Good Governance and Banking Ombudsman in India

Abstract

A systematic institutional set up for ensuring the accountability and fairness in the functioning of the state and its institutions is prerequisite for the good governance. Banking sector is a service oriented sector. It needs a well designed mechanism of Redressal to the grievances of the stakeholders to ensure the better service to the people and in turn to fetch the confidence and satisfaction of the people. In view of providing a systematic and well organized system of Redressal mechanism to the customers, the Reserve Bank of India notified BOS (Banking Ombudsman Scheme) on June 14, 1995 as per the provision of Section 35A of the Banking Regulation act, 1949. Good Governance is basically concerned with accountability, transparency, reliability, predictability, openness, efficiency and effectiveness of the system. Accountability is the major concern in the organization/institution. Accountability gives responsibility to the individuals and institutions for their decisions and actions to ensure the objectivity. The issues related to accountability verily could be seen in all sectors wherever the public delivery is concerned. In the existing system policy formulation and monitoring of its implementation is being performed by the same institution/organization which leaves the objectivity under question. In order to ensure the better functioning of the public delivery system it is aptly required that both the functions should not be performed by the same institutions/ organizations. Monitoring of implementation of the policies should necessarily be given to the unbiased and different institution. The present argument gives strength to the ombudsman institution which works as watchdog being an external institution. The study looks at to explore the role of the Banking Ombudsman as a promoter of good governance in Indian banking sector. In order to answer the question, the theory of Good Governance and its integral principle, Accountability are taken into account. The Banking Ombudsman in India acts as an external organization which allows customers of bank to give complaints against the deficiencies. However, the efficiency and effectiveness of the Banking Ombudsman depends on different variables such independence of the institution, defined jurisdiction, accessibility of the institution to the public, and its efficiency in its work. These all factors are taken into account in this study.