RBI Introduces Internal Ombudsman Mechanism For Select NBFCs

For select Non-Banking Financial Companies (NBFCs), the Reserve Bank of India (RBI) has established an Internal Ombudsman process.

RBI has directed deposit-taking NBFCs (NBFCs-D) with or more branches, as well as non-deposit taking NBFCs (NBFCs-ND) with assets of Rs 5,000 crore or more and a public customer interface, to appoint an Internal Ombudsman (IO) at the apex of their internal grievance redress mechanisms within six months.

The order also includes the internal ombudsman's nomination, term, role and responsibilities, procedural standards, and supervision mechanism.

The ombudsman will assess any complaints that have been partially or completely rejected by the NBFC before the NBFC's final judgement is communicated to the complainant, according to the RBI statement.

"NBFCs not having public customer interface and certain types of NBFCs, viz., stand-alone Primary Dealers (PDs), NBFC - Infrastructure Finance Companies (NBFC-IFCs), Core Investment Companies (CICs), Infrastructure Debt Fund - Non-Banking Financial Companies (IDF-NBFCs), Non-Banking Financial Company - Account Aggregators (NBFC-AAs), NBFCs under Corporate Insolvency Resolution Process, NBFCs in liquidation and NBFCs having only captive customers have been excluded from the requirement to appoint Ios," the statement said.

Before the NBFC's final judgement is communicated to the complainant, any complaints that are partially or completely rejected by the NBFC will be evaluated by the IO. Direct complaints from members of the public will not be heard by the IO.