RBI introduces Internal Ombudsman mechanism for Credit Information Companies

RBI introduces Internal Ombudsman mechanism for Credit Information Companies: The Reserve Bank of India (RBI) has ordered Credit Information Companies to appoint an internal ombudsman (IO) by April 1, 2023, in order to improve the efficacy of its grievance redressal procedures. Apart from regulatory control by the RBI, the operation of the IO mechanism would be overseen by the CIC’s internal audit system.

Internal Ombudsman mechanism for CIC: Key Points

• The Reserve Bank of India has ordered the appointment of an internal ombudsman by Credit Information Companies.
• In order to extend the reach of the RBI-Integrated Ombudsman Scheme 2021, the Central Bank decided to include CICs in its purview. According to the RBI, this would provide customers of enterprises subject to regulation with a free alternative dispute resolution process for grievances involving CICs.
• The internal ombudsman must be appointed by each CIC for a definite term of at least three years and no more than five years.
• In addition to regulatory control by the RBI, the operation of the IO mechanism will be overseen by the CIC’s internal audit system.
• According to the RBI, the Central Bank will also look into instances where the IO’s ruling was overruled by the CIC.

Functions & roles of IO

1. The IO will only deal with complaints that the CIC has already reviewed but rejected in full or in part. It will not respond to direct complaints from complainants or members of the public.
2. CIC must make sure that the IO position should not be left vacant. Additionally, with the exception of complaints arising from a CIC service failure, the IO will not be handling any complaints concerning fraud and misappropriation.
3. Managing Director or Chief Executive Officer of the CIC will get administrative reports from the internal ombudsman, and the Board will receive functional reports. The RBI’s supervisory evaluation will include a review of the customer service and customer complaint resolution departments. The RBI said that the Central Bank will also examine cases in which the IO’s decision was overturned by the CIC.