The Ombudsman Scheme is a dispute resolution mechanism provided by the Reserve Bank of India (RBI) for addressing complaints against banks and other financial institutions. The scheme is intended to provide an efficient and cost-effective alternative to legal proceedings for resolving disputes between customers and financial institutions.
The Ombudsman Scheme for NBFCs was introduced by the RBI in February 2018, and it covers all deposit-taking NBFCs registered with the RBI. The scheme is applicable to complaints relating to non-payment or inordinate delay in payment of deposits, as well as complaints regarding unfair practices, such as charging of excessive interest rates and non-observance of fair practices code.
The salient features of the Ombudsman Scheme for NBFCs are as follows:
- Scope: The scheme is applicable to all deposit-taking NBFCs registered with the RBI, except for primary dealers and asset finance companies.
- Jurisdiction: The scheme covers complaints relating to non-payment or inordinate delay in payment of deposits, as well as complaints regarding unfair practices.
- Complaints: Any person can lodge a complaint with the Ombudsman against an NBFC if the NBFC has rejected the complaint or if the complainant has not received a satisfactory response from the NBFC within a period of one month.
- Complaint handling: The Ombudsman shall examine the complaint and attempt to resolve it through mediation or conciliation. If the complaint cannot be resolved through mediation or conciliation, the Ombudsman shall pass an award, which shall be binding on the NBFC.
- Powers: The Ombudsman has the power to summon and enforce attendance of witnesses, receive evidence on affidavits, and call for documents and information from the NBFC.
- Appeals: The NBFC and the complainant both have the right to appeal against the Ombudsman’s award to an appellate authority appointed by the RBI.
In conclusion, the Ombudsman Scheme for NBFCs is a dispute resolution mechanism provided by the RBI for addressing complaints against deposit-taking NBFCs registered with the RBI. The scheme covers complaints relating to non-payment or inordinate delay in payment of deposits, as well as complaints regarding unfair practices. The Ombudsman has the power to summon witnesses, receive evidence, and pass binding awards. Both the NBFC and the complainant have the right to appeal against the Ombudsman’s award to an appellate authority appointed by the RBI.