Protection of NBFC customers' interest non-negotiable: RBI deputy governor

Reserve Bank of India (RBI) on Friday emphasised the need to create a culture of responsible goveranance in the NBFC sector and urged shadow banking players to give utmost importance to protection of customers as it is “non-negotiable”. RBI deputy governor M Rajeshwar Rao recalled the incidents of coercive recovery practice by some of the players and said these developments spurred purely by commercial considerations have dented the credibility of the whole system which flourishes and thrives on trust.

Grievance redressal

He said at the NBFC Summit that NBFCs should not compromise on the ethos of finance for mercurial or ephemeral gains. These gains would anyway accrue to the institutions over the long term if and when it is built on an edifice of trust and mutual benefit.

RBI is inundated with the complaints of harsh recovery practices, breach of data privacy, increasing fraudulent transactions, cybercrime, excessive interest rates and harrassment, he said.  Protection of the customers is non-negotiable, he added.

Rao said RBI had put in place an elaborate grievance redressal machinery. The RBI Ombudsman scheme, Fair Practices Code, etc. are pointers in this direction. “At RBI, any regulatory move has always the larger public interest as its core theme and we have been doing our best having regard to public interest in general for the financial system,” he said.

Recently, the Scheme for Internal Ombudsman (IO) was extended to NBFCs on a selective basis. The IO at the apex of the NBFCs’ internal grievance redressal mechanism, shall independently review the resolution provided by the NBFC in the case of wholly or partially rejected complaints.