The increase in the number of Non-Banking Financial institutions (NBFC’s) and their wide range of services has created a rise in demand for these services. NBFC’s are financial institutions that do not have a banking license but offer various kinds of banking services. The RBI has introduced an Internal Ombudsman scheme for certain categories of NBFC’s due to this high demand for their services, this is to strengthen the grievance redress system of NBFCs.
These Non- Banking financial institutions have played a major role in widening the scope of finance to specialist areas such as MSME, microfinance, housing, and auto finance. The central bank said in a statement following the monetary policy review that many NBFCs have effectively used digital modes to assist the supply of financial products and services to a wide range of clients.
This scheme was first introduced in 2018 by the RBI, it was introduced as an effective redressal mechanism for financial institutions.
The main objectives of the introduction of this scheme are as follows:
“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 a deficiency in service that has been partly or wholly rejected by the NBFCs,” said Adhil Shetty, CEO, BankBazaar.com.
In conclusion, the introduction of the Internal Ombudsman scheme for NBFC’s by the RBI is a welcoming scheme as it would prove to be highly effective in the maintenance of the customer complaints and find faster resolutions which will intern uphold the trust of the customers in the services provided by these NBFC’s. The RBI will be releasing its detailed instructions regarding the same soon.
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