New Delhi: Emphasising the need to create a culture of responsible governance in the NBFC sector, RBI Deputy Governor M Rajeshwar Rao on Friday urged shadow banking players to give utmost importance to the protection of customers as it is "non-negotiable".
Recalling incidents of the coercive recovery practice by some of the players, the Deputy Governor said, such developments spurred by purely commercial considerations have dented the credibility of the whole system which flourishes and thrives on trust.
"My ask here is that we should not compromise on the ethos of the finance for mercurial or ephemeral gains. These gains would anyway accrue to the institutions over the long term if and when it is built on an edifice of trust and mutual benefit," he said at the NBFC Summit organised by CII.
Observing that RBI is inundated with the complaints of harsh recovery practices, breach of data privacy, increasing fraudulent transactions, cybercrime, excessive interest rates and harassment, he said, protection of the customers is "non-negotiable".
"To us at RBI, any regulatory move has always, the larger public interest as its core theme and we have been doing our best having regard to public interest in general for the financial system. Putting in place an elaborate grievance redressal machinery, an RBI Ombudsman scheme, Fair Practices Code, etc. are pointers in this direction," he said.
More recently, he said, the Scheme for Internal Ombudsman (IO) has been extended to NBFCs on a selective basis. The IO at the apex of the NBFCs' internal grievance redressal mechanism, shall independently review the resolution provided by the NBFC in the case of wholly or partially rejected complaints.
However, regulatory measures alone may not suffice, he said, adding, protecting customers against unfair, deceptive, or fraudulent practices has to become top priority of every entity and permeate the organisation culturally and become a part of its ethos.
"Customer service would mean, amongst many other things, that a customer has similar pre-sale and post-sale experience, she/he is not disadvantaged vis--vis another customer because he or she approached the financial entity through a different delivery channel, and he or she has a right to hassle-free exit from the contractual obligation. This issue has been deliberated often enough and it's time to act now," he said.