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RBI launches Ombudsman scheme for NBFCs
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Why in the news ?
- In order to strengthen the redressal mechanism, the Reserve Bank of India (RBI) launched the Ombudsman Scheme for non-banking financial companies (NBSFCs).
More on news
- The scheme will provide a cost-free and expeditious complaint redressal mechanism relating to deficiency in the services by non-banking financial companies.
- Initially the scheme will cover all deposit-taking NBFCs. Based on the experience gained, the RBI would extend the scheme to cover NBFCs having asset size of Rs 100 crore and above with customer interface.
- In the event of non-implementation of settlement or the Award, the complainant may represent to the RBI and the RBI may initiate such action under the provisions of RBI Act, 1934 as it deems fit.
- Certain NBFCs like infrastructure finance companies are excluded from the ambit of the ombudsman scheme.
NBFCs
- A Non-Banking Financial Company (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 issued by Government
- NBFCs provides banking services without meeting the legal definition of a bank.
- Unlike Banks , NBFC cannot accept demand deposits. NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself.
- Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.
Source
The Hindu, Indian Express, RBI