The Indian financial system has undergone a profound structural metamorphosis, transitioning from a localized, elite service model—often termed the ‘Class Bank’ model—to one characterized by mass market penetration, aptly named the ‘Mass Bank’ era. This exponential increase in customer volume, coupled with the rapid digital adoption of services such as the Unified Payments Interface (UPI) and growth in Non-Banking Financial Companies (NBFCs), has created a complex ecosystem where customer disputes are both frequent and multifaceted. Resolving these disputes through traditional judicial channels presents significant challenges, primarily related to procedural cost, time, and the volume of pending litigation.
The Banking Ombudsman Scheme (BOS), first established by the Reserve Bank of India (RBI) in 1995, was conceived to provide a statutory framework for Alternative Dispute Resolution (ADR). The mechanism operates under the powers conferred by Section 35A of the Banking Regulation Act, 1949. Functioning as a quasi-legal, independent body, the Ombudsman mechanism focuses on achieving expeditious, cost-free, and inexpensive redressal of grievances, thereby strategically reducing the burden placed upon the formal court system.
International Journal of Political Science and Governance
