Delhi High Court Issues Directions To Strengthen RBI Ombudsman Complaint System, Calls For Safeguards To Avoid Misuse

The Delhi High Court on Thursday issued directions to strengthen the system to deal with customer complaints by Reserve Bank of India (RBI) Ombudsman.

Justice Prathiba M Singh said that the intent of all financial regulatory mechanisms, including banks, financial institutions and regulators, must be to put in place adequate safeguards to avoid misuse, take stringent actions against perpetrators and to ensure that innocent credit card holders are not made to undergo harassment and frustration by incessant emails, messages and demands.

The Court directed RBI to take steps to ensure that all complaints filed by the customers are not rejected by the Ombudsman simply by a mechanised process.

It added that if there are any mistakes made by complainants, an opportunity ought to be given to them to correct any errors or mistakes.

The Court held that rejection of complaints by the Ombudsman by a mechanised model results in more disputes being filed in consumer forums, commercial Courts, civil Courts and writ petitions.

“Issues which ought to be resolved at the level of the Ombudsman of the RBI shall be resolved at that stage itself and for the said purpose, if any strengthening, expansion or supplementing of the human resource at the Ombudsman's office is required, the same shall be undertaken,” the Court said.

It added that whenever the complaints filed before the RBI Ombudsman are finally rejected, the same shall undergo a second level human supervision process, by trained legal personnel for e.g. retired judicial officers, lawyers, etc., who are legally trained for at least ten years, so that complaints are not rejected due to small errors.

The Court said that if the complaint redressal mechanism adopted by the Ombudsman is made more effective and efficient, litigation in Courts and consumer forums can be reduced considerably.

“RBI shall issue directions to all banks regulated by them to create a flowchart in the complaints tab on their respective websites where the manner in which a customer can register a complaint with the customer care executive, branch manager, as well as the nodal officer can be communicated to the customers,” the Court said.

It added: “The Ombudsman of RBI shall also ensure that all banks and financial institutions clearly reflect on their respective websites, the hierarchy of all such officers who deal with consumer complaints, in the form of a flowchart.”

Justice Singh was dealing with a plea filed by a lawyer, Sarwar Raza, who was hounded for repayment of a fraudulent credit card transaction he never authorised.

Pursuant to the complaints made by him, the Citibank provisionally credited back the amount of Rs.76,777 to him. However, in July 2022 the Bank closed his complaint, made reversed the provisional credit granted to him, and commenced billing the disputed amount in the billing cycles from July 2022.

The ground for closure of his complaint was that the transaction had been affected through APIN/IPIN/OTP credentials, which he contended to not have entered, as the credit card had neither been activated, nor used by him.

Even thought the Ombudsman closed the complaint, the Bank continued to levy interest and penalty on the allegedly fraudulently debited amount from credit card.

Disposing of the plea, Justice Singh noted that the amount of Rs.76,777 had already been re-credited to Raza, which was sought by him.

The Court said that no payment of late fee, interest charge, or any amount in respect of the said amount shall be charged by the Bank.

“The CIBIL score of the Petitioner shall not be changed merely based on the disputed transactions and the same shall be restored, if there are no other grounds for changing the score,” the Court said.

Regarding the conduct of the recovery agents of the bank, the Court held the Bank responsible for the harassment caused to Raza and directed it to pay costs of Rs.1 lakh to be paid to him by January 15, 2026.

Title: SARWAR RAZA v. OMBUDSMAN RBI & ANR

Citation: 2025 LiveLaw (Del) 1616

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