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Proposal to merge banking, insurance ombudsman schemes

Sarbajeet K. Sen

NEW DELHI, March 25

IN an interesting move in the financial sector, the Finance Ministry is considering a proposal to consolidate the Ombudsman schemes of the banking and insurance sectors into an umbrella scheme.

Couple of rounds of high-level discussions for the proposed merger have already been held at the Finance Minstry, according to official sources.

If approved by the Government, the merger would have to be cleared by the two regulatory authorities — the Reserve Bank of India (RBI) and the Insurance Regulatory and Development Authority (IRDA).

The idea to merge the two schemes that have been running simultaneously for several years now had come up during discussions for a revised Ombudsman scheme for the banking sector.

While the Banking Ombudsman scheme has been in operation since 1995, the Insurance Ombudsman scheme was notified a few years later.

Official sources said that with the proposal to consolidate the schemes was a direct fallout of the creation of the new Financial Sector Division within the Finance Ministry. The new division has brought under one roof the banking and insurance divisions.

Also under consideration is granting of greater punitive powers to the Ombudsmen in dealing with redressal of consumer grievances. However, the details of the enhanced powers under consideration were not available.

The new scheme would also prescribe completely different eligibility criteria for the appointment of the Ombudsman. It has been proposed that serving officers be made eligible for being appointed as Ombudsmen by lowering the age criteria.

Thus, the minimum eligibility age is to be set at 55 years for senior Central Government officers to become Ombudsmen, with the rider that the person must have completed at least 25 years of service. However, a decision has been already taken that there would be no official intervention in the process of appointment.

As reported earlier by this paper, a decision has been taken that the RBI would retain its appointing authority under the new scheme. However, it would not be ascertained whether the IRDA would also take part in the appointment process should the offices of the Banking and Insurance Ombudsmen be merged under an umbrella scheme.

The new criteria being drafted for appointment has led to a temporary halt in the process of filling up of the vacancies that have arisen on account of retirement during the pendency of the formulation of the new scheme.

In the banking sector itself, there are six vacant offices of Banking Ombudsman in New Delhi, Bhopal, Jaipur, Bangalore, Kanpur and Hyderabad out of a total of 15 such offices.

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