Many borrowers who were struggling with poor service from credit bureaus or were victims of incorrect credit data reports but did not get a proper resolution can now hope for succour. There will now be an RBI-monitored grievance redressal mechanism for complaints against the credit score bureau.
The Reserve Bank of India (RBI) has announced that individuals having issues with credit information companies such as CIBIL, Experian, Equifax etc., can file complaints directly with the central bank. The announcement was made by the RBI governor today in the statement after the Monetary Policy review.
These credit information companies (CICs), commonly called credit bureaus, collate the data of the customers from banks, credit card companies and other financial institutions. On the basis of the data collected, these CICs offer a score indicating whether the customer is a good borrower or a bad borrower. However, it may happen that the information available with the credit bureaus is wrong and resulting incorrect credit score is not corrected within 30 days. Now onwards if there is no resolution from these bureaus within 30 days, the borrower can file a complaint with the RBI against the CICs.
As per the governor’s statement, “The Reserve Bank – Integrated Ombudsman Scheme (RB-IOS) has improved the customer grievance redress mechanism. The turnaround time of grievance redress under RB-IOS has declined considerably. In order to make the RB-IOS more broad-based, it has been decided to include Credit Information Companies (CICs) under the RB-IOS framework. This will provide a cost-free alternative redress mechanism for grievances against CICs. Further, with a view to strengthen the internal grievance redress by CICs themselves, it has been decided to mandate the CICs to have their own internal Ombudsman (IO) framework.”
As per the Statement on Developmental and Regulatory Policies, “The Reserve Bank-Integrated Ombudsman Scheme (RB-IOS) 2021, covers Regulated Entities (REs) such as 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. In order to make the RB-IOS more broad-based, it has been decided to bring Credit Information Companies (CICs) also under the ambit of RB-IOS 2021. This will provide a cost-free alternate redress mechanism to customers of REs for grievances against CICs. Further, with a view to strengthen the internal grievance redress of the CICs and to make it more efficient, it has also been decided to bring the CICs under the Internal Ombudsman (IO) framework.”
Currently, there are four credit information companies in India – namely, Credit Information Bureau (India) Ltd (CIBIL), Equifax Credit Information Services Pvt Ltd, Experian Credit Information Company of India Pvt Ltd and CRIF High Mark Credit Information Services Pvt Ltd.
Neeraj Dhawan, Country Manager, Experian India says, “It was announced that as a part of its Development and Regulatory Policies, to improve the credit ecosystem in the country, Credit Information Companies (CICs) will be brought under the purview of the RBI’s Integrated Ombudsman Scheme. This will offer a faster redressal mechanism for grievances. Also, CICs will be required to have their own internal Ombudsman (IO) framework. This is a positive step that will help consumers resolve their concerns to gain timely access to credit and be in control of their finances.”
What is RBI’s integrated ombudsman scheme?
The central bank launched Reserve Bank – Integrated Ombudsman Scheme, 2021 in November 2021. The scheme integrates the existing three Ombudsman schemes of RBI namely, (i) the Banking Ombudsman Scheme, 2006; (ii) the Ombudsman Scheme for Non-Banking Financial Companies, 2018; and (iii) the Ombudsman Scheme for Digital Transactions, 2019. Some of the salient features of the Scheme are:
It will no longer be necessary for a complainant to identify under which scheme he/she should file a complaint with the Ombudsman.
The Scheme defines ‘deficiency in service’ as the ground for filing a complaint, with a specified list of exclusions. Therefore, the complaints would no longer be rejected simply on account of “not covered under the grounds listed in the scheme”.
The Scheme has done away with the jurisdiction of each ombudsman office.
A Centralised Receipt and Processing Centre has been set up at RBI, Chandigarh for receipt and initial processing of physical and email complaints in any language.
The responsibility of representing the Regulated Entity and furnishing information in respect of complaints filed by customers against the Regulated Entity would be that of the Principal Nodal Officer in the rank of a General Manager in a Public Sector Bank or equivalent.
The 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/documents.