Q. For redressal of complaints against non-banking financial companies (NBFCs), the Reserve Bank of India (RBI) launched the ‘Ombudsman Scheme’ for NBFCs. In this respect, a complainant can appeal to ombudsman only if she had not received any reply within a period of _________ after the NBFC received her representation.
A. fifteen days
B. six weeks
C. one month
D. two months
Answer: C. one month
As announced in the Monetary Policy Statement of February 7, 2018, the Reserve Bank of India (RBI) launched the Ombudsman Scheme for Non-Banking Financial Companies (NBFC) on February 23, 2018.
Salient features of this scheme
In exercise of the powers conferred by Section 45L of the Reserve Bank of India Act, 1934, the Reserve Bank of India (RBI), for the purpose of enabling it to promote conducive credit culture among the Non Banking Financial Companies (NBFCs) and to regulate the credit system of the country to its advantage, provides for a system of Ombudsman for redressal of complaints against deficiency in services concerning deposits, loans and advances and other specified matters.
Ambit of scheme
All NBFCs, as defined in Section 45-I(f) of the Reserve Bank of India Act, 1934 and registered with the RBI under Section 45-IA of the Reserve Bank of India Act, 1934 which
- are authorized to accept deposits, or have customer interface
- with assets size of one billion rupees or above, as on the date of the audited balance sheet of the previous financial year, or of any such asset size as the RBI may prescribe
will come within the ambit, and should comply with the provisions of the Ombudsman Scheme for Non-Banking Financial Companies, 2018.
Some categories of NBFCs are excluded from the ambit of the Scheme. They are:
- The Non-banking Financial Company – Infrastructure Finance Company (NBFC-IFC)
- Core Investment Company (CIC)
- Infrastructure Debt Fund – Non-banking Financial Company (IDFNBFC), and
- NBFC under liquidation
The scheme will provide a cost-free and expeditious complaint redressal mechanism relating to deficiency in the services by NBFCs covered under the Scheme.
Grounds for complaint
Any person may file a complaint with the Ombudsman having jurisdiction, on any one of
the following grounds alleging deficiency in services :
- non-payment or inordinate delay in the payment of interest on deposits;
- non-adherence to the Reserve Bank directives, if any, applicable to rate of interest
- non-repayment or inordinate delay in the repayment of deposits;
- non-presentation or inordinate delay in the presentation of post-dated cheques
provided by the customer;
- failure to convey in writing, the amount of loan sanctioned along with terms and
conditions including the annualized rate of interest and method of application thereof;
- failure or refusal to provide sanction letter/ terms and conditions of sanction in
vernacular language or a language as understood by the borrower;
- failure or refusal to provide adequate notice on proposed changes being made in
sanctioned terms and conditions in vernacular language as understood by the
- failure or inordinate delay in releasing the securities documents to the borrower on
repayment of all dues;
- levying of charges without adequate prior notice to the borrower/ customer;
- failure to provide legally enforceable built-in repossession clause in the contract/ loan agreement;
- failure to ensure transparency in the contract/ loan agreement regarding
(i) notice period before taking possession of security; (ii) circumstances under which the notice period can be waived; (iii) the procedure for taking possession of the security; (iv) a provision regarding final chance to be given to the borrower for repayment of loan before the sale/ auction of the security; (v) the procedure for giving repossession to the borrower and (vi) the procedure for sale/ auction of the security;
- non-observance of directions issued by Reserve Bank to the non-banking financial
- non-adherence to any of the other provisions of Reserve Bank Guidelines on Fair
Practices Code for Non-Banking Financial Companies.
Rejection of the complaint
The Ombudsman shall not entertain a complaint unless:-
- the complainant, before making a complaint to the Ombudsman, had made a written representation to the respective NBFC and the NBFC had rejected the complaint or the complainant had not received any reply within a period of one month after the NBFC received his representation or the complainant is not satisfied with the reply given to him by the NBFC;
- the complaint is made not later than one year after the complainant has received the reply of the NBFC to his representation or, where no reply is received, not later than one year and one month after the date of the representation to the NBFC;
- the complaint is not in respect of the same cause of action which was settled or dealt with on merits by the Ombudsman in any previous proceedings whether or not received from the same complainant or along with one or more complainants or one or more of the parties concerned with the cause of action;
- the complaint does not pertain to the same cause of action, for which any proceedings before any court, tribunal or arbitrator or any other forum is pending or a decree or Award or order has been passed by any such court, tribunal, arbitrator or forum;
- the complaint is not frivolous or vexatious in nature;
- the complaint is made before the expiry of the period of limitation prescribed under the Indian Limitation Act, 1963 for such claims; and
- the complainant has filed along with the complaint, copies of the documents if any,
which he intends to rely upon, and a declaration that the complaint is maintainable
under Clause 9-A
The scheme is initially being introduced at the four metro centers viz. Chennai, Kolkata, Mumbai and New Delhi for handling complaints from the respective zones.
Any person who has a grievance against a Non-Banking Financial Company on anyone
or more of the grounds mentioned in Clause 8 of the Scheme may, himself or through
his authorized representative (other than an Advocate), make a complaint to the Ombudsman within whose jurisdiction the Branch/ Registered Office of the Non-Banking
Financial Company complained against, is located.
The Scheme provides for an Appellate mechanism under which the complainant/ NBFC has the option to appeal against the decision of the Ombudsman before the Appellate Authority.
The NBFC Ombudsman does not charge any fee for filing and resolving customers’ complaints.