• The Malaysian experience post the Asian crisis provides ways to address the crucial design imperatives:

o Effective management: The ARC has to be manned by seasoned distressed debt management
professionals.
o Fair price for asset purchases: The transfer of stressed assets to the ARC has to be at just right price neither
too high, nor too low. This would ensure that neither is the resolution process impaired, nor do
supernormal profits accrue to any stakeholder.
o Support from stakeholders
o ARC should have a pre-defined, limited shelf-life.
• Closing regulatory gap between the SARFAESI Act and IBC: The SARFAESI Act should be amended to allow
ARCs to acquire equity directly in companies sold under the IBC. This would improve the probability of
distressed companies receiving resolution plans.
• Setting up of a Distressed Loan Sales Trading Platform for receiving bids for NPAs for better price discovery.
• Governance reforms in the banks: There is a need for reforms in critical governance pillars such as the conduct
and operations of risk management departments in financial institutions, auditors, boards, rating agencies,
independent analysts and regulatory supervisors.
o Also, PSBs have to be provided professional autonomy and a level playing field with their private sector
counterparts.

3.6. INTEGRATED OMBUDSMAN SCHEME

Why in news?
Recently, Reserve Bank of India (RBI) announced an integrated ombudsman scheme “One Nation One
Ombudsman” to improve grievance redressal mechanism for bank customers.
More about News
• Currently, there are three separate ombudsmen for banks, non-banking finance companies (NBFCs) and
non-bank prepaid payment issuers (PPIs) that are wallets.
• These are operated by the RBI from 22 ombudsman offices located across the country.
• Now, the RBI has decided to integrate the three Ombudsman schemes and introduce centralised processing
of grievances following a ‘One
Related information
Nation One Ombudsman’ Internal Ombudsman (IO) Scheme, 2018
approach. • It was launched by the RBI to strengthen the internal grievance
• The move is expected to make redressal system of banks and ensure the complaints of the customers
the ombudsman mechanism are redressed at the level of the bank itself.
simpler, efficient and more • All Scheduled Commercial Banks having more than 10 banking outlets
responsive. (excluding Regional Rural Banks), are required to appoint IO in their
• The Integrated Ombudsman banks.
Scheme will be rolled out in June • The IO is mandated to examine customer complaints related to the
2021. deficiency in service on the part of the bank (including those listed in
the BOS 2006).
About Bank Ombudsman (BO) • Banks are mandated to internally escalate all the complaints which
• BO is quasi-judicial authority are not fully redressed to their respective IOs before conveying the
which is an Alternate Dispute final decision to the complainant.
Redressal mechanism for o Thus, the customers of banks need not approach the IO directly.
• Banks’ internal audit mechanism is required to monitor the scheme
resolution of disputes between a
apart from regulatory oversight by RBI.
bank and its customers. Ombudsman Scheme for Digital Transactions (OSDT)
o RBI in 1995 introduced the BO • RBI launched OSDT in 2019 under Payment and Settlement Systems
scheme under Section 35A of Act, 2007.
the Banking Regulation Act, • It provides a cost-free and expeditious complaint redressal
1949. mechanism relating to deficiency in customer services in digital
o In 2006, the RBI revised the transactions conducted through non-bank entities (like mobile wallets
BO scheme under which the or tech enabled payment companies using UPI for settlements)
BO and the staff in the offices regulated by RBI.
of the BO are drawn from the • Ombudsman for Digital Transactions is a senior official appointed by
serving employees of the the RBI (appointed for a period not exceeding 3 years at a time).
Reserve Bank.
33 www.visionias.in ©Vision IAS