Banking Article, Banking Finance 2020, Banking Finance April 2020

Ombudsman for Digital Transaction

On 1st.July 2015 Govt Of India launched “Digital India” campaign. The motto is “Power to Empower”. The Govt. targeted to transfer maximum financial & non financial transaction on digital platform. Govt. has also taken initiatives to moving towards cashless economy. In our country the cash handling cost is approx. 0.25% of GDP. Cash transactions  involves risk ,inconvenience and monitoring  problem. On 11thApril 2016, NPCI (National Payment Corporation Of India) started new digital transaction gateway as UPI (Unified Payment Interface ) . After Nov 2016, demonetization the volume of digital transaction increased many folds. The Govt.of India/RBI announced many incentive to promote digital transactions such lower the MDR(merchant discount rate ),incentive for digital transaction in addition to DBT. Govt. of India taken initiative and   4G/3G network is made available in remote area. As a result of these initiatives the digital transactions increased many fold as shown in table below.

                                     Data of transaction on Digital Platform

Financial Year Volume No.(In Million) Value Rs. (in Billion)
2014-15 3709.46 76111.29
2015-16 5406.41 85271.12
2016-17 7138.40 96626.07
2017-18 9855.6 113551.85
2018-19 16799.46 136711.08
April-19 to  July-19 7422.43 52139.47

                                                                                             Source: NPCI

The digital transaction in volume term recorded a growth(Y to Y)  of  38.06 % during 2017-18 and 70.46% during 2018-19.In value term the growth (Y to Y)is 17.51 % in 2017-18 and 20.39% in 2018-19.It is excepted that the digital transactions will increase more than4 times from Rs.2069 cr in Dec-18 to Rs.8707 cr in Dec-2021. RBI also push for 44% of debit card transaction on POS in next two years.

Many non-banking  entity/organization come with state of the art technology and  providing the facilities of transaction through digital platform. The main player of the digital platform are Paytm,PhonePe,Google Pay,BHIM. As the volume of digital transaction increases, the threat of digital fraud also increases. The number of complains, relating to  fraud in digital transaction increased many fold. In the public interest and in the interest of conduct of business relating to payment gateway, it is necessary to provide for a mechanism of speedy redresal of complaints against deficiency in services related to digital transactions. In exercise of the powers conferred under Section 18 of the Payment and Settlement Systems Act, 2007,  Reserve Bank Of India formulated & implemented Ombudsman scheme for Digital Transactions  on 31-01-2019.


  • The scheme come in force from 31-01-2019.
  • The Ombudsman is an officer of RBI, in the rank of Manager/Chief Gen. Manager  and appointment will be for a maximum period of 3 years.
  • The office of Ombudsman of Digital Transaction is located in 21 centers across country.
  • Only the digital transaction complaint related to non-banking entity are taken by Ombudsman of Digital Transactions.
  • The digital transaction relating to banking entity will be taken by Banking Ombudsman(Gen).
  • The non-banking entity cannot escape from the liability in case the transaction enabled on third party platform .It will be the responsibility of the payment service provider to resolve customer dispute arising out of such transaction.

Pre condition of filling complain

  • The complainant must first approach the service provider for resolution/redressal of the grievance. If the  grievance is not redressed  by the service provider or not replied within one month from the date of complain or the complainant is not satisfied with the redressal  of  complain then the complainant can file a complain with Ombudsman of Digital Transactions within 12 months from the date of  rejection/redressal.
  • In exceptional cases, the Ombudsman can allow to admit a complain within the limitation period under Indian Limitation Act 1963 after the expiry of 12 months period.
  • If the complainant file a complaint on other forum like court, consumer court then he/she cannot file the complain to Ombudsman of Digital Transactions.
  • The complain must not be relating to dispute cover under sec.24 of Payment and Settlement Act 2007(dispute/complain between two or more service providers).
  • The complain does not relating to dispute between customers.
  • The complain is not in vexatious or frivolous in nature.

Basis of Complain

  • The basis of complain regarding failure/delay of service provider in loading the funds in e-wallet, crediting the fund in merchant’s account, refund the amount within reasonable time.
  • Non-transfer, failure to transfer the fund on instruction of customer.
  • Non-adherence to any other instruction of RBI.
  • Failure in online fund transfer/credit in account.
  • Unauthorized electronic fund transfer of customer.
  • Fail to follow the stop-payment instruction of customer in time.
  • Complain relating to UPI/Bharat Bill Payment System, fall within the preview of The Ombudsman of Digital Transactions.

Procedure of filling the complain with Ombudsman of Digital Transactions

  • The complainant after disposal/rejection of complain by service provider can file complain to Ombudsman of Digital Transactions within 12 months of disposal /rejection of complain by service provider.
  • The complain can be made by the complainant or the authorized representative (except advocate) of complainant.
  • Any complain forwarded by Govt.of India or RBI will also be considered for redressal by Ombudsman of Digital Transactions.
  • The complain must have following details:
  • The name and address of complainant
  • The name and address of head office/branch of service provider
  • Facts /reason of complain with all available documentary evidence
  • The nature & extent of loss with relief sought for
  • No fee or charge is payable for the filling of complain

System of Redressal of complain

The Ombudsman of Digital Transactions will send notice to all parties after receiving the complain. The Ombudsman go through the re-presentation/evidence of parties and will try to resolve the dispute though

  • Settlement by agreement between parties.
  • Settlement by conciliation and mediation between parties.
  • Passing an award as per the provision of scheme.
  • The maximum award amount is Rs20.00 lakhs.
  • In addition to this Ombudsman can award Rs1.00 lakh for the loss, expenses and mental harassment.
  • After receiving the award, the complainant have to send acceptance of award to the service provider concerned within 30days otherwise the award have no effect.
  • After receiving the acceptance of award by complainant, the service provider have to comply the award within 30 days.


  • The Appellate Authority for the award is Deputy Governor, RBI (In-Charge of the Deptt.of Ombudsman of Digital Transactions).
  • Appeal against the award can be made to Appellate Authority within 30 days from the date of receipt of communication of award/rejection of complaint.
  • Any one of parties of complain, can go to Appellate Authority against the redressal  of the complain .
  • The Appellate Authority  shall, after giving the reasonable opportunity to parties
  1. Dismiss the appeal.
  2. Allow the appeal and set aside the award.
  3. Modify the award and pass a new direction/order.
  4. Refer the matter to Ombudsman of Digital transaction for fresh disposal.

Leave a Reply

Your email address will not be published. Required fields are marked *