Under what law, the Internal Ombudsman (IO) scheme 2018 gives statutory powers to Internal Ombudsman?
1. RBI Act
2. Banking Regulaton Act
3. Lokpal and Lokayukta Act
4. Companies Act
Answer : 2. Banking Regulaton Act
The Reserve Bank of India (RBI) has recently introduced Internal Ombudsman (IO) scheme 2018 to tighten internal grievance redressal system at Scheduled Commercial Banks (SCBs). In it, RBI has given statutory powers to Internal Ombudsman (IO) under section 35 A of the Banking Regulation Act, 1949. The central bank has tightened the selection and operating procedure for IO in banks and made it mandatory for lenders with more than 10 branches (excluding Regional Rural Banks) to have an independent authority to review complaints that were partially or wholly rejected by the respective banks. An ombudsman is a person officially charged with investigating and addressing public complaints or violation of rights. The tenure of the IO cannot be more than 5 years and it is not open to reappointment. An IO also cannot be removed without consent from the RBI. This new post will not report to the bank’s CEO but to the customer service committee of the bank.