RBI directs NBFCs to appoint Internal Ombudsman within six months.

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The Reserve Bank of India vide its notification dated 15th November 2021 has directed Deposit-taking NBFCs (NBFCs-D) with 10 or more branches and Non-Deposit taking NBFCs (NBFCs-ND) with asset size of Rs.5,000 crore and above having public customer interface to appoint Internal Ombudsman (IO) within a period of six months from the date of issue of the direction.

However, the following types of NBFCs will be excluded from the applicability of this direction:

  • Stand-alone Primary Dealer;
  • Non-Banking Financial Company – Infrastructure Finance Company (NBFC-IFC);
  • Core Investment Company (CIC);
  • Infrastructure Debt Fund – Non-Banking Financial Company (IDF-NBFC);
  • Non-Banking Financial Company – Account Aggregator (NBFC-AA);
  • NBFC under Corporate Insolvency Resolution Process;
  • NBFC in liquidation;
  • NBFC having only captive customers.

The NBFC may appoint more than one IO depending on the number of complaints received/branch network. In such a case, the NBFC shall define the jurisdiction of each IO.

The tenure of the IO shall be for a fixed term of not less than three years, but not exceeding five years and the same shall be indicated in the appointment letter. The IO shall not be eligible for reappointment or for extension of tenure in the same NBFC.

The IO shall deal only with the complaints that have already been examined by the NBFC but have been partly or wholly rejected by the NBFC. In other words, the IO shall not handle complaints received directly from the customers or members of the public.

The NBFC shall put in place a system of periodic reporting of information to Reserve Bank as indicated below:

a) On a quarterly basis, the total number of complaints received, the number of partly or wholly rejected complaints and the number of complaints escalated to the IO, within 15 days from the end of the quarter;

b) On an annual basis:

  • the number of cases where the decision of IO has been rejected (with the approval of Managing Director/Chief Executive Officer), to be submitted by April 15; and
  • the number of cases closed by the IO, and age-wise number of cases where the NBFC was yet to implement the decision of the IO, to be submitted by April 15.

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