Skip to main content

What are guidelines for appointment of Internal Ombudsman by CICs?

With a view to strengthen and improve the efficiency of the internal grievance redressal mechanisms of Credit Information Companies (CICs), Reserve Bank of India (RBI) has directed CICs to appoint internal ombudsman.

Which CICs need to appoint Internal Ombudsman (IO)?

All Credit Information Companies (CICs) defined under section 2(e) of the Credit Information Companies (Regulation) Act, 2005 and holding a Certificate of Registration under Section 5(2) of the Act, are required to appoint Internal Ombudsman (IO) at the apex of their internal grievance redress mechanism.

What is the deadline for appointment of IO?

CICs are required to appoint Internal Ombudsman (IO) by April 01, 2023.

Who can be appointed as Internal Ombudsman (IO)?

  1. The IO shall be either a retired / serving officer, not below the rank of Deputy General Manager or equivalent in any financial sector regulatory body (viz. RBI, SEBI, IRDAI, PFRDA), CIC, a Non-Banking Financial Company (NBFC) or bank, with necessary skills and experience of at least 7 years in banking, non-banking finance, financial sector regulation or supervision, credit information or consumer protection.
  2. The IO shall previously not have been employed, nor presently be employed, by the CIC or its related parties.
  3. The IO shall not attain the age of 70 before completion of the proposed term.

What shall be the term of Internal Ombudsman (IO)?

  • The IO shall have a fixed term of not less than 3 years, but not exceeding 5 years.
  • The IO shall not be eligible for re-appointment or extension of term in the same CIC.

What are other terms of appointment for Internal Ombudsman (IO)?

  • The CIC shall ensure that there is a minimum overlap of at least one month between the time of demitting of office of the outgoing IO and the incumbent IO.
  • The IO shall not be removed before the completion of the contracted term without the explicit approval of RBI. In case the vacancy arises on account of reasons beyond the control of the CIC (such as death, resignation, incapacitation, terminal illness, etc.), the CIC shall appoint a new IO, within 3 months from the date of the vacancy arising.
  • The CIC may appoint more than one IO depending upon the volume of complaints anticipated.
  • The Principal Nodal Officer liaising with the offices of RBI Ombudsman, Nodal Office or any other official of the CIC, shall not act as the IO or vice versa.

Which complaints shall be dealt with by Internal Ombudsman (IO)?

The IO shall deal only with the complaints that have already been examined by the CIC but have been partly or wholly rejected by the CIC.

Which complaints shall not be handled by Internal Ombudsman (IO)?

The IO shall not handle following complaints –

  1. Complaints received directly from the complainants or members of the public.
  2. Complaints related to fraud, misappropriation, etc., except those resulting from deficiency in service, if any, on the part of the CIC.
  3. Complaints / references relating to (a) internal administration, (b) human resources, or (c) pay and emoluments of staff.
  4. References in the nature of suggestions and commercial decisions of the CIC.
  5. Complaints which have been decided by or are already pending in other fora such as Consumer Disputes Redressal Commission, courts, etc.
  6. Disputes for which remedy has been provided under Section 18 of the Credit Information Companies (Regulation) Act, 2005.

What is the procedure for disposal of complaints by Internal Ombudsman (IO)?

  • The CIC shall establish a system of auto-escalation, within 21 days of receipt, of all complaints that are partly or wholly rejected by the CIC’s internal grievance redress mechanism, to the IO for a final decision.
  • The IO and the CIC shall ensure that the final decision is communicated to the complainant within 30 days from the date of receipt of the complaint by the CIC.
  • The decision of the IO shall be binding on the CIC. 
  • Where the IO upholds the decision of the CIC to reject or partly reject the complaint, the reply to the complainant should explicitly state this fact.
  • Where the IO overrules the decision of the CIC to reject or partly reject the complaint, the CIC can disagree with the decision of the IO only with the approval of its Managing Director / Chief Executive Officer. In such cases, the reply to the complainant shall explicitly state this fact, which must be communicated to the complainant within 7 days of communication of the decision of the IO on the case to the CIC. All such cases shall be subsequently reviewed on a quarterly basis by the Board of the CIC.
  • For complaints that are fully or partly rejected even after examination by the IO, the CIC shall necessarily advise the complainant as part of the reply, that he / she can approach the RBI Ombudsman for redress.

What are other roles and responsibilities of Internal Ombudsman (IO)?

  • The IO shall, on a quarterly basis, analyse the pattern of all complaints received against the CIC, such as entity wise, product-wise, category-wise, consumer group-wise, geographical location-wise, etc., and may provide inputs to the CIC for policy intervention, if so warranted.
  • The IO shall furnish periodic reports to the Consumer Protection Committee of the Board, preferably at quarterly intervals, but not less than bi-annually.
  • The IO shall be designated as an ex-officio member or a permanent invitee to the meetings of the Consumer Protection Committee of the Board.
  • The IO shall report to the Managing Director or Chief Executive Officer of the CIC administratively, and to the Board functionally.
  • The IO shall not represent the CIC in legal cases before any court or fora or authority.

What are the reporting timelines for CICs?

  • The CIC shall submit reports to Consumer Education and Protection Department, Central Office, RBI, on a quarterly and annual basis by 10th day following the quarter / year for which they are due.
  • The CIC shall, within 5 working days of appointment of the Internal Ombudsman, furnish the details of the individual so appointed to the Consumer Education and Protection Department, Central Office, RBI.


References

Reserve Bank of India. (2022, October 06). 'Appointment of Internal Ombudsman by the Credit Information Companies'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12395&Mode=0

Reserve Bank of India. (2022, October 06). 'The Reserve Bank introduces Internal Ombudsman mechanism for Credit Information Companies (CICs)'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=54502


Follow at - Telegram   Instagram   LinkedIn   Twitter

Labels:

Comments

Post a Comment

Popular Posts

Report of the Committee to develop a Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in the Financial Sector

Reserve Bank of India (RBI) has released the report of the committee to develop a framework for responsible and ethical enablement of artificial intelligence (FREE-AI) in the financial sector. Committee to develop a Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in the Financial Sector In the financial sector, Artificial Intelligence (AI) has the potential to unlock new forms of customer engagement, enable alternate approaches to credit assessment, risk monitoring, fraud detection, and offer new supervisory tools. At the same time, increased adoption of AI could lead to new risks like bias and lack of explainability, as well as amplifying existing challenges to data protection, cybersecurity, among others. To encourage the responsible and ethical adoption of AI in the financial sector, the committee to develop a Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in the Financial Sector (Chairperson: Dr. Pushpak B...
Post a Comment
Read more

Continuous Clearing and Settlement on Realisation in Cheque Truncation System (CTS)

Reserve Bank of India (RBI) has issued direction on continuous clearing and settlement on realisation in Cheque Truncation System (CTS). What is Cheque Truncation System (CTS)? Cheque Truncation System (CTS) involves halting the physical movement of the cheque and its replacement by images of the instrument and the corresponding data contained in the MICR line.  In CTS, 3 images are taken of each cheque – front Gray Scale, front Black & White and back Black & White. MICR (Magnetic Ink Character Recognition) is a 9-digit code printed at the bottom of cheques using magnetic ink – first 3 digits indicate City Code, middle 3 digits indicate Bank Code and the last 3 digits indicate Bank Branch Code. Only CTS-2010 standards compliant instruments can be presented for clearing through CTS. The presenting banks which truncates the cheques need to preserve the physical instruments for 10 years. From when will the continuous clearing and settlement on realisation in CTS be implemented...
Post a Comment
Read more

What is KYC?

Be it opening a new bank account, applying for a new credit card, registering for new e-wallet, or any other account or facility involving financial matters, the application process is incomplete until KYC is done.  What is KYC? KYC or Know Your Customer is a process of customer identification and verification while opening an account or undertaking a financial transaction. Why is KYC process needed? To prevent money laundering To combat financing of terrorism What is verified under KYC? The banks / financial institutions collect the relevant documents from the customers to verify the following – Proof of identity Proof of address Which documents can be collected for KYC? As per RBI’s Master Direction - Know Your Customer (KYC) Direction, 2016 (Updated as on May 10, 2021), “Officially Valid Document” (OVD) means – Passport Driving licence Proof of possession of Aadhaar number Voter's Identity Card issued by the Election Commission of India Job card issued by NREGA duly signed by an...
Post a Comment
Read more

Non-Fund Based Credit Facilities

Reserve Bank of India (RBI) has issued directions on non-fund based credit facilities. To whom shall the directions be applicable? The directions shall apply to the following Regulated Entities (REs) for all their Non-Fund Based (NFB) exposures such as guarantee, letter of credit, co-acceptance etc. Commercial Banks (including Regional Rural Banks and Local Area Banks) Primary (Urban) Co-operative Banks (UCBs) / State Co-operative Banks (StCBs) / Central Co-operative Banks (CCBs) All India Financial Institutions (AIFIs) Non-Banking Financial Companies (NBFCs) including Housing Finance Companies (HFCs) in Middle Layer and above, only for the issuance of Partial Credit Enhancement. The directions shall not apply to the derivative exposures of a RE. Which NFB facilities are permitted to be issued by RE? RE shall issue a NFB facility only on behalf of a customer having funded credit facility from the RE. However, this shall not be applicable in respect of – Derivative contracts entered int...
Post a Comment
Read more

Committees to be constituted by NBFC-BL

Non-Banking Financial Companies (NBFCs) are required to constitute various committees for effective corporate governance. This article lists out some of the important committees to be constituted by the Base Layer NBFCs (NBFC-BL). Board of Directors Applicability Companies Act, 2013 Section 149(1) – Every company shall have a Board of Directors. Composition of the Board Companies Act, 2013 Section 149(1) – The Board of Directors shall consist of individuals as directors – Public company – minimum 3 directors Private company – minimum 2 directors One Person Company – minimum 1 director  Maximum 15 directors (more than 15 directors may be appointed after passing a special resolution) Section 149(4) – Every listed public company shall have at least 1/3rd of the total number of directors as independent directors. Companies (Appointment and Qualifications of Directors) Rules, 2014 Rule 3 – The following companies shall appoint at least 1 woman director – Every listed company Every other...
Post a Comment
Read more