Regulated entities should embrace a customer-centric approach for consumer protection: RBI Guv

For consumer safety: The primary focus of top management in regulated entities should be on cultivating a customer-centric approach and upholding a commitment to consumer protection, RBI Governor Shaktikanta Das said on Friday.

“While regulations provide a framework for financial institutions to operate within, the true effectiveness of these regulations depends on how they are implemented by the regulated entities themselves,” Das added while speaking at the Annual Conference of RBI ombudsman.

According to Das, with India's economy expanding, the customer base of these entities is also growing. “Therefore, as stakeholders in the financial ecosystem, it is crucial to ensure that this growing customer base is provided with fair and sustainable products and services,” he added further.
Challenges for consumers

The RBI governor also talked about challenges faced by consumers, and said, “The increasing diversity and complexity of financial products and services can pose challenges for consumers in understanding and making informed decisions.”

He emphasises the need for clear, transparent, and consistent communication regarding products, services, fees, and other relevant information.  

“Clear communication is vital for building trust and fostering long-term customer relationships,” he opined. Das went on to add that effective grievance redress mechanisms are essential for assessing the performance of any institution. “Fragmented and inefficient grievance redress mechanisms can delay the resolution of consumer complaints. To address this, it's crucial to streamline processes and minimise unnecessary layers, ensuring timely resolution of grievances,” Das said.

The RBI governor also shed light on grievance redress mechanisms and said that recent regulatory initiatives such as the framework for Digital Lending, the revised regulatory framework for Microfinance Loans, the Reserve Bank - Integrated Ombudsman Scheme 2021, and the Internal Ombudsman Framework in Regulated Entities have been introduced to enhance consumer protection and strengthen grievance redress mechanisms.