RBI launches Ombudsman scheme for NBFCs

The Reserve Bank of India (RBI) has launched Ombudsman Scheme for non-banking financial companies (NBFCs) for redressal of complaints against NBFCs registered with RBI under section 45-IA of the RBI Act, 1934. The scheme will provide cost-free and expeditious complaint redressal mechanism relating to deficiency in services by non-banking financial companies covered under the scheme.

Ombudsman Scheme for NBFCs

The offices of NBFC Ombudsmen will function at four metro centres —Mumbai, Chennai, Kolkata and New Delhi. They will handle complaints of customers in respective zones. To begin with, the scheme will cover all deposit-taking NBFCs.
Under this scheme, any customer or person can file compliant with ombudsman on various grounds. Only written complaints or those in electronic format will be accepted.  The complaint may be wrt non-payment or inordinate delay in payment of interest, non-repayment of deposits, lack of transparency in loan agreement, non-compliance with RBI directives on fair practices code for NBFCs, levying of charges without sufficient notice tocustomers and failure or delay in returning securities documents despite repayment of dues among others.
RBI will appoint one or more of its officers in rank of not less than General Manager (GM) to be known as Ombudsman to carry out functions. The appointment will for period not exceeding three years at time. The schemes provide for Appellate mechanism under which complainant/NBFC will have option to appeal against decision of Ombudsman before Appellate Authority.
It will obligation of NBFC concerned to implement settlement arrived with complainant or Award passed by Ombudsman when it becomes final and send  report in this regard to RBI within 15 days of award becoming final. In case of non-implementation of settlement or Award, the complainant may represent to RBI and RBI may initiate such action under provisions of RBI Act, 1934 as it deems fit.

Month: Current Affairs - February, 2018