Non-Banking Financial Companies Current Affairs - 2019

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RBI constitutes panel to review Core Investment Companies

Reserve Bank of India (RBI) constituted a working group to review regulatory guidelines and supervisory framework for Core Investment Companies (CIC). The 6-member working group is chaired by Tapan Ray, non-executive chairman, Central Bank of India and former Secretary in Union Ministry of Corporate Affairs (MCA).

Key Highlights

Background: In August 2010, Central Bank on recognising the difference in business model of a holding company relative to other Non-Banking Financial Companies (NBFCs) had introduced a separate framework for regulation of systemically important.

RBI’s Objective behind forming Panel

Country’s Corporate Group structures have become more complex over the years. It now involves multiple layering and leveraging, which has further led to greater inter-connectedness with financial system through their access to public funds. Also, in light of recent developments, there is a need to strengthen corporate governance framework of CICs.

Troubled financial conglomerate Infrastructure Leasing and Financial Services (IL&FS) is registered with RBI as a CIC.

Terms of Reference for Panel

It will examine current regulatory framework for CICs in terms of efficacy, adequacy and effectiveness and will also suggest changes.

It will also suggest measures to strengthen corporate governance and disclosure requirements for CICs as well as measures to enhance RBI’s on-site supervision and off-sight surveillance over CICs.

To assess adequacy of supervisory returns submitted by CICs and also suggest changes.

Timeframe: Working Group must submit its report by 31 October 2019

What is RBI’s Complaint Management System?

The Reserve Bank of India (RBI) has launched Complaint Management System (CMS), on its website for facilitating RBI’s grievance redressal process.

About CMS

It is a software application launched by RBI for lodging complaints against any regulated entity with public interface such as commercial banks, urban cooperative banks (UCBs), Non-Banking Financial Companies (NBFCs).

Objective: To facilitate RBI’s grievance redressal process and also to improve customer experience in timely redressal of grievances.

Need: For maintaining trust and sustaining the confidence of consumers in the banking system and other financial service providers (FSPs), prompt and effective grievance redressal mechanism together with customers empowerment through education is must.

Features:

Keeping convenience of customers in mind, RBI has designed CMS in a way to enable online filing of complaints.

Targeted Solution: Once the complaint is registered it would be directed to appropriate office of Ombudsman or Regional Office of RBI.

Transparent Procedure: The application has the feature of keeping complainants fully informed via auto-generated acknowledgements and enabling them to track status of their complaints as well as to file appeals online against the decisions of Ombudsmen, where applicable. Thus help improving transparency in system.

Tracking: The application is also provided with various dashboards which will help RBI to effectively track progress in redressal of complaints.

Feedback: Complainants can also voluntarily share feedback on their experience in obtaining redressal thus helping the service provider to further improvise its services.

Way Ahead: CMS will be accessible on desktop and on mobile devices. In future, RBI also plans to introduce a dedicated Interactive Voice Response (IVR) system for tracking status of complaints.

RBI can leverage the data from CMS for analytics purpose, which can then be used for regulatory and supervisory interventions, if required.