Mumbai, Oct 8 (IANS): With a view to further strengthen the internal grievance redress mechanism of NBFCs, the Reserve Bank of India (RBI) on Friday decided to introduce the Internal Ombudsman Scheme (IOS) for certain categories of NBFCs which have higher customer interface.

Non-Banking Financial Companies (NBFCs) have played an important role in extending finance to niche sectors such as MSME, microfinance, housing, vehicle finance and have effectively complemented the efforts of banks through last mile financial intermediation. Several NBFCs have also successfully adopted digital modes to support the delivery of their financial products and services to a wide spectrum of customers.

The increased significance, strength and reach of NBFCs across the country has necessitated having in place better customer experience including grievance redress practices, the RBI said in a statement.

Over the last few years, the RBI has initiated various measures for consumer protection and grievance redress for customers of NBFCs, which include requiring NBFCs to appoint Nodal Officers for grievance redress (2013) and the launch of the Ombudsman Scheme for NBFCs (2018).

The new scheme has been proposed as part of further strengthening the grievance redressal mechanism in the NBFC space as well.

The IOS for NBFCs, which will be on the lines IOS for banks and non-bank payment system participants, will require select NBFCs to appoint an Internal Ombudsman at the top of their internal grievance redress mechanism to examine customer complaints which are in the nature of deficiency in service and are partly or wholly rejected by the NBFCs.

Detailed instructions in this regard will be issued separately by RBI.