Reserve Bank of India introduces internal ombudsman mechanism for Credit Information Companies

RBI imposes penalties on three co-operative banks for rule violations

India’s central bank today directed all Credit Information Companies (CICs) to appoint internal ombudsman at the top of their internal grievance redress mechanism by April 1 of next year.

The directions include the appointment/tenure, role and responsibilities, procedural guidelines, and oversight mechanism for the IO, the Reserve Bank of India said in a statement.

All complaints that are partly or wholly rejected by CICs will be reviewed by the IO before the final decision of the CIC is conveyed to the complainant, it said, adding that the IO will not entertain any complaints directly from the members of public.

The RBI said these directions will strengthen the internal grievance redress mechanism within the CICs by enabling a review of customer complaints before their rejection, by an independent apex level authority within the CIC.

In August, the RBI had decided to bring CICs under the ambit of Reserve Bank-Integrated Ombudsman Scheme, which covers regulated entities such as scheduled commercial banks including urban cooperative banks, non-banking financial companies and non-scheduled primary co-operative banks with a deposit size of Rs. 50 crore and above, to provide a cost free alternate redress mechanism to customers of REs for grievances against CICs.

According to the directions issued today, the following types of complaints shall be outside the purview and shall not be handled by the IO:

1. Complaints related to fraud, misappropriation, etc., except those resulting from deficiency in service, if any, on the part of the CIC.

2. Complaints/references relating to (a) internal administration, (b) human resources, or (c) pay and emoluments of staff
3. References in the nature of suggestions and commercial decisions of the CIC
4. Complaints which have been decided by or are already pending in other fora such as Consumer Disputes Redressal Commission, courts, etc.
5. Disputes for which remedy has been provided under Section 18 of the Credit Information Companies (Regulation) Act, 2005

Currently, consumers raise disputes through CICs’ websites, which is then routed to the credit institution from where the consumer has taken loan. CICs cannot make any changes to the data unless authorised by the credit institution concerned.

According to the scheme, a regulated entity will not have the right to appeal in cases where an award is issued by the ombudsman against it for not furnishing satisfactory and timely information or documents. The executive director-in charge of consumer education and protection department of RBI would be the appellate authority under the scheme.

Source: Economic Times

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