Module: | Priority Sector, Consumer Protection & Digital Lending
Q117: Consider the following statements regarding the operational constraints and procedural mandates for the Internal Ombudsman (IO) in banks. Which of the following is/are correct?
1. Banks are strictly prohibited from providing the contact details of the IO in the public domain.
2. The IO is authorized to handle complaints received directly from customers, if the bank fails to resolve them initially.
3. The IO is required to record a "reasoned decision" in every case reviewed.
4. If a complaint is escalated to the RBI Ombudsman without prior IO review, the bank must necessarily seek the IO's comments, and submit them to the RBI Ombudsman.
2. The IO is authorized to handle complaints received directly from customers, if the bank fails to resolve them initially.
3. The IO is required to record a "reasoned decision" in every case reviewed.
4. If a complaint is escalated to the RBI Ombudsman without prior IO review, the bank must necessarily seek the IO's comments, and submit them to the RBI Ombudsman.
✅ Correct Answer: B
The correct answer is Option B. Statement 1 is correct: Banks must not publish the IO's contact details.
Statement 2 is incorrect: The reason for the privacy rule is that the IO shall not handle complaints received directly from customers; the IO is an internal reviewer of rejected complaints, not a public interface.
Statement 3 is correct: The IO must provide a "reasoned decision" for every case to ensure accountability.
Statement 4 is correct: If a complaint skips the IO process (e.g., the customer goes straight to the RBI), the bank is still obligated to obtain the IO's comments retrospectively and submit them to the RBI Ombudsman.
A Reasoned Decision is a formal written explanation that outlines the logical basis, evidence, and rules used to arrive at a conclusion, ensuring the verdict is not arbitrary.
The privacy of the IO's contact details protects the officer from external pressure, harassment, or a flood of premature complaints that have not yet been processed by the bank.
Retrospective review occurs when a process step is missed; in this context, it ensures that the IO's independent opinion is placed on record even if the customer has already moved to the regulator.
This procedural mandate reinforces the IO's role as a vital filter and quality check for the entire banking system's grievance redressal.
If an IO frequently disagrees with the bank's rejections, it signals to the regulator that the bank's frontline resolution processes are defective.
The RBI Ombudsman relies on the IO's comments to understand why the bank felt justified in rejecting the customer's initial claim.
Statement 2 is incorrect: The reason for the privacy rule is that the IO shall not handle complaints received directly from customers; the IO is an internal reviewer of rejected complaints, not a public interface.
Statement 3 is correct: The IO must provide a "reasoned decision" for every case to ensure accountability.
Statement 4 is correct: If a complaint skips the IO process (e.g., the customer goes straight to the RBI), the bank is still obligated to obtain the IO's comments retrospectively and submit them to the RBI Ombudsman.
A Reasoned Decision is a formal written explanation that outlines the logical basis, evidence, and rules used to arrive at a conclusion, ensuring the verdict is not arbitrary.
The privacy of the IO's contact details protects the officer from external pressure, harassment, or a flood of premature complaints that have not yet been processed by the bank.
Retrospective review occurs when a process step is missed; in this context, it ensures that the IO's independent opinion is placed on record even if the customer has already moved to the regulator.
This procedural mandate reinforces the IO's role as a vital filter and quality check for the entire banking system's grievance redressal.
If an IO frequently disagrees with the bank's rejections, it signals to the regulator that the bank's frontline resolution processes are defective.
The RBI Ombudsman relies on the IO's comments to understand why the bank felt justified in rejecting the customer's initial claim.