reforms which was an eye-opener in this situation.[5] That report emphasized upon various checks and balances measures and introduced Banking Ombudsman Scheme 1995. This scheme was imperative, considering the changes in customer preferences were linked with the economic policy shift in favor of liberalization and privatization.

The then Governor of RBI, Dr. Rangarajan, declared the new The Banking Ombudsman Scheme' on 14th June 1995. The Ombudsman scheme was instituted through Section 35A of the Banking Regulation Act 1949. The scheme was first revised in 2002 to broaden the scope of the complaints entertained, and the kind of services offered. There have been further amendments since then in 2006, 2007, 2009 and 2017.

The revised Banking Ombudsman scheme came into power since 1st January 2006 with the ambit of authority and power given to the ombudsman being widened to include newer areas. The ombudsman currently has twenty offices and they are mostly located in state capitals. The Ombudsman scheme governs overall commercial, regional -rural, scheduled primary co-operative banks.[6]

The RBI increased the ambit of the Scheme to combat the limitations stemming from sale of Insurance, Mutual fund and other third party involved endeavors by Banks. For instance, if the Jammu and Kashmir Bank is conducting sale of the mutual funds by Reliance, and Reliance is unwilling or unable to deliver the services claimed, then the Jammu and Kashmir bank will be held accountable for the damages.

Due to this revised scheme, a client may register a complaint against the Bank for the bank's non-compliance to RBI guidelines with respect to Mobile Banking or Electronic Banking services. The procedure for registering and engaging with complaints has also been revised upon. The appeal is now permitted for the complaints initially closed under Clause 13 (c) of the existing Scheme regarding the rejection which was unavailable previously.[7]

Procedure and Grounds for Complaint
A complainant cannot approach the Ombudsman directly without first registering a complaint with the bank itself. If the bank does not respond for the duration of a month or the complainant is unsatisfied with the bank's response, he can then approach the Ombudsman.

Each branch of a bank is mandated by law to display the address of the office of the banking ombudsman that has authority over this branch. To register a complaint simply by stating all relevant information about the kind of loss, the degree of it, and the amount of compensation sought.[8]

Some of the common grounds for complaint are[9]-

• Any unjustified delay or not paying the cheques, drafts and bills.

The bank refusing to accept a specific denomination of notes, without any reasonable justification for the same.

• The banks levying an extra fee on the acceptance of small denomination of notes.
• The bank deferring or refusing to pay the inward remittances.

If the bank does not accept taxes, as mandated by the government of India or the RBI.

• If the bank defers the issuance of government securities or fails to either issue or redeem the government securities.
• If the banks impose by closing the deposits, without any valid justification.
• If the bank does not close the account despite the client having requested that.
• Any unjustified and intentional delay in closing the accounts.

The three reliefs available to the complainant are[10]:

• Directions to summon for information under Clause 10 of The Act.
• Settlement through agreement
• Compensation

To further elucidate the procedure and grounds for complaint, we can refer to the following cases-
In M/S Athena Energy Ventures Pvt. Ltd. Vs. Andhra Bank[11], the court held that if a customer is not informed about the pre-payment charges, then the bank cannot levy those charges for the unexpired period of the Bank Guarantee.

In the case of Corporate Bank vs. Navin Shah[12], Respondent claimed that the bank had failed to receive money in foreign currency, and he sought damages for the same. It was held that there was no deficiency of service on behalf of the bank and that it had fulfilled all the obligations under the contract. It is important for the Ombudsman to be unbiased when handling disputes, so as to not let customers exploit the bank in the pretext of compensation.

Two concepts were established in the case of United Commercial bank vs. the banking

1. If one chooses to move the Ombudsman eight years after the first refusal of the bank on that issue, the complainant is time-barred for this action under Clause 16(3)(b).
2. When a series of litigation is pending in courts on the same subject matter, then the Ombudsman has no jurisdiction on that matter.

Critical Analysis
The Ombudsman has been fulfilling its responsibility of maintaining the financial health of the Indian banking system by strengthening the fiduciary relationship between banks and customers. It is structured in such a fashion that it does not interfere with the jurisdiction of any court, and therefore aggrieved individuals seek recourse in the ombudsman as the primary channel of addressing altercations with the bank.

The unique selling point of the ombudsman is its ability to dispense justice in an individual case, without being restricted by precedents. In exceptional situations, the ombudsman can even overlook the technicalities and legal formalities of evidence when settling the contestation between the individual and the bank.

There are multiple known and unknown risks and uncertainties that pose a threat to the banking sector like cyber-security breaches, malware attacks, data privacy breaches, phishing frauds, data theft, and misuse, etc. It is difficult to anticipate the manner in which they will manifest and to what extent. Owing to these risks, there has been an increase in the number of complaints more complex than before due to which the role of the ombudsmen and their ability to deal with such a dynamic financial environment is becoming increasingly challenging.

To further strengthen the grievance redressal mechanism, the Internal Ombudsman (IO) mechanism was institutionalized in 2015 in all public sector banks and selected private sector and foreign banks. Since then, all scheduled commercial banks (besides regional rural banks) that have more than ten outlets in India come under the coverage of the IO scheme.

The IO was set up to ensure that bank customers get an independent review of their grievances and undivided attention is paid to resolve their complaints before they approach the Banking Ombudsman.

To support the Ombudsman Framework, the RBI launched the Complaint Management System in June 2019 that digitalized the processing of complaints received in the offices of Banking Ombudsmen and Consumer Education and Protection Cells. The CMS is a software application on the RBI's website through which customers can lodge their complaints against any of the entities regulated by the RBI.

There is still scope left for improvement, if one enhances the corporate governance in the banking industry. If banks are penalized with immediate effect, it will set an example for other banks to not violate the rights of their customers and provide a high standard of service.

There have been many suggestions on how to improve the current system and make it more accommodative and inclusive. It is important to enhance the services provided to the customers by making the procedure more flexible, informal and leading to a quicker outcome. An emphasis on technology to facilitate interpersonal customer service is also required. To improve the given situation, significant share of learning, with ombudsman plans taking charge to utilize casework insights to assist banks in enhancing the quality of service provided, and adopting a key strategy to manage future altercations. Last but not the least, sustained operational productivity is required. Ombudsman schemes should be eager to manage complaints, build reputations based on trustworthiness, and steer clear of backlogs.

The amount of transactions has significantly increased due to the newer payment methods and banks introducing newer products and services. This, however, increases the ambit for complaints. The resolution is important but what is equally important is the speed at which one reaches the settlement. If the complaints are met with unnecessary delay, customer retention becomes unlikely as people will prefer to shift their account to another bank instead of waiting for their issues to be responded to.[13]

Despite an increase in the amount of complaints, there has not been an adequate increase in the number of offices of the banking ombudsman. This is something that needs to be looked into, by the RBI to ensure the pace of complaint management is not slowed down over time.[14]

The Ombudsman needs to come across as an unbiased authority to gain the trust of consumers and ensure their protection.

The following are the metrics used to assess good governance and the scope of improvement:
Independence of the Institution
In order for the institution to be truly effective it is vital that it remain as independent in its functions as possible and free from any kind of external political or administrative interference. It is only when full freedom is granted in the budget and recruitment of personnel that they are considered independent. In addition, the personnel should be appointed in long fixed-term and given a high fixed salary.

The true independence of the institution is an important consideration as far as good governance is concerned. Compared to other countries, our system of appointment of the ombudsman is very different. In India, the appointment of the ombudsman is completely in the hands of the RBI from amongst its own employees.

This needs to be revised to ensure that the objective of the ombudsman scheme is not lost. For the appointment of the ombudsman, it would be helpful to have an independent counsel under the RBI which would include representatives of customers as well as banks. The council should be free to appoint any qualified person. It is important that whoever is appointed should have sufficient knowledge and experience in the banking sector and a legal understanding as well.[15]

The banking ombudsman in India has full freedom when it comes to the budget and can spend money as and when the need be. In India, banking ombudsman have a fixed tenure of three years which can be renewed and a high fixed salary but research suggests that ombudsmen prefer being promoted to higher positions than to be reappointed for another term.[16]

Accessibility of the Institution
Awareness amongst the public is vital for the success of this institution. The first step required is promotion of the scheme and education on the procedure of the same to build awareness and accessibility. This is where availability of resources like local offices, regional and local personnel and proper procedures becomes important. It is imperative that these resources be organized in a manner easily accessible to the wider public.

The offices of the Banking Ombudsman have initiated outreach programs to build awareness. Some of the ways adopted to do this include conducting awareness workshops, involvement in exhibitions, interface with banks, marketing and advertising. If the customers are well equipped with knowledge about their rights, then those rights will be better protected and customers will hesitate less in approaching the ombudsman. Their awareness will spark their vigilance.[17]

In rural areas, advertisement campaigns were made available in regional languages so as to reach more people. To increase the impact of these outreach programs, each bank branch must come up with a structure to disseminate information to customers about the scheme and provide clarity as to its practical benefits over approaching legal forums.

For instance, as a way of creating awareness about the banking ombudsman scheme, schools in Telangana and Andhra Pradesh included lessons on banking ombudsman in their syllabus in the higher grades between the academic years 2013-14 and 2014-15. In 2011, it was decided at the Annual Conference of Banking Ombudsmen that Townhall events will be conducted by each ombudsman office within its jurisdiction in tier two cities. This however was not taken seriously and each office conducted only two-three events annually.[18]

Defend Jurisdiction and Adequate Power
To avoid clashes and conflict with other state bodies, a significant step would be to assign a defined jurisdiction to this institution and to empower them with adequate powers. Another factor that could increase the efficiency of the Ombudsman is if the scheme is codified in order to entrust the Ombudsman with certain authorities that the district court enjoys. For instance, the power to summon witnesses, to legally demand disclosure of confidential information, and to hold an inquiry.

This will help ensure the functioning is smooth. Most importantly, the RBI has to verify that the banks implement the awards granted by the Ombudsman. In the absence of this, people are not likely to have faith in the scheme. In states like Kerala where a lot of cooperative banks are working, the jurisdiction of the ombudsmen needs to be expanded to cooperative banks.[19]

Conclusion
The effort initiated by the Reserve Bank of India to protect citizens and provide them with a dignified quality of service by holding the banks accountable is truly commendable. Under the ombudsman system, one does not an attorney to begin the process. This is what makes the system accessible to the poor and simple for all.

However, for these efforts to be utilized to the fullest extent, awareness is required. If people are uneducated about the procedure of grievance redressal, and the grounds on which they can hold the banks liable, they will feel alienated from the system and will not approach it. The awareness has to reach the grass-root level, which will require a combined effort from the RBI and the Central Government of India to institute specific policies in the banking sector.

End-Notes:

1. I.P. Massey, Administrative Law, Eastern Book Company (7th Ed.)
2. Ibid
3. Ibid
4. Durga Hotel Complex v. Reserve Bank of India, (2007) 5 SCC 120)
5. Ahmad F, and Konnakkatti N, Good Governance And Banking Ombudsman In India (2017) accessed 23 May 2020 [Ahmad]
6. Reserve Bank Of India - Publications' (M.rbi.org.in, 2019) accessed 8 May 2020
7. Dhawan S, 'Banks Now Liable For Mis-Selling Insurance: Here Is How To Complain To Banking Ombudsman' (The Economic Times, 2018) accessed 23 May 2020
8. Ibid
9. Shravi P, 'Overview Of Banking Ombudsman Scheme - Ipleaders' (iPleaders, 2018) accessed 10 May 2020
10. Sethi S, 'Banking Ombudsman Scheme - Law Times Journal' (Law Times Journal, 2020) accessed 16 May 2020
11. Athena Energy Ventures Pvt. Ltd. vs .Andhra BankAIR2019Delhi165
12. Corporate Bank vs. Navin ShahAIR 2000 SC 761
13. Saleem S, and Borate N, 'Is Banking Ombudsman Consumer-Friendly?' (Livemint, 2019) accessed 8 May 2020
14. Asif M, and Bukhari S, Institutional Analysis Of Ombudsman: (A Comparative Study Of Pakistan, India, UK And USA) (2013) accessed 23 May 2020
15. Ahmad F, Supra, Note 5
16. Malyadri, Pacha&Solety, Sirisha. (2012). Success of banking ombudsmen scheme: Myth or reality. International Journal of Research Studies in Management
17. Ahmad F, Supra Note 5
18. Ibid
19. Ibid