RBI Notifications

RBI extends ombudsman scheme to non-deposit taking NBFCs

Note4Students

From UPSC perspective, the following things are important :

Prelims level : NBFC, Banking Ombudsman Scheme

Mains level : Banking Ombudsman Scheme

  • The RBI has extended the coverage of Ombudsman Scheme for non-banking financial companies (NBFCs) to eligible non deposit taking non-banking financial companies (NBFC-NDs) having asset size of Rs 100 crore or above with customer interface.

What is NBFC?

  • A NBFC is a company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities.
  • It does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property.
  • A non-banking institution which is a company and has principal business of receiving deposits under any scheme or arrangement in one lump sum or in installments by way of contributions or in any other manner, is also a non-banking financial company.

About the Ombudsman Scheme

  • The scheme was launched on February 23, 2018 for redressal of complaints against NBFCs registered with the RBI under Section 45-IA of the RBI Act, 1934 and covered all deposit accepting NBFCs to begin with.
  • It provides a cost-free and expeditious complaint redressal mechanism relating to deficiency in the services by NBFCs covered under the scheme.
  • The offices of the NBFC Ombudsmen are functioning in four metro centres — Chennai, Kolkata, Mumbai and New Delhi — and handle complaints of customers in the respective zones.
  • The scheme also 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.

Who are excluded under the scheme?

However, non banking financial company-infrastructure finance company (NBFC-IFC), core investment company (CIC), infrastructure debt fund-non-banking financial company (IDF-NBFC) and an NBFC under liquidation, are excluded from the ambit of the scheme.

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