RBI has vide its circular dated 12th March, 2021 asked banks, financial institutions, NBFCs, co-operative banks to report on loans which were restructured due to the covid-19 pandemic.
This information is given by banks etc. to Credit Information Companies to enable proper data capturing by these data companies. The gist of the circular is given below:
2. The Uniform Credit Reporting Format has two Annexes. The Annex-I contains two formats for credit reporting, viz., Consumer Bureau and Commercial Bureau, whereas Annex-II contains credit reporting format for Micro Finance Institution (MFI) segment.
3. It has now been decided to modify the aforesaid three formats as under:
(i) Consumer Bureau: The label of the field ‘Written off and Settled status’ is modified as ‘Credit Facility Status’ and it will also have a new catalogue value, viz., ‘Restructured due to COVID-19’.
(ii) Commercial Bureau: The existing field ‘Major reasons for restructuring’ will have a new catalogue value, viz., ‘Restructured due to COVID-19’.
(iii) MFI Bureau: The existing field ‘Account status’ will have a new catalogue value, viz., ‘Restructured due to COVID-19’.
5. Banks/AIFIs/NBFCs should make necessary modification to their systems and commence reporting the above information to CICs within two months from the date of this circular. CICs shall make necessary modifications to their system to reflect the above changes.
There have been reports about individuals/small businesses falling prey to growing number of unauthorised digital lending platforms/Mobile Apps on promises of getting loans in quick and hassle-free manner. These reports also refer to excessive rates of interest and additional hidden charges being demanded from borrowers; adoption of unacceptable and high-handed recovery methods; and misuse of agreements to access data on the mobile phones of the borrowers.
Legitimate public lending activities can be undertaken by Banks, Non-Banking Financial Companies (NBFCs) registered with RBI and other entities who are regulated by the State Governments under statutory provisions, such as the money lending acts of the concerned states. Members of public are hereby cautioned not to fall prey to such unscrupulous activities and verify the antecedents of the company/ firm offering loans online or through mobile apps. Moreover, consumers should never share copies of KYC documents with unidentified persons, unverified/unauthorised Apps and should report such Apps/Bank Account information associated with the Apps to concerned law enforcement agencies or use Sachet portal (https://sachet.rbi.org.in) to file an on-line complaint.
Reserve Bank has also mandated that digital lending platforms which are used on behalf of Banks and NBFCs should disclose name of the Bank(s) or NBFC(s) upfront to the customers. The names and addresses of the NBFCs registered with the Reserve Bank can be accessed here and the portal for filing complaints against the entities regulated by the RBI can be accessed through https://cms.rbi.org.in.
RBI has mandated setting up on an online dispute resolution (ODR) system for digital payments by banks and non banks and authorised payment system operators. It will be a system driven, rule based mechanism with minimal human intervention. Initially the ODR will be for failed transaction by January 1, 2021 Any entity setting up a payment system in India thereafter or participating therein, shall make available the ODR system at the commencement of its operations. Based on experience gained, ODR arrangement would later be extended to cover disputes and grievances other than those related to failed transactions.
There are some minimum requirements for ODR to be maintained which are as under:
Minimum Requirements of the ODR System 1. Applicability1.1. These requirements apply to all authorised Payment Systems Operators (PSOs) – banks and non-banks – and their participating members [Payment System Participants (PSPs)].2. Concept of the ODR system 2.1. The ODR system should be a transparent, rule-based, system-driven, user-friendly and unbiased mechanism for resolving customer disputes and grievances, with zero or minimal manual intervention. 3. Structure of the ODR system 3.1. Each PSO shall make available an ODR system for resolving disputes and grievances arising out of failed transactions and provide the participating PSPs an access to the system. 3.2. The PSO and its PSPs shall provide the customers an access for lodging the disputes and grievances relating to failed transactions, irrespective of such transactions being on-us or off-us in nature.4. Types of transactions covered under the scope of the ODR system 4.1. To begin with, disputes and grievances relating to failed transactions shall be covered under the ODR system. The scope, thus, includes all transaction types mentioned in the RBI circular DPSS.CO.PD No.629/02.01.014/2019-20 dated September 20, 2019 on “Harmonisation of Turn Around Time (TAT) and customer compensation for failed transactions using authorised Payment Systems”. 4.2. All provisions, including those relating to TAT and compensation to customers mentioned in the above circular need to be adhered to while resolving disputes and grievances using the ODR system. 5. Lodging and tracking of disputes and grievances5.1. Customers shall be provided with one or more channels – web-based or paper-based complaint form, IVR, mobile application, call centre, SMS, through branches or offices, etc. – for lodging disputes and grievances. As mentioned above, such facility shall be provided by the PSO as well as by the PSP (the issuer institutions with whom the customer has a relationship) with a mechanism to link / access the ODR system put in place by the PSO. The industry may progressively increase the variety of these channels. 5.2. In addition to the above channels, in case of mobile phone-based systems like Unified Payments Interface (UPI), third party app providers (TPAPs) shall also provide customers with a facility to lodge disputes and grievances through the same mobile app used for making payments, which shall be integrated with the ODR system. 5.3. The process of lodging the dispute or grievance shall be simple and involve only necessary minimum details. The ODR system should be made capable of automatically fetching full details based on the information provided by the customer. The aspect of data confidentiality shall specifically be taken care of while designing such parameters.5.4. Once a customer has lodged the dispute or grievance, a unique reference number shall be allocated by the ODR system. Facility shall be provided to the customers for tracking the status of the dispute or grievance using this reference number.
Just little more than a month ago, I received a SMS on my mobile phone warning me of a transaction for USD 85 on Amazon.com. Immediately the same day and within minutes i had sent a mail to the bank whose credit card i was having to block the said transaction and also block my credit card in order to obviate any further transactions. The bank, a leading private sector bank with otherwise impeccable credentials, simply slept on the matter. Alarmed I reminded them by the evening of the fraud that had taking place on my credit card and asking them to do something about it. None. Nope. No reply. By night I was desperate and therefore marked a copy of my mail to the managing director of the famous bank, but again NYET, no reply from them. Then I got wildly desperate and started banging them to respond. In the meanwhile i called their toll free IVRS number and after about 30 minutes was directed to talk to an inexperienced, immature, callous call centre guy who did not understand what the matter was about and kept repeating the instructions placed on his computer screen. Then i shouted BLOCK MY CREDIT CARD, he sufficiently fearful now, sent his problem upwards and finally after about one hour of conversation, got the credit card blocked. Phew!!
The next day after much banging again, the bank responded by saying that they are giving me temporary credit on my credit card to the extent that was already debited and will look into the problem (typical red tape language). I told them that if they had acted with alacrity then the transaction could have been blocked and the items not shipped at all, if at all they were shipped, because it could have been easily verified that the transaction was not made from my IP address. Dumb, really dumb bankers!!
Which now leads me to a big question – that of increasing frequency of online frauds taking place in India very rampantly these days. These frauds range from skimming the ATM scanner so that when you swipe your ATM or debit card on the machine someone is able to make a duplicate card on the basis of information gathered therein and make fraudulent transactions worth thousands of rupees from customers’ accounts.
Very recently i had visited my regular ATM from where i take the money. I saw that the ATM was not having any security at all, there were no uniformed, armed security guards at the ATM entrance or anywhere nearby. Most of the times the ATM doors are also freely open with the result that anybody can enter the ATM booth and install skimming machines or equipments without anybody noticing it. No doubt there are CCTV cameras installed but considering the apathy with which government servants do their job (this was a government owned nationalised banks’ ATM) it could be days or months before anyone notices the lapse, if at all anyone notices it.
This is a pathetic state of affairs and I don’t understand what the RBI or other banks are doing about it.
Customers withdrawing monies from ATM are at a big risk because banks are least bothered to do even minimum required to protect them from online frauds. I believe only when a politician or his kin loses money will the government or the RBI or the banks act in this regard.
In the meanwhile the common man has to recite thousands of prayers every time he enters an ATM kiosk to do any transaction. Jai Ho India