Internal Ombudsman for Regulated Entities Directions, 2023

RBI/CEPD/2023-24/108 CEPD.PRD.No.S1228/13.01.019/2023-24 December 29, 2023 (1) Chairman/Managing Director/CEO of All Scheduled Commercial Banks (excluding RRBs) (2) Chairman/Managing Director/CEO of All NBFCs (3) Chairman/Managing Director/CEO of Non-Bank System Participants (4) Chairman/Managing Director/CEO of All Credit Information Companies Dear Sir / Madam, Master Direction - Reserve Bank of India (Internal Ombudsman for Regulated Entities) Directions, 2023 The Reserve Bank institutionalized the Internal Ombudsman mechanism in various regulated entities vide instructions / guidelines contained in the Internal Ombudsman Scheme 2018- Implementation by banks dated September 3, 2018, Internal Ombudsman Scheme for Non-Bank System Participants, 2019 dated October 22, 2019, Appointment of Internal Ombudsman by Non-Banking Financial Companies dated November 15, 2021 and Reserve Bank of India (Credit Information Companies - Internal Ombudsman) Direction, 2022 dated October 6, 2022. The Internal Ombudsman mechanism has been set up with a view to strengthen the Internal Grievance Redress system of the regulated entities. 2. A review of Internal Ombudsman schemes has been undertaken by the Reserve Bank in line with the integration of the erstwhile three RBI Ombudsman Schemes as also with the objective to improve the customer service standards in regulated entities. The framework reaffirms that the Internal Ombudsman mechanism should work as envisaged and the Internal Ombudsman shall be positioned as an independent, apex level authority on consumer grievance redress within the regulated entities. 3. Accordingly, in exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949, Section 45L read with 45M of the Reserve Bank of India Act, 1934, sub-section (1) of Section 11 of Credit Information Companies (Regulation) Act, 2005 and Section 18 of the Payment and Settlement Systems Act, 2007, the Reserve Bank of India, being satisfied that it is necessary and expedient in public interest to do so, hereby directs that all the regulated entities as indicated in Clause 4 of the Master Direction shall comply with the Direction with immediate effect. 4. The regulated entities are further advised as follows:

• The Internal Ombudsman appointed by the regulated entity, under the erstwhile Internal Ombudsman Schemes / Direction shall continue to hold office till the expiry of their tenure.
• The regulated entities not currently falling under the Internal Ombudsman Schemes / Direction may closely monitor their eligibility as per the prescribed provisions for timely appointment of Internal Ombudsman in their entity, as required.
• The regulated entities are advised to forward the contact details of the Internal Ombudsman / Deputy Internal Ombudsman to Consumer Education and Protection Department, Central Office, Reserve Bank of India, 1st Floor, Amar Building, Sir P M Road, Fort, Mumbai 400 001 (e-mail: iocepd@rbi.org.in) and ensure to update the same as and when there is any change.

Yours faithfully, (Neena Rohit Jain) Chief General Manager Encl: Master Direction - Reserve Bank of India - (Internal Ombudsman for Regulated Entities) Directions, 2023

Master Direction - Reserve Bank of India (Internal Ombudsman for Regulated Entities) Directions, 2023

In exercise of the powers conferred by Section 35A of Banking Regulation Act, 1949, Section 45L read with 45M of the Reserve Bank of India Act, 1934, sub-section (1) of Section 11 of the Credit Information Companies (Regulation) Act, 2005 and Section 18 of the Payment and Settlement Systems Act, 2007, the Reserve Bank of India, being satisfied that it is necessary in the public interest to do so, hereby, issues the Directions hereinafter specified.

These Directions are issued with a view to strengthen the Internal Grievance Redress mechanism within a Regulated Entity and ensure a proper and speedy resolution of customer complaints by enabling a review before their rejection, by an apex level authority within the Regulated Entity. These Directions integrate and update the erstwhile Internal Ombudsman Schemes issued by the Reserve Bank for banks, Non-Banking Financial Companies (NBFCs), Non-bank System Participants (NBSPs) and Credit Information Companies (CICs).

Chapter I Preliminary

1. Short Title and Commencement (1) These Directions shall be called the Reserve Bank of India (Internal Ombudsman) Directions, 2023. (2) These Directions shall come into effect from December 29, 2023 and shall apply to the whole of India.

2. Suspension (1) The Reserve Bank, if it is satisfied that it is expedient to do so, may, by an order, suspend for such period as may be specified in the order, the operation of any or all of the provisions of these Directions, either generally or in relation to any specified regulated entity. (2) The Reserve Bank may by an order, extend from time to time, the period of any suspension ordered as aforesaid by such period, as it may deem fit.

3. Definitions (1) In these Directions, unless the context states otherwise, the terms herein shall bear the meanings assigned to them as below:

• (a) “Bank” means a ‘banking company’, a ‘corresponding new bank’ and ‘State Bank of India’ as defined in Section 5 of the Banking Regulation Act, 1949 (Act 10 of 1949) that are included in the Second Schedule of the Reserve Bank of India Act, 1934 (Act 2 of 1934), but does not include a bank in resolution or winding up or under directions or any other bank as specified by the Reserve Bank;
• (b) “Banking Outlet” is a fixed-point service delivery unit, manned by either bank’s staff or its business correspondent where services of acceptance of deposits, encashment of cheques / cash withdrawal or lending of money are provided for a minimum of four hours per day for at least five days a week;
• (c) “Competent Authority” means Executive Director In-charge of customer service for banks, Executive Director / Managing Director / Chief Executive Officer for Non-Banking Financial Companies, Managing Director / Chief Executive Officer for Non-bank System Participants, and Managing Director / Chief Executive Officer for Credit Information Companies;
• (d) “Complaint” means a representation in writing or through other modes alleging deficiency in service on the part of the regulated entity and seeking relief thereon;
• (e) “Credit Information Company (CIC)” means a company as defined in the Companies Act, 2013 (18 of 2013) and has been granted a certificate of registration under sub-section (2) of section 5 of the Credit Information Companies (Regulation) Act, 2005 (30 of 2005);
• (f) “Deficiency in service” means a shortcoming or an inadequacy in any service, which the regulated entity is required to provide statutorily or otherwise, which may or may not result in financial loss or damage to the customer;
• (g) “Deputy Internal Ombudsman” means any person appointed under clause 6 of these Directions;
• (h) “Financial Sector Regulatory Body” means regulatory body for financial sector entities and includes:
  • (i) The Reserve Bank of India established under the Reserve Bank of India Act, 1934;
  • (ii) The Securities and Exchange Board of India established under the Securities and Exchange Board of India Act, 1992;
  • (iii) The Insurance Regulatory and Development Authority of India established under the Insurance Regulatory and Development Authority of India Act, 1999;
  • (iv) The Pension Fund Regulatory and Development Authority established under the Pension Fund Regulatory and Development Authority Act, 2013;
• (i) “Internal Ombudsman” means any person appointed under clause 5 of these Directions;
• (j) “Non-Banking Financial Company (NBFC)” means an NBFC as defined in Section 45-I (f) of the Reserve Bank of India Act, 1934 and registered with the Reserve Bank; but does not include a standalone Primary Dealer, Core Investment Company, an Infrastructure Debt Fund-Non-Banking Financial Company (IDF-NBFC), a Non-Banking Financial Company - Infrastructure Finance Company (NBFC-IFC), NBFC- Account Aggregator, NBFC under Corporate Insolvency Resolution Process, NBFC in liquidation and / or winding up, or under directions of Reserve Bank of India or any other NBFC specified by the Reserve Bank;
• (k) “Non-bank System Participant (NBSP)” means any person other than a bank participating in a payment system as defined under Section 2 of the Payment and Settlement Systems Act, 2007 including a ‘System Provider’ 1;
• (l) “Payment System” means a system that enables payment to be effected between a payer and a beneficiary, involving clearing, payment or settlement service or all of them, but does not include a stock exchange;
• (m) “Regulated Entity (RE)” means a bank or an NBFC or an NBSP or a CIC as defined in these Directions, or any other entity as may be specified by the Reserve Bank from time to time;
• (n) “Related Party” shall include related party as defined in sub-clause 76 of section 2 of the Companies Act, 2013 and related party as per the applicable accounting standards. (2) All other expressions, unless defined herein, shall have the same meaning as assigned to them under the Banking Regulation Act, 1949, the Reserve Bank of India Act, 1934, the Payment and Settlement Systems Act, 2007, the Credit Information Companies (Regulation) Act, 2005, the Credit Information Companies Rules, 2006, the Credit Information Companies Regulations, 2006, or the Reserve Bank – Integrated Ombudsman Scheme (RB-IOS), 2021 or regulations, directions and guidelines issued by the Reserve Bank of India.

4. Applicability (1) These Directions shall apply to

• (a) Banks as defined under clause 3(1)(a) of these Directions and having 10 or more banking outlets in India, whether such bank is incorporated in India or outside India;
• (b) NBFCs as defined under clause 3(1)(j) of these Directions and fulfilling the following criteria as on date:
  • (i) Deposit-taking NBFCs (NBFCs-D) with 10 or more branches;
  • (ii) Non-Deposit taking NBFCs (NBFCs-ND) with asset size of Rs.5,000 crore and above and having public customer interface;
• (c) All NBSPs as defined in Clause 3(1)(k) of these Directions with more than one crore Pre-paid Payment Instruments outstanding as on March 31, 2023, or thereafter. However, the Scheme shall continue to be applicable even if the number of Pre-paid Payment Instruments outstanding falls below the threshold at a later date;
• (d) All Credit Information Companies as defined under clause 3(1)(e). (2) Any regulated entity, subsequent to the issue of these Directions, reaching the threshold/s prescribed under clause 4(1) shall come under the ambit of these Directions and hence would be required to put in place an Internal Ombudsman framework within six months of reaching the threshold. (3) The Reserve Bank, if it is satisfied in public interest, may, by order, direct any regulated entity to appoint an Internal Ombudsman and these directions shall apply to that regulated entity.