RBI to introduce Internal Ombudsman Scheme for NBFCs to simplify grievance redressal mechanism

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October 08, 2021 2:03 PM

The internal ombudsman at NBFCs will 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 are on the rise. As a result, the number of customer grievances that require redressal are also on the rise.

While keeping the key policy rates unchanged in its bi-monthly monetary policy review meeting on Friday, the Reserve Bank of India announced the introduction of Internal Ombudsman Scheme (IOS) for certain categories of NBFCs.

“The increased strength and reach of NBFCs across the country has necessitated various measures by the Reserve Bank for protection of customers of NBFCs. With a view to further strengthening the internal grievance redress mechanism of NBFCs, it has been decided to introduce the Internal Ombudsman Scheme (IOS) for certain categories of NBFCs having higher customer interface,” the RBI stated.

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 for NBFCs announced today takes on from the NBFC Ombudsman Scheme introduced in 2018 and is one of a long chain of measures adopted by the RBI to strengthen the redressal mechanisms within financial institutions. 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,” said Adhil Shetty, CEO, BankBazaar.com.

The number of NBFCs and the scope of services they are providing are on the rise. As a result, the number of customer grievances that require redressal are also on the rise. “This step will simplify the grievance redressal mechanism within the NBFCs and improve the quality of services, which in turn will have a significant impact in boosting consumer confidence,” added Shetty.

Rajesh Sharma, Managing Director, Capri Global Capital Ltd, said, “Permitting banks to on-lend through NBFCs focusing on priority sector would give an impetus to scale up their business without worrying about financial destitution. Moreover, the introduction of the Internal Ombudsman Scheme (IOS) for certain categories of NBFCs that have higher customer interface is a much-needed step as it will reduce the hassle for customers in choosing the right ombudsman.”

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