Now, individuals facing issues with credit information bureaus or companies, such as CIBIL, Experian and Equifax, can file complaints directly with the Reserve Bank of India (RBI) ombudsman, according to Friday's monetary policy announcement.
This development comes on the back of several borrowers struggling with poor service from the credit bureaus or those who are victims of incorrect credit data reports and did not get a resolution. The RBI has now announced measures to closely monitor such mismanagement and set up an RBI-monitored grievance redressal mechanism for complaints against the credit score bureau.
Typically, the credit information companies (CICs), also called credit bureaus, collect the data of the customers from banks, credit card companies, and other financial institutions. Depending on the data collected, these CICs offer a score indicating whether the customer is a good borrower or a bad borrower. However, at times, the information available with the credit bureau is wrong. And often the incorrect credit score is not corrected within 30 days. Henceforth, if there’s no resolution from these bureaus within 30 days, the borrower can file a complaint with the RBI against the CICs.
As per the statement of RBI Governor Shaktikanta Das, “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.”
According to 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) 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, which are 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.
What Is RBI integrated Ombudsman Scheme?
PM Modi has launched two customer-centric innovative schemes under the RBI in November 2021 – Retail Direct Schemes for retail investors and the Integrated Ombudsman Scheme. With this, the country opened its sovereign bond market to individual buyers.
The Banking Ombudsman Scheme (BOS) was first introduced in 2006. It was updated in July 2017. As per the RBI site, the BOS is an efficient forum for banking customers to resolve complaints related to certain services rendered by banks. The BOS is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995. At present, the BOS 2006 (as amended up to July 1, 2017) is in operation.
The Banking Ombudsman is a senior official appointed by the RBI to redress customer complaints against deficiency in certain banking services covered under the grounds of complaint specified under Clause 8 of the Banking Ombudsman Scheme 2006 (As amended up to July 1, 2017).
Integrated Banking Ombudsman Scheme helps in improving the grievance redress mechanism for resolving customer complaints against RBI’s regulated entities. The scheme is based on a ‘One-Nation Ombudsman’ with one portal, one email, and one address for the customers to lodge their complaints, according to the PMO. At present, there are separate Ombudsmen for banks, non-banking finance companies (NBFCs), and non-bank prepaid payment issuers (PPIs) that are wallets. RBI operates this from across 22 Ombudsman offices located across the country. They are integrated into one centralized scheme to make the grievance redressal process simpler and more efficient. A centralized receipt and processing centre has been set up at RBI, Chandigarh, for receipt and initial processing of physical and email complaints in any language.