Complaints By Bank Customers Must Not Be Mechanically Rejected: Delhi High Court Issues Directions To Strengthen RBI Ombudsman System
The High Court held that customer grievances under the Reserve Bank-Integrated Ombudsman Scheme, 2021, must not be rejected through automated processes, and mandated a more accountable, supervised, and consumer-friendly mechanism to ensure effective redressal.
The High Court of Delhi underscored that complaints made by banking consumers, particularly victims of alleged unauthorised transactions, cannot be dismissed by the Ombudsman in a perfunctory or mechanised manner.
The Court directed the Reserve Bank of India to strengthen its grievance-handling systems so that complaints are adjudicated meaningfully.
The Court was hearing a writ petition challenging the handling of a fraudulent credit card transaction and the subsequent mechanical closure of complaints by the Ombudsman, despite the petitioner contesting liability and seeking protection from coercive recovery measures.
A Bench comprising Justice Prathiba M. Singh, while emphasising that “steps shall be taken for ensuring that all complaints filed by the customers are not rejected simply by a mechanised process”, issued a series of directions to strengthen the Reserve Bank-Integrated Ombudsman Scheme, 2021.
Background
The respondent bank issued the petitioner a credit card. Subsequently, another card was issued without the petitioner's request. Soon thereafter, a disputed transaction appeared in the statement of the second card, which the petitioner asserted was fraudulent as the card had never been activated or used by him.
He filed complaints both with the bank and with the cyber cell. An interim reversal of the disputed charge was made initially, but later the bank reinstated the amount and levied a penalty and interest. Multiple recovery calls and notices were issued despite pending proceedings.
The petitioner then approached the Ombudsman by filing two complaints; however, both were closed mechanically, one for having been allegedly lodged by an advocate, and another on a technical ground that the petitioner had not approached the bank first, which he contended was contrary to the record.
The petitioner, therefore, approached the High Court seeking restoration of the reversed amount, correction of his CIBIL score, and restraint on further coercive action. A contempt petition was also filed due to continued recovery steps despite the Court’s interim protection.
Court’s Observation
The Delhi High Court examined the records showing system-generated communication in large volumes, making it difficult for consumers to identify responsible officials or obtain accountability. It was observed that the Ombudsman must serve as an effective dispute resolution forum and not function as a mere automated rejection mechanism.
The Court noted that the complaint closure under Clause 10(2) of the Reserve Bank-Integrated Ombudsman Scheme, 2021, had been undertaken through a system-generated process without human scrutiny at any stage. It stressed that the Scheme mandates a structured opportunity for consumers to seek resolution and that summary rejection of complaints increases litigation in civil courts and consumer fora.
While acknowledging the role of digital communication and automated systems in banking, the Court held that this cannot dilute the duty of the regulated entities and the RBI to provide meaningful accountability and effective grievance redressal. The Court also observed that collection practices employed in the matter had caused harassment and stated that regulatory safeguards under RBI’s circulars on customer protection and recovery agents must be strictly adhered to.
The Court observed that the complaint redressal framework under the Reserve Bank-Integrated Ombudsman Scheme, 2021, must function as an effective grievance resolution system and not merely as a mechanised rejection process. It emphasised that technical mistakes committed by consumers should not result in outright dismissal of complaints at the first instance, and an opportunity must be provided to rectify such errors.
The Court directed that any final rejection of complaints by the Ombudsman must undergo a second-level human scrutiny by legally trained personnel so that grievances are not dismissed due to minor defects. It further directed the Reserve Bank of India to ensure that banks clearly display on their respective websites the complete hierarchy and process for filing complaints, enabling customers to approach the concerned officials without confusion.
The Court concluded that strengthening and supplementing human resources at the Ombudsman’s office would significantly reduce unnecessary litigation before consumer fora and courts, ensuring that disputes are resolved at the regulatory level itself.
Conclusion
The Court recorded that the disputed amount had been re-credited and held that no interest or penalty could be recovered in relation to it. The Court directed that the petitioner’s CIBIL score must not be altered based on the disputed transaction. Costs were awarded to the petitioner for the harassment faced through recovery efforts.
The writ petition was disposed of with clear directions, and the matter was posted for reporting compliance.
Cause Title: Sarwar Raza v. Ombudsman, Reserve Bank of India & Anr. (Neutral Citation: 2025:DHC:10520)
Appearances:
Petitioner: Petitioner appeared in person.
Respondents: Senior Advocate Sanjeev Sindhwani, with Advocates Suruchi Suri, Ramesh Babu, Rohan Srivastava, Jagriti Bharti and Tanya Chowdhary
