RBI to include CICs under Internal Ombudsman framework

RBI to include CICs under Internal Ombudsman framework

The Reserve Bank on Friday decided to include Credit Information Companies CICs in the scope of the Internal Ombudsman framework in order to strengthen the grievance redressal system.

The Customer grievance redressal mechanism has been improved by the Reserve Bank-Integrated Ombudsman Scheme RB-IOS.

The turnaround time for grievance redressal under the RB-IOS has declined considerably, according to the Statement on Developmental and Regulatory Policies.

After unveiling the bi-monthly monetary policy, it was decided to mandate CICs have their own internal Ombudsman IO framework with a view to strengthen internal grievance redress by CICs, according to Governor Shaktikanta Das.

The RB-IOS 2021 covers scheduled commercial banks, including urban cooperative banks, non-banking financial companies NBFCs and non-scheduled primary co-operative banks with a deposit size of Rs 50 crore and above.

The statement said that this will provide a cost-free alternative redressal mechanism for customers of REs who have grievances against CICs and that the RB-IOS will be more broad based on the decision to bring CICs under the ambit of RB-IOS 2021.

It has also been decided to bring CICs under the Internal Ombudsman IO framework with a view to strengthening the internal grievance redressal of CICs.

With regard to outsourcing, the REs are increasingly using outsourcing as a means of reducing costs and availing expertise that is not available internally.

It exposes REs to various risks because of the outsourcing of a permissible activity.

The RBI has guidelines on managing risks in outsourcing of certain activities by REs.

In view of the increasing trend of outsourcing, the framework for REs to manage the associated risks needs to be strengthened. In order to harmonise and consolidate the existing guidelines, a draft Master Direction on Managing Risks and Code of Conduct in Outsourcing Financial Services will be issued shortly for comments from stakeholders, Das said.

Standalone Primary Dealers SPDs are permitted to undertake foreign currency business for limited purposes, according to the statement.

It is proposed that SPDs can be allowed to offer all foreign exchange market-making facilities, as currently permitted to Category-I Authorised Dealers, subject to prudential guidelines, in order to strengthen the role of SPDs as market makers, at par with banks operating primary dealer business.

It said that this measure would give forex customers a wider range of market-makers in managing their currency risk, adding breadth to the forex market in India.

Wider market presence would improve the ability of SPDs to provide support to the primary issuance and secondary market activities in government securities, which would continue to be the main focus of primary dealer activities. It said that regulations in this regard would be issued separately.