RBI to issue comprehensive guidelines to protect consumers from fraudNew Delhi: The Reserve Bank will soon come out with comprehensive guidelines to protect consumers from being cheated by entities which are regulated by the central bank."The Financial Sector Legislative Reforms Commission (FSLRC) report recommends
New Delhi: The Reserve Bank will soon come out with comprehensive guidelines to protect consumers from being cheated by entities which are regulated by the central bank.
"The Financial Sector Legislative Reforms Commission (FSLRC) report recommends adoption of consumer protection framework that will empower and require regulators to ensure consumer protection for the financial activities regulated by them," RBI Executive Director NS Vishwanathan said on the sidelines of an event organised by Assocham.
"The bank (RBI) is in the process of framing comprehensive consumer protection regulations based on domestic experience and global best practices," he said, adding, the existing norms would be strengthened.
All the RBI regulated entities would come under this be it banks or NBFC, he said. Asked if RBI is considering setting up a fund for consumer protection, he said, "at present there are no such plans...We only have a Depositor Education and Awareness Fund."
On aligning fund raising requirement with new Companies Act, Vishwanathan said, in June 2013, RBI issued a circular saying that private placement norms applicable to non-NBFCs will be applicable to NBFC as well.
As per the existing norms, Non-Banking Financial Companies (NBFCs) also cannot raise funds through private placement from more than 49 people at a time, he said.
"Subsequently, the Companies Act have now changed the rules with regard to private placement. It say 200 persons in a year. You can raise money through private placement only from 200 persons in a year," he said.
"If you want anything beyond that you have to undertake public issue. So, we have to align our guidelines with the new Companies Act," he added.
Without giving timeline, he said, it is work in progress. It is being considered.
On small and payment banks, he said "We have issued final guidelines on licensing for which we have called for applications."
"NBFCs are allowed to convert, subject to meeting the norms. We have also stated that over time we would open this licensing window on tap, thus the possibility of NBFCs including the MFIs in the sector becoming small banks is there," he added.