Internal ombudsmen must focus on fair outcomes, Swaminathan says
Reserve Bank of India Deputy Governor Swaminathan J urged banks and regulated entities to empower their internal ombudsmen and focus on fair complaint resolution rather than technical closure. Speaking in Mumbai, he noted that unresolved grievances carry reputational and regulatory costs.
Fairness over procedural compliance
Addressing bank executives and internal ombudsmen in Mumbai, Swaminathan emphasized that grievance redress is a core operational function rather than a cost center.
He cautioned against mechanical concurrence with earlier decisions, stating that internal ombudsmen must evaluate if customer outcomes are reasonable and fair.
Swaminathan highlighted a key concern: a significant portion of complaints ultimately resolved in favor of customers by the RBI Ombudsman were never referred to internal ombudsmen in the first place.
He urged boards to treat complaint trends as vital business intelligence and to prevent complaints from bypassing internal ombudsman mechanisms due to classification errors.
From complaint closure to prevention
Swaminathan called on financial institutions to move from individual complaint handling to systemic root cause analysis.
Recurring complaints usually point to underlying operational or process flaws that require redesign, staff training, or stronger internal controls.
While digital technology enables rapid transactions and provides analytics for early trend detection, he stressed that software cannot replace independent judgment, empathy, and fair treatment.
Moral suasion is not enough
The RBI correctly diagnoses that internal ombudsmen often act as corporate rubber stamps.
Relying on moral suasion alone will not fix systemic classification errors that bypass internal review.
Without concrete supervisory penalties, customer fairness will stay secondary to procedural speed.