Background: Delhi High Court’s Intervention in Consumer Protection
In a significant consumer protection ruling, the Hon’ble High Court of Delhi (Single Bench: Justice Prathiba M. Singh), while adjudicating a petition filed by a credit card holder concerning a disputed transaction and coercive recovery actions by a bank, passed strong directions reinforcing the rights of genuine customers.
The Court, inter alia, directed that:
- The amount already re-credited to the customer shall not attract any late fee, interest, or further demand
- The credit score of the customer shall be restored
- The bank shall pay costs of ₹1,00,000 to the petitioner
Importantly, the Court observed that financial regulators and banks must put in place effective safeguards against misuse of payment systems and ensure that genuine customers are not harassed through repeated emails, messages, or payment demands, especially when disputes are pending.
Directions to RBI: Strengthening the Ombudsman & Grievance Framework
Recognising systemic gaps, the Hon’ble Court issued specific directions to the Reserve Bank of India (RBI) to:
- Strengthen the customer complaint handling mechanism under the RBI Ombudsman framework
- Ensure greater transparency and accessibility in grievance redressal processes
- Mandate banks and regulated entities to clearly disclose grievance redressal hierarchies and escalation mechanisms on their websites.
RBI Compliance Mandate via DAKSH Portal
Pursuant to the above judicial directions, the RBI, through its DAKSH supervisory portal, has issued a compliance requirement to all Regulated Entities (REs), including NBFCs.
Key Compliance Requirement
In compliance with the directions of the Hon’ble High Court of Delhi in W.P.(C) 16659/2022 & CM APPL. 52510/2022, Regulated Entities are now required to:
1. Display a detailed flowchart under the “Complaints” section of their website, which must clearly outline:
- The procedure for lodging a complaint with:
- Customer Care Executive
- Branch Manager
- Nodal Officer or any other designated grievance officer
- The hierarchy of officers responsible for handling consumer grievances
- The escalation mechanism, including timelines and escalation levels
2. The flowchart must be clear, accessible, and customer-friendly, enabling consumers to understand:
- Whom to approach
- At what stage
- Within what timelines
Mandatory Reporting Through DAKSH Portal
- A formal compliance confirmation regarding the above disclosure must be submitted through the RBI DAKSH portal
- Deadline for compliance: On or before 31 March 2026
Failure to comply may attract supervisory observations, adverse inspection remarks, or regulatory action.
Why This Update Is Significant for NBFCs and Banks
While most NBFCs and banks already maintain a grievance redressal mechanism on their websites, this update introduces a specific, court-driven compliance requirement that goes beyond generic disclosures.
This mandate emphasises:
- Transparency in grievance handling
- Accountability at each escalation level
- Reduction of customer harassment
- Alignment with consumer protection jurisprudence
Regulators and courts are now closely scrutinising not just the existence of grievance mechanisms, but their clarity, effectiveness, and accessibility to customers.
Action Points for Regulated Entities
NBFCs and Banks should immediately:
- Review existing grievance redressal disclosures on their websites
- Design and upload a clear, RBI-compliant flowchart under the “Complaints” section
- Ensure officer details, escalation levels, and timelines are accurate and updated
- Prepare and submit compliance confirmation via the DAKSH portal well before the deadline
- Align internal grievance handling processes with the published hierarchy
How A2I Legal Assists
A2I Legal supports NBFCs and other Regulated Entities with:
- Drafting and designing RBI-compliant grievance redressal flowcharts
- Reviewing and strengthening Consumer Grievance Redressal Policies
- Ensuring alignment with RBI Ombudsman Scheme and recent judicial directions
- End-to-end assistance in DAKSH portal compliance and submissions
This regulatory update marks a clear shift towards stronger consumer-centric compliance, driven directly by judicial intervention. NBFCs and banks must treat grievance redressal disclosures not as a formality, but as a critical governance and compliance obligation.
Proactive compliance today will prevent regulatory scrutiny tomorrow.
📌 For customised advisory or implementation support, reach out to A2I Legal.
