RBI to Introduce Internal Ombudsman Scheme for Select NBFCs to Simplify Grievance Redressal Mechanism

The Reserve Bank of India (RBI) on Friday announced the introduction of an internal ombudsman scheme (IOS) to redress grievances at select non-banking finance companies (NBFCs). 
 
The IOS will be on the lines of a similar system adopted at banks and will redress grievances related to deficiencies in service, governor Shaktikanta Das said, and is being unveiled with the objective of enhancing the customer experience. Dr Das announced the new measure in the statement on regulatory policies along with the bi-monthly review of the monetary policy.
 
A report in “The Economic Times”  quoted Dr Das as saying “The increased significance, strength and reach of NBFCs across the country have necessitated having in place better customer experience including grievance redress practices”. 
 
Dr Das said over the last few years, the RBI has taken a slew of measures to improve consumer protection at NBFCs which include asking such lenders to appoint nodal officers to address grievances in 2013 and launch of the ombudsman scheme for NBFCs in 2018. 
 
“With a view to further strengthen the internal grievance redress mechanism of NBFCs, it has been decided to introduce the Internal Ombudsman Scheme (IOS) for certain categories of NBFCs which have higher customer interface,” he said. 
 
There will be an internal ombudsman at the top of the NBFCs' internal grievance redress mechanism to examine customer complaints which are in the nature of deficiency in service and are partly or wholly rejected by the NBFCs. Dr Das added that detailed instructions on the same will be issued separately. 
 
Commenting on the same, industry experts said a stronger and robust redressal mechanism means customers have more options to escalate their grievances and expect relief. This builds confidence in the system and makes it more responsive.
 
The internal ombudsman at the NBFCs will, similar to their counterparts in banks and non-bank payment system companies, examine customer complaints related to deficiency in service that have been partly or wholly rejected by the NBFCs. 
 
The number of NBFCs and the scope of services they are providing have been steadily increasing and so is corresponding number of customer grievances that require redressal. 
 
This much-needed step of introducing IOS is expected to simplify the grievance redressal mechanism within the NBFCs and improve the quality of services, reduce the hassle for customers in choosing the right ombudsman and in turn will have a significant impact in boosting consumer confidence.
 
Meanwhile, Dr Das also announced a six month extension in the facility which allows banks to co-lend through NBFCs and get the priority sector lending tag, till March 2022. 
 
The RBI governor reminded that bank lending to registered NBFCs (other than micro-lenders) for on-lending to agriculture (investment credit), micro and small enterprises and housing (with an increased limit) was permitted to be classified as priority sector lending up to certain limits in August 2019. 
 
Increased traction has been observed in delivering credit to the underserved/unserved segments of the economy through the scheme, which was last extended till 30th September in April, the central bank governor said.
 
 

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