In furtherance of protecting and promoting the interests of the customers in the Non-Banking Finance Companies (NBFC) sector, the Reserve Bank of India (RBI) has expanded the scope of the Ombudsman Scheme for Non-Banking Finance Companies, 2018 (Scheme).


In the statement on Developmental and Regulatory Policies dated 7 February 2018 (Statement), the RBI had set out its decision to introduce the Scheme with the objective of providing customers of NBFCs with a grievance redressal mechanism that was expeditious and cost-free. The Statement indicated that the Scheme would be operationalised initially for all deposit taking NBFCs, while it was also intended to cover NBFCs having an asset-size of INR 100 crores and above with customer interface. The Scheme was accordingly issued by the RBI on 23 February 2018 in line with the Statement.

After having reviewed the operation of the Scheme, the RBI, in April 2019, decided to extend the applicability of the Scheme to non-deposit taking NBFCs having customer interface and an asset-size of INR 100 crore and above, as on the date of the audited balance sheet of the previous financial year. The Scheme, however, continues to be inapplicable to NBFC - Infrastructure Finance Company (NBFC-IFC), Core Investment Company (CIC), Infrastructure Debt Fund NBFC (IDF-NBFC) and NBFCs under liquidation.

Complaint Process

A customer can file a complaint against an NBFC with an RBI appointed ombudsman on up to 13 grounds including non-payment or inordinate delay in the payment of interest or repayment of deposit, failure to ensure transparency in the loan agreement and non-observance of directions issued by the RBI. The customer is required to make a written complaint to the NBFC before approaching the ombudsman. If the complaint remains unaddressed for more than a month, then the complainant can reach out to the ombudsman.

Resolution Procedure

A complaint may be settled by way of an agreement between the NBFC and the concerned customer, with the ombudsman acting as a mediator. However, if the NBFC and the concerned customer fail to reach an agreement, the ombudsman may pass an award either allowing the complaint with a specific performance obligation and/or compensation of up to INR 11 lakhs, or rejecting it.


As with the deposit taking NBFCs that were already covered under the Scheme, it is advisable for the NBFCs that are now getting covered to build an internal mechanism to address customer complaints to prevent any complaint from reaching the ombudsman. In the event a matter is raised to the ombudsman, NBFCs have to implement the settlement or award, as the case may be, and send a report in this regard to the RBI within 15  days of the final settlement or award. Failure to implement the settlement or award will give the complainant a right to represent itself before the RBI, following which the RBI may initiate any action it deems fit under the Reserve Bank of India Act, 1934.

The Scheme, thus, aims to promote conducive credit culture among the NBFCs and provides an efficient mechanism for redressal of complaints without any cost to the customer. Applicable NBFCs have already started putting in necessary policies and establishing a mechanism for redressal of complaints. Depending on the success of the Scheme, we can expect the RBI to include other types of NBFCs under the purview of the Scheme.

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