Delhi HC issues directions to RBI to strengthen complaint redressal; slaps ₹1 lakh costs on Citibank for harassment

The Delhi High Court has issued a slew of directions to the Reserve Bank of India (RBI) to ensure that its banking ombudsman does not simply reject the consumer complaints in a mechanical manner [Sarwar Raza V. Ombudsman RBI & Anr].

Justice Prathiba M Singh was dealing with a case in which a consumer's complaint related to fraudulent issuance of a credit card was rejected due to a wrong entry in the compliant form.

The Court opined that the rejection of complaints due to such technical reasons revealed that the functioning of the ombudsman was not so consumer friendly. It stressed that consumers must be given an opportunity to correct any errors of mistakes in their complaints.

"Rejection of complaints by the Ombudsman by a mechanised model results in more disputes being filed in consumer forums, commercial Courts, civil Courts and writ petitions," the Court said as it called for strengthening the human resource at the Ombudsman’s office.

The Court also suggested that once the complaint is rejected by the RBI Ombudsman, a person with legal experience should examine the decision.

“Whenever the complaints filed before the RBI Ombudsman are finally rejected, the same shall undergo a second level human supervision process, by trained legal personnel for e.g. l retired judicial officers, lawyers, etc., who are legally trained for at least ten years, so that complaints are not rejected due to small errors,” the Court directed. 

If the complaint redressal mechanism adopted by the ombudsman is made more effective and efficient, litigation in Courts and consumer forums can be reduced considerably, the bench stressed.

Further, the Court directed the RBI to issue directions to all banks to create a flowchart in their complaints tab for customer's smooth communication with the customer care executive, branch manager and nodal officer. 

The Court also directed the RBI Ombudsman to ensure that all banks and financial institutions display the hierarchy of officers dealing with the consumer complaints.

The Court passed these directions in its judgment in the case of fraudulent issuance of a credit card to an advocate. The petitioner Sarwar Raza had moved the Court seeking refund of an amount of ₹76,777 and penalty imposed on him. He also sought restoration of his CIBIL score.

As per the case history, the Citibank in 2022 had issued a second credit card in Raza's name without his authorization. Subsequently, the amount of ₹76,777 was debited from it.

After his complaint, the bank provisionally reversed the transaction. However, it later closed the complaint stating that OTP was sent before the transaction. The petitioner moved the RBI Ombudsman which simply closed the complaint.

In the meantime, the bank continued to levy interest and penalty on the petitioner over the alleged fraudulently debited amount. Thereafter, the petitioner moved the Court. The disputed amount, along with interest and penalty, was re-credited during the pendency of the case.

In the judgment dated November 27, the Court declined to go into factual analysis of the transactions and the password-change messages sent to the petitioner.

However, it emphasised that when there is even an inadvertent sharing of an OTP or a password by any credit card holder, there ought to be some mechanism by which the consumer is able to immediately contact the  bank for blocking the credit card.

“The charging of late payment of fee, interest, etc., in such cases when customers have lodged complaints and that too without resolving the same, shall not be permissible,” the Court added.

It found that Raza's complaint in the first instance had been rejected on the ground that it was filed in advance and in the second instance, the RBI said that something in the complaint "was wrongly filled".

"The rejection of complaints filed by the public due to such technical reasons show that the functioning of the Ombudsman of the RBI is not more consumer friendly," the Court said.

Hence, the Court granted relief to the petitioner and ordered that that the bank shall not charge any late fee or interest in respect of the disputed amount. It also directed restoration of his CIBIL score.

"The CIBIL score of the petitioner shall not be changed merely based on the disputed transactions and the same shall be restored, if there are no other grounds for changing the score," it said.

The Court also deprecated the conduct of bank’s recovery agents who sent threatening messages to the petitioner and even visited his residence asking for payment of the amount.  

“Such conduct of recovery agents, in the opinion of this Court is condemnable and not at all permissible,” the Court said. 

It, thus, imposed a cost of ₹1 lakh on the bank to be paid to the petitioner,  holding it responsible for the harassment caused to him. 

The Court will hear the matter again on January 30, 2026 to look into the compliance with the directions.

Petitioner Raza appeared in person.

Advocates Ramesh Babu, Rohan Srivastava, Jagriti Bharti and Tanya Chowdhary appeared for RBI.

[Read Judgment]