NBFC

Appointment of Nodal Officer/Principal Nodal Officer

The Reserve Bank of India has issued Ombudsman Scheme for Non-Banking Financial Companies, 2018 to appoint Nodal Officer/Principal Nodal Officer to address the grievances of the customer in Financial Sector more or less covered by NBFC via Notification No. RBI/2017-18/133 DNBR. PD, CC. No. 091/03.10.001/2017-18 dated 23^rd February 2018 from immediate effect.

Let’s discuss in brief regarding the Ombudsman Scheme-2018 for NBFC.

Coverage of Scheme

NBFC as defined in Section 45-I(f) of Reserve Bank of India Act, 1934 and registered with RBI under Section 45-IA of Reserve Bank of India Act, 1934 which

1. Are authorized to accept deposits; or
2. Have customer interface with assets size of Rs. one billion or above as on date of the audited balance sheet of the previous financial year or of any such assets size as the RBI may prescribe will come within the ambit

Required to comply with the provisions of the Ombudsman Scheme for Non-Banking Financial Companies, 2018.

To being with the scheme will be operationalized for all deposit accepting NBFC and further extended to include remaining identified categories of NBFC.

It is initially introduced to four metro cities viz. Chennai, Kolkata, Mumbai and New Delhi.

Non-Banking Financial Companies –Infrastructure Finance Company (NBFC-IFC), Core Investment Company (CIC), Infrastructure Debt Fund-Non Banking Financial Company (IDF-NBFC) and NBFC under liquidation are excluded from the ambit of Scheme.

The Scheme shall come into effect and force from 23^rd February 2018.

What are the Complaints?

It means any representation or allegation made in writing or through electronic means, containing a grievance alleging deficiency in service.

Deficiency in service is explained further in scheme however sample of deficiency in services are as below:-

1. Non-payment or inordinate delay in the payment of interest on deposits or repayment of deposits itself;
2. Non-adherence to RBI directives, if any applicable to rate of interest on deposits;
3. Failure to convey in writing, the amount of loan sanctioned along with terms and condition including annualized rate of interest and method of application thereof;
4. Failure or refusal to provide sanction letter/ terms and conditions of sanction in vernacular language or language as understood by the borrower;
5. Levying of charges without adequate prior notice to the borrower/customer;
6. Failure or inordinate delay in releasing the securities documents to the borrower on repayment of all dues;
7. Non-observation of the direction issued by Reserve Bank to the non-banking financial companies

And so on. List of deficiency in service goes on and extend up to (a) to (m).

What will be the Procedure for Filing Compliant?

Any person who has grievances against NBFC on the grounds of Deficiency of Service, himself or through his authorized representative other than Advocates, make a complaint to Ombudsman within whose jurisdiction the Branch/Registered office of NBFC complained against, is located.

The complaint when in writing shall be duly signed by the complainant or his authorized representative should state the following issues clearly:-

1. Name and address of Complainant
2. Name and address of branch or the registered office of the non-banking financial company against which the complaint is made
3. Facts giving rise to the complaint
4. Nature and extent of loss caused to the complainant and
5. The relief sought for.

Further complaint made through electronic means shall also be accepted by the Ombudsman. Moreover, the ombudsman shall also entertain complaints covered by this scheme received from the Central Government or RBI or other financial regulator and forwarded to him for disposal.

Power not to entertain a Complaint

Ombudsman shall not entertain a complaint unless:-

1. Complainant made written representation to respective NBFC and NBFC rejected or no reply within a period of 1 month or reply is not satisfactorily
2. Complaint is made within 1 year after the complainant received a reply of NBFC to his representation or no reply received within 1 year and 1 month after the date of representation to the NBFC
3. The complaint is not in respect of the same cause of action which was settled or dealt with on merits by Ombudsman in any previous proceedings
4. 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 complaint for which decree or award or order has already been passed by the court, tribunal, arbitrator or any forum.
5. The complaint is not frivolous or vexatious in nature
6. Compliant is made before the expiry of the period of limitations which is prescribed under the Indian Limitation Act, 1963^[1] and
7. The aggrieved person on filing complaint should produce copies of documents, grounds of complaint.

What will be the Consequences of Complaint?

To carry out the function, Ombudsman has the power to call for information from both concern parties to get the informed decision on the matter stated above.

Both the concerned party, Complainant and Nodal Officer of Concern NBFC will get a copy of Complaint and argument will go through on and subject to agreeing or non-agreeing and acceptability of fact the Ombudsman can suggest for settlement on agreeing on terms and condition for both parties.

During the period of stating argument by both parties, ombudsman allows to get settle the case otherwise he after hearing the case, pass an award either allowing or rejecting the complaint. Ombudsman passing the judgment can’t direct the payment of an amount more than actual loss suffered by the applicant or One Million Rupees whichever is lower. However, in all sort of cases subject to his discretion, he has the power to award compensation of not exceeding Rs. One lakhs to the aggrieved person considering the loss of time, expenses incurred harassment and mental anguish suffered by the complainant.

The award shall state briefly the reasons for passing the Award.

A copy of the Award shall be sent to the complainant and the NBFC free of cost.

An Award allowing the complaint shall lapse and be of no effect unless the complainant furnishes to NBFC and Ombudsman concerned within a period of 30 days from the date of receipt copy of the Award, letter of acceptance of the award in full and final settlement of claim subject to there is no appeal from both party concerned.

When will complaint be Rejected?

Ombudsman may reject a complaint at any stage if it appears to him that:-

1. Grounds of the complaint is not on the deficiency of services; or
2. Compensation sought is beyond the pecuniary limit specified in the scheme; or
3. Complaint made is without any sufficient clause; or
4. Complaint made is not pursued by the complainant with reasonable diligence required to be taken; or
5. In the opinion of the Ombudsman, there is no loss or damage or inconvenience caused to the complainant.

Any person aggrieved by an Award Clause or rejecting the complaint on above reason can have access to go for appeal in the appellate authority within 30 days of the date of receipt of communication of Award or rejection of the complaint.

Implementation/Enforcement of Award

There shall be an obligation of concerned NBFC to implement the settlement arrived with the complaint or award passed by Ombudsman when it becomes final and send a report in this regard to RBI within a period of 15 days of the award became final. Non-address of order is initiated under provisions of Reserve Bank of India Act, 1934 as it deems fit.

NBFC to display salient features of the scheme for knowledge of the public in English, Hindi and Vernacular Language in all offices and branches, in such manner that a person visiting office or branch has adequate information of the scheme.

Head Office Principal Nodal Officer (PNO) or Nodal Officer (NO) details to send to Mumbai (Chief General Manager, Consumer Education, and Protection Department, RBI, Central Office, 1^st Floor, Amar Building, Sir P.M. Road, Mumbai 400001

Branch or regional PNO/NO of NBFC details to be sent to RBI^[2] Ombudsman of the concerned zone.

For Information Address and Area of Operation of NBFC Ombudsman: