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RBI may create ombudsman for digital transactions

RBI may create ombudsman for digital transactions
Photo Credit: VCCircle

The Reserve Bank of India has proposed setting up an ombudsman scheme specifically for online payments in light of the rising number of complaints regarding digital transactions, it said in its Annual Report 2017-18.

The report added that the broader intent behind the move was to enhance consumer protection for financial transactions, especially by leveraging technology.

“The increasing volume of complaints involving digital payments being received by the offices of BOs (Banking Ombudsman)  and the large number of Prepaid Payment Instruments (PPIs) issued by banks and non-bank issuers have necessitated the establishment of a separate Ombudsman for digital transactions,” the report stated.

Accordingly, the RBI will set up dedicated offices at select centres and will also have nodal officers as part of the modalities in creating this institution.

Grievances relating to digital financial transactions accounted for 19% of total complaints during 2016-17 and this figure rose to 28%, as on June this year, the report said.

“Although a separate Ombudsman Scheme for complaints relating to digital financial transactions does not exist 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,” the report added.

The banking regulator has recently been active in streamlining and regulating online financial services.

Late last year, the RBI issued directions to govern the workings of non-banking financial companies engaged in peer-to-peer lending.

Accordingly, it stated that no non-banking institution other than a company can undertake P2P lending without obtaining a certificate of registration from it. Besides, every company seeking registration should have a net-owned fund of not less than Rs 2 crore, or as specified by the RBI. However, the regulator has given a breather to existing players—they can apply for registration as an NBFC-P2P within three months.

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