OMBUDSMAN SCHEME FOR DIGITAL TRANSACTIONS, 2019

[Mr. M. GOVINDARAJAN]

Introduction

The Reserve Bank of India, in the public interest and in the interest of conducting the business relating to payment systems provided for a mechanism of Ombudsman for redressal of complaint against deficiency in services related to digital transactions and it has formulated a scheme called as ‘Ombudsman Scheme for digital transactions, 2019’ which came into effect from 31.01.2019.  The scheme requires the system participants to comply with the scheme.  The scheme further requires the system participants to display prominently in all its offices and branches the internal customer grievance redressal framework, including contact details of the designated nodal officer to handle the customer complaints / grievances along with the escalation matrix.

Digital transactions

Clause 2(5) of the Scheme defines the expression ‘digital transactions’ as a payment transaction in a seamless system effected without the need for cash at least in one of the two legs, if not in both. This includes transactions made through digital / electronic modes wherein both the originator and the beneficiary use digital / electronic medium to send or receive money.

Establishment of Ombudsman

• The Reserve Bank may appoint one or more of its officers in the rank of Chief General Manager or General Manager to be known as Ombudsman for Digital Transactions to carry out the functions entrusted to them by or under the Scheme.
• The appointment may be made for a period not exceeding three years at a time.
• The office of the Ombudsman for Digital Transactions shall be located at such places as may be specified by the Reserve Bank.

Complaint

      Clause 2(4) of the Scheme defines the term ‘complaint’ as any representation in writing or through electronic means containing grievance/s alleging deficiency in service by the System Participants.

      Any person may file a complaint free of cost with the Ombudsman for Digital Transactions having jurisdiction on any one of the following grounds alleging deficiency in service-

• Prepaid payment instruments-
  • Failure in crediting merchant's account within reasonable time;
  • Failure to load funds within reasonable time in wallets / cards;
  • Unauthorized electronic fund transfer
  • Non-Transfer / Refusal to transfer/ failure to transfer within reasonable time, the balance in the Prepaid Payment Instruments to the holder’s ‘own’ bank account or back to source at the time of closure, expiry of validity period etc., of the Prepaid Payment Instrument
  • Failure to refund within reasonable time / refusal to refund in case of unsuccessful / returned / rejected / cancelled / transactions;
  • Non-credit / delay in crediting the account of the Prepaid Payment Instrument holder as per the terms and conditions of the promotion offer(s) from time to time, if any;
  • Non-adherence to any other instruction of the Reserve Bank on Prepaid Payment Instruments

• Mobile/electronic fund transfers-

• Failure to effect online payment / fund transfer within reasonable time;
• Unauthorized electronic fund transfer;
• Failure to act upon stop-payment instructions within the time frame and under the circumstances notified to the customers within prescribed timeline;
• Failure to reverse the amount debited from customer account in cases of failed payment transactions within prescribed timeline;
• Non-adherence to any other instruction of the Reserve Bank on Mobile / Electronic fund transfers.

• Non-adherence to instructions of Reserve Bank / respective System Provider to System Participants, on payment transactions through Unified Payments Interface / Bharat Bill Payment System/ Bharat QR Code / UPI QR Code on the following ground-
  • Failure in crediting funds to the beneficiaries’ account;
  • Failure to return within reasonable time the payment to the originating member in case of failure to credit the funds to the beneficiary’s account;
  • Failure to / delay in refund of money back to account in case of transaction failure or declined transactions (i.e. failed transactions);
  • Non-adherence to any other instruction of the Reserve Bank on payment transactions / through Unified Payments Interface (UPI) / Bharat Bill Payment System (BBPS)/ Bharat QR Code / UPI QR Code.

• Non-reversal / failure to reverse within reasonable time, funds wrongly transferred to the beneficiary account due to lapse at the end of System Participant.
• Any other matter relating to the violation of the directives including on fees / charges, if any, issued by the Reserve Bank in relation to digital transactions.

Pre-requisite for making a complaint

• No complaint to the Ombudsman for Digital Transactions shall lie unless-
  • The complainant had, before making a complaint to the Ombudsman for Digital Transactions,
    • made a written representation to the System Participant who had rejected the complaint, or
    • the complainant had not received any reply within a period of one month after the System Participant received her/his representation, or,
    • the complainant is not satisfied with the reply given to her/him by the System Participant;

Non entertainable complaints

• The complaint isin respect of the same cause of action which was settled or dealt with on merits by the Ombudsman for Digital Transactions in any previous proceedings, whether or not, received from the same complainant or along with one or more complainants or one or more of the parties concerned with the cause of action;
• The complaintpertains to the same cause of action, for which any proceedings before any court, tribunal or arbitrator or any other forum is pending or a Decree or Award or Order has been passed by any such Court, Tribunal, Arbitrator or Forum
• The complaint isfrivolous or vexatious in nature
• The complaint falls under the disputes covered under Section 24 of the Payment and Settlement Systems Act, 2007; and
• The complaint pertains to disputes arising from a transaction between customers.

Limitation

• The complaint shall be made within one year after the complainant has received reply from the system participant.
• Where no reply is received from the systemparticipant the complaint shall be filed within one year and one month from the date of representation he submitted before the system participant.
• In exceptional circumstances as decided by the Ombudsman, the complaint is made before the expiry of the period of limitation prescribed under the Indian Limitation Act, 1963 for such claims.

Procedure for disposal of complaint

• Any person who has a grievance on any one or more of the grounds may, himself or through his authorized representative (other than an advocate), make a complaint to the Ombudsman for Digital Transactions within whose jurisdiction the branch or office of the System Participant complained against is located.
• a complaint arising out of services with centralized operations, shall be filed before the Ombudsman for Digital Transactions within whose territorial jurisdiction the billing / declared address of the customer is located
• The complaint in writing shall be duly signed by the complainant or his authorized representative stating clearly the following-
  • The name and the address of the complainant;
  • The name and address of the branch or office of the System Participant against which the complaint is made;
  • The facts giving rise to the complaint;
  • The nature and extent of the loss caused to the complainant; and
  • The relief sought for.
• The required documents shall be accompanied along with the complaint.
• A complaint made through electronic means may also be accepted.
• The Ombudsman may require the system participant to provide any information or furnish certified copies of any document relating to the complaint which is or is alleged to be in its possession.
• If the system participant fails to provide the information as required by the Ombudsman without sufficient cause it may lead to the inference that the information, if provided, or copies, if furnished, would be unfavorable to the system participant.
• The Ombudsman shall maintain the information secretary but in certain exceptional circumstances he may disclose the information.
• The Ombudsman shall send a copy of the complaint to the system participant and try to promote a settlement of the complaint by an agreement between the complainant and system participant through conciliation or mediation.
• If require the Ombudsman may call for a meeting of system participant and the complainant together to promote an amicable resolution.
• If agreeable mutually acceptable resolution then it may be signed by both the parties and after that the Ombudsman shall pass the order in accordance with the agreement.
• The proceedings before the Ombudsman shall be summary in nature.
• If no agreeable resolution is there the Ombudsman may allow the parties to present their cases and after giving an opportunity of being heard to both the parties he shall pass an award along with the reasons for passing such award.
• The Ombudsman is having power to award compensation upto the actual loss suffered or ₹ 20 lalks whichever is lower.
• The Ombudsman, in addition to the above compensation, may award compensation not exceeding ₹ 1 lakh taking into account the loss of the complainant's time, expenses incurred by the complainant, harassment and mental agony suffered by the complainant.
• A copy of the award shall be sent to the complainant and the system participant by the Ombudsman at free of cost.

Lapse of award

• An Award shall lapse and be of no effect unless the complainant furnishes to the System Participant concerned within a period of 30 days from the date of receipt of copy of the Award, a letter of acceptance of the Award in full and final settlement of his/her claims.

Compliance by system participant

• The System Participant shall, unless it has preferred, within one month from the date of receipt by it of the acceptance in writing of the Award by the complainant comply with the Award and intimate compliance to the Ombudsman for Digital Transactions.
• In the event of non-implementation of settlement or the Award, the complainant may represent to the Reserve Bank and the Reserve Bank may initiate such action under the provisions of applicable Statutes, as it deems fit.

Rejection of complaint

• The Ombudsmanmay reject a complaint at any stage if it appears to him that the complaint made is-
  • not on the grounds of specific complaints;
  • filed beyond the limitation period;
  • complaint is filed without sufficient cause;
  • the complaint is not pursued by the complainant with reasonable diligence;
  • in the opinion of the Ombudsman there is no loss or damage or inconvenience caused to the complainant.
• The Ombudsman, shall, if it appears at any stage of the proceedings that the complaint pertains to the same cause of action, for which any proceedings before any court, tribunal or arbitrator or any other forum is pending or a decree or Award or order has been passed by any such court, tribunal, arbitrator or forum, pass an order rejecting the complaint giving reasons thereof.

Appeal

• Any party aggrieved on the order passed by the Ombudsman or on rejection of the complaint may file appeal before the Appellate Authority within 30 days of the receipt of the order or rejection of the complaint.
• In case of appeal by the System Participant, the period of 30 days for filing an appeal shall commence from the date on which the System Participant receives letter of acceptance of Award by complainant.
• The appeal may be filed by a System Participant only with the previous sanction of the Chairman or, in his absence, the Managing Director or the Executive Director or the Chief Executive Officer or any other equivalent officer.
• The Appellate Authority may, if satisfied that the applicant had sufficient cause for not making the appeal within time, allow a further period not exceeding 30 days.
• The Appellate Authority shall, after giving the parties a reasonable opportunity of being heard:
  • dismiss the appeal; or,
  • allow the appeal and set aside the Award; or,
  • remand the matter to the Ombudsman for fresh disposal in accordance with such directions as the Appellate Authority may consider necessary or proper; or,
  • modify the Award and pass such directions as may be necessary to give effect to the Award so modified; or,
  • pass any other order as it may deem fit.