Central bank may consider extending charter to banking finance firms, it suggests
Posted on – Monday, 05/06/23 at 8:05pm
New Delhi: A panel set up by the RBI to inspect and review the state of customer service by Regulated Entities (REs) has recommended that the Central Bank consider enforcing it after reviewing and updating the Charter of Customer Rights.
It suggested that the central bank may also consider extending the charter to banking financial companies (NBFCs).
RBI on 23 May 2022 formed a seven-member committee chaired by former RBI Deputy Governor BP Kanungo to assess the effectiveness, adequacy and quality of customer services in entities regulated by RBI, As well as existing RBI guidelines on customer service and identifying gaps if any.
The committee recommended the above-mentioned measures in its recent report to the RBI.
“To ensure consistency in the classification, recording and reporting of complaints by RE, the Reserve Bank should develop a definition of complaints under the internal grievance mechanism which should also cover complaints outside the purview of the Reserve Bank’s Comprehensive Ombudsman Scheme,” the group recommended road.
The Committee further recommends that the RBI Ombudsman (RBI) should be empowered to direct the RE concerned to review all such cases and take appropriate corrective action on the basis of facts or a similar set of complaints and confirm compliance with the Reserve Bank.
It also proposes the establishment of a common RE-agnostic portal for filing complaints so that customers of any RE can file complaints on a single platform.
The portal can assign complaints to the appropriate RE, enable complainants to track complaints and automatically escalate rejected complaints to the internal ombudsman.
The panel further said that going forward, the Reserve Bank may also consider integrating the platform with its Complaints Management System (CMS) portal to provide seamless transmission and movement of complaints and data.
In order to improve customer service at RE, the Association of Indian Banks may update its model operating procedures in accordance with regulations to easily settle claims in accounts of deceased account holders in various situations.
The model operating procedures may specify the documents that claimants are required to submit.
The group suggested that, if a nomination exists, the proceeds could be released immediately upon submission of the required documents.
Obtaining a nomination in a deposit account may be mandatory to facilitate the settlement of claims in the event of the account holder’s death.
There are currently several existing accounts with no nominations.
The panel recommends that REs should be required to be nominated in all such cases within a reasonable period of time, such as three years.
To avoid the need for the nominee or heir to visit a branch or RE premises, the process of settling a deceased claim can also be made available online, it further said.
The online facility can provide for the submission of all required documents and their verification.
A system can be provided to generate a digital reference number when submitting a claim and supporting documents.
Claims can be resolved within a reasonable period of time, eg 30 days from the date of submission of all necessary documents. The panel suggested that this time frame should also apply when the claim is actually filed.
Beyond 30 days, the RE may be required to pay interest at a certain rate, such as 2% higher than the interest rate on deposits held by the deceased.
While the RE should take the necessary steps to update KYC regularly, it must be ensured that operations in the account do not stop.
