The Reserve Bank on Friday decided to expand the scope of Internal Ombudsman framework by including Credit Information Companies (CICs) with a view to strengthening grievance redressal system. The Reserve Bank-Integrated Ombudsman Scheme (RB-IOS) has improved the customer grievance redressal mechanism.
The turnaround time of grievance redressal under RB-IOS has declined considerably, RBI said in Statement on Developmental and Regulatory Policies. “With a view to strengthen the internal grievance redress by CICs themselves, it has been decided to mandate CICs to have their own Internal Ombudsman (IO) framework,” RBI Governor Shaktikanta Das said after unveiling the bi-monthly monetary policy.
The RB-IOS 2021 covers Regulated Entities (REs) such as scheduled commercial banks including urban cooperative banks, non-banking financial companies (NBFCs) and non-scheduled primary co-operative banks with a deposit size of Rs 50 crore and above.In order to make the RB-IOS more broad based, it has been decided to bring CICs also under the ambit of RB-IOS 2021, the statement said adding this will provide a cost-free alternate redressal mechanism to customers of REs for grievances against CICs.
Further, it said, with a view to strengthening the internal grievance redressal of CICs and to make it more efficient, it has also been decided to bring CICs under the Internal Ombudsman (IO) framework.With regard to outsourcing, the RBI said REs are increasingly using outsourcing as a means for reducing costs as well as for availing expertise not available internally.Although outsourcing of a permissible activity is an operational decision of REs, it exposes REs to various risks.
The RBI has, from time to time, issued guidelines on managing risks in outsourcing of certain activities by REs. “In view of the increasing trend of outsourcing, the framework for REs to manage the associated risks needs to be suitably strengthened. Therefore, to harmonise and consolidate the extant guidelines, a draft Master Direction on Managing Risks and Code of Conduct in Outsourcing of Financial Services will be issued shortly for comments from stakeholders,” Das said.
The statement further said Standalone Primary Dealers (SPDs) at present are permitted to undertake foreign currency business for limited purposes. With a view to strengthening the role of SPDs as market makers, at par with banks operating primary dealer business, it is proposed to enable SPDs to offer all foreign exchange market-making facilities as currently permitted to Category-I Authorised Dealers, subject to prudential guidelines, it said.
This measure would give forex customers a broader spectrum of market-makers in managing their currency risk, thereby adding breadth to the forex market in India, it said. “Wider market presence would improve the ability of SPDs to provide support to the primary issuance and secondary market activities in government securities, which would continue to be the major focus of primary dealer activities. Regulations in this regard would be issued separately,” it said.