Current Affairs

RBI to Set up Ombudsman for NBFCs

The Reserve Bank of India has announced setting up of an ombudsman for addressing customer grievances in the non-banking finance companies (NBFCs).

RBI to Set up Ombudsman for NBFCs

  • This will be started in a phased manner. RBI will start with deposit taking NBFCs and widen the scope to cover NBFCs with asset size of Rs 100 crore. 
  • It is a move to strengthen the customer grievance redressal mechanism for Non-banking finance companies (NBFCs).
  • Referring to the successful working of the banking ombudsman. RBI Deputy Governor B.P. Kanungo mentioned that the Ombudsman Scheme will be operationalised by the end of this month.
  • The banking ombudsman scheme has been working well and has been accepted as a preferred mode of customer grievance redressal by public at large, which is cost free and expeditious.
  • Since the NBFCs complaints were increasing, and there is no such redressal mechanism for the NBFCs unlike the banking and insurance sectors, it was decided that there should be a scheme for the non-banking financial sector also.
  • The ombudsman will exercise jurisdiction over the companies it in a phased manner, starting with deposit-taking NBFCs, and at a later stage will include all non-banking finance companies which have an asset size of Rs 1 billion and above with customer interface.
  • There are around 20 banking ombudsmen have been appointed with offices mostly in state capitals.
  • One can file a complaint before the banking ombudsman if the reply is not received from the bank within one month after the bank concerned has received one's complaint, or the bank rejects the complaint, or if the complainant is not satisfied with the reply given by the bank. 

What is NBFC?

According to the RBI, an NBFC is a company registered under the Companies Act, 1956, which could be engaged in the business of loans and advances, shares, stocks, bonds, debentures, securities, leasing, hire-purchase, insurance, or chit business. However, any institution whose principal business is that of agriculture, industrial activity, purchase or sale of any goods, or related to selling, buying or building immovable property; cannot be termed an NBFC. Apart from that, any non-banking company whose principal business is of receiving deposits—in lump sum or in instalments—in any manner, will be called an NBFC.

Expected Questions

The Reserve Bank of India has announced setting up of an ombudsman for addressing customer grievances in the desposit taking non-banking finance companies (NBFCs) and widen the scope to cover NBFCs with asset size of 
a. Rs 25 crore
b. Rs 150 crore
c. Rs 100 crore
d. Rs 50 crore
RBI to Set up Ombudsman for NBFCs RBI to Set up Ombudsman for NBFCs Reviewed by insiya yadav on February 09, 2018 Rating: 5

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