Ombudsman Scheme for Non-Banking Financial Companies

Ombudsman Scheme for Non-Banking Financial CompaniesThe Reserve Bank of India in exercise of the powers conferred by Section 45L of the Reserve Bank of India Act, 1934 introduced Ombudsman Scheme for Non-Banking Financial Companies, 2018 registered with the RBI. The scheme applies NBFC which satisfies the following criteria:
1. NBFCs which are authorised to accept deposits; or
2. NBFCs having 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

To begin with, the Scheme will be operationalized for all deposit accepting NBFCs and based on the experience gained, the Scheme would be extended to include the remaining identified categories of NBFCs.

Objective of the scheme

The objective is to:

  • Enable resolution of complaints free of cost, relating to certain aspects of services rendered by certain categories of non-banking financial companies registered with the Reserve Bank
  • To facilitate the satisfaction or settlement of such complaints, and matters connected therewith

NBFC excluded from Ombudsman Scheme for Non-Banking Financial Companies

The following NBFCs are excluded from the ambit of the Scheme:

  • Non-banking Financial Company – Infrastructure Finance Company (NBFC-IFC)
  • Core Investment Company (CIC)
  • Infrastructure Debt Fund – Non-banking Financial Company (IDF-NBFC)
  • An NBFC under liquidation

Ombudsman Offices

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, so as to cover the entire country. The Scheme shall come into effect and force from February 23, 2018

Appellate Authority

The Deputy Governor-in-Charge of the Department of the Reserve Bank implementing the Scheme will be appellate authority. Any person aggrieved by an Award may within 30 days of the date of receipt of communication of Award or rejection of complaint, prefer an appeal before the Appellate Authority;

Power not to entertain a complaint

The Ombudsman shall not entertain the complaint unless:

  1. 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
  2. The complainant had not received any reply within a period of one month after the NBFC received his representation
  3. The complainant is not satisfied with the reply given to him by the NBFC;
  4. 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
  5. 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
  6. 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
  7. The complaint is not frivolous or vexatious in nature
  8. The complaint is made before the expiry of the period of limitation prescribed under the Indian Limitation Act, 1963 for such claims
Gromo Referal

Award by Ombudsman

  • The power to pass an Award directing payment of an amount which is more than the actual loss suffered by the complainant as a direct consequence of the act of omission or commission of the NBFC, or one million rupees whichever is lower.
  • The Ombudsman may, also award compensation not exceeding one hundred thousand rupees to the complainant, taking into account the loss of time, expenses incurred, harassment and mental anguish suffered by the complainant
  • An Award allowing the complaint shall lapse and be of no effect unless the complainant furnishes to the NBFC and the Ombudsman concerned within a period of 30 days from the date of receipt of copy of the Award, a letter of acceptance of the Award in full and final settlement of his claim

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