RBI to audit 9,500 NBFCs to check on levels of compliance

The Reserve Bank of India (RBI) is likely to engage the services of external auditors to audit majority of the 9,500-odd non-banking finance companies (NBFCs) to delve into their operations and check whether their registered office is at the place mentioned in their application for registration, among others.

Failure of certain NBFCs due to idiosyncratic factors and several digital lenders violating extant regulations and guidelines on outsourcing and Fair Practices Code may be the trigger the aforementioned audit, according to industry sources.

The RBI cancelled the certificate of registration (CoR) of 3,110 NBFCs between FY15 and FY22, with the largest number of cancellations (1,851) being in FY19. As on October 1, 2022, the CoRs of 5,451 NBFCs were cancelled by the central bank.

The proposed audit exercise could lead to cancellation of CoRs of more NBFCs in FY24.

There are 9,500-odd NBFCs but the RBI’s supervisory staff strength is only about 1,500. So, besides perusing offsite returns submitted by NBFCs, RBI may want to engage the services of external auditors to get in-depth assessment of the operations of the small and medium NBFCs, the sources said.

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Soon, RBI’s Ombudsman scheme to also include housing fin firms

Customers of housing finance companies may soon enjoy the benefit of getting their complaints resolved through Reserve Bank of India’s integrated ombudsman scheme as the central bank is in the process of widening the ambit of its customer grievance redressal mechanism.

RBI, in the annual report of ombudsman scheme, said that its consumer education and protection department is working towards extension of the scheme to HFCs. This may be done by March 31, 2023.

Last year, the coverage of the integrated ombudsman scheme was extended to credit information companies and the non-scheduled urban cooperative banks with a deposit size of Rs 50 crore or above.

In November 2021, RBI created a single platform for both bank and non-bank customers for getting speedy resolution of their grievances. Three erstwhile ombudsman schemes — Banking Ombudsman Scheme 2006, Ombudsman Scheme for Non-Banking Financial Companies 2018 and Ombudsman Scheme for Digital Transactions 2019 – were integrated into a single scheme.

RBI said that the volume of complaints received under the ombudsman schemes during the year 2021-22 increased by 9.39% to 4.18 lakh over the previous year.