Ombudsman Scheme for NBFC : Launched by RBI

The Reserve Bank of India issued ombudsman scheme for Non-Banking Finance Companies. The scheme will cover all deposit accepting NBFC's and will provide a cost-free and expeditious complaint redressal mechanism relating to deficiency in the services by NBFCs.

Introduction to Ombudsman Scheme

Ombudsman scheme was introduced by RBI recently to provide the customers of NBFC Company with easy, cost-free and prompt grievance redress mechanism. The ombudsman scheme for banks was a hit among the banking customers hence RBI aimed at releasing the same for Non-banking financial companies.

Ombudsman scheme for NBFC was launched on 23rd February 2018. The current ombudsman scheme would cover only the deposit-taking NBFC, effective immediately. The NBFC ombudsman is an official appointed by the RBI to work on the customer complains.

Location of Headquarters

NBFC Ombudsman headquarters are located in four offices currently which include Chennai, Kolkata, Mumbai, and New Delhi. The customers can file a complaint in their respective zones, and the given offices will handle those complaints.

Procedure for Filing Complaint with Ombudsman

  • Any customer of NBFC can file a complaint with ombudsman on any grounds which are mentioned in the clause 8 of the said scheme. This complaint can only be made by the representative who should not be an advocate for the customer.

  • The complaint made by the representative should be made in the branch which has jurisdiction of the Non-Banking company against whom the complaint has been submitted.

  • The complainant needs to sign the said form of grievance which is submitted, or if not signed by him it should be duly signed by the representative.

  • The complaint filed should contain the address of the complainant the registered address of the NBFC. It should also contain relief which is sought by the complainant.

Non-Applicability of the Ombudsman Scheme

The scheme only covers deposit-taking NBFC’s hence this scheme is not applicable on the non-deposit taking NBFC with asset size of 100 crore rupees and above.

The following NBFC are excluded from the ambit of the scheme:

  • Non-Banking Financial Companies which are under liquidation

  • The Non-Banking Financial Company- Infrastructure Finance Company

  • Infrastructure Debt Fund- NBFC

  • Core Investment Company

Grounds for Filing Complaint (RBI)

Any customer of an NBFC can approach Ombudsman with complaints on the following grounds stating deficiency in the services provided by them:

  1. Financial Deficiency

  • Failure in releasing the securities documents to the borrower on repayment of all dues.

  • Failure or excessive delay on the part of NBFC in furnishing written documents regarding any changes made by them in the terms and conditions of the loan

  • If the NBFC is levying charges without adequate prior notice to the customer.

  1. Functional Deficiency

  • Inordinate delay in the payment of interest on the deposit.

  • Failure to convey in writing, the amount of loan sanctioned along with terms and Conditions including annualized rate of interest and method of application.

  • If the NBFC is not adhering to the directives which are given by RBI regarding the rate of interest on the deposit.

  • If the NBFC makes excessive delay in filling post-dated cheque.

  1. Contractual Deficiency

  • Failure to convey in writing, the amount of loan sanctioned along with terms and

  • 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 the loan before the sale/ auction of the security;
    (v) the procedure for providing repossession to the borrower and (vi) the method for sale/ auction of the security.

Rejection of the Complaint

RBI and Central government have vested power with Ombudsman to refuse the complaint which is filed with them, on the following grounds.

  • If the complainant has not filed the complaint with NBFC before filing a complaint with the ombudsman.

  • The cause of action for which the complaint has been filed with the ombudsman is already going on in court or tribunal.

  • The complaint filed is frivolous.

  • If the complaint made is not on the grounds mentioned in the clause 8 of the ombudsman scheme.

Further Remedy Available

Any customer of Non-Banking Financial Company (NBFC) need not wait long for redressal of any complaints against the NBFC.

This scheme was launched to introduce contributive credit culture among NBFC. But if the customer is not satisfied with the award then they can approach the Appellate Authority appointed they can also take recourse of remedies available through law.

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