RBI's retail direct, integrated ombudsman schemes off to a good start

Over 35,000 registrations on retail direct platform; complaints under new ombudsman rise steadily, some coming via emails

The Reserve Bank of India’s retail direct scheme is off to a good start but the central bank itself does not see it as an alternative to existing investment avenues, but an additional avenue.

Still, a reasonable expectation is to have at least 100,000 investors within a month of it being operational, and that could be well under way, if the latest trend is to sustain.  

Registrations on the retail direct platform have crossed 35,000. The idea is to fetch more participation from high net worth individuals and pensioners looking for safety of their investments.  

Regular retail traders will take time to onboard as they learn the intricacies of bond trading, said a person closely observing the space.  

For example, a common investor may not yet to be conversant with the link between yields and prices and how a coupon and yield could be different, the person said.

Issues like tax, a rising interest rate scenario dragging down the returns and potentially leading to losses, could also prevent a widespread adaption of the platform as of now. Even as the bonds offer higher return in some cases than bank deposits, small savings certificates and provident funds are offering above 7.5 per cent.  

Debt mutual funds, with a lock-in period of three years, could also offer more returns than currently being offered by the government bonds. The minimum investment limit of Rs 10,000 has also worked as a deterrent for many small investors, say experts. However, this will pick up pace in the coming days, but there would be no rush.

The integrated ombudsman scheme, however, has seen great response and customers seemed to have easily taken to the scheme, say people in the know of the matter.

Both the schemes were launched by the Prime Minister on November 12.  

On the day of the launch, some 1,300 complaints were lodged with the RBI under the new scheme, and the numbers have risen steadily, say people in the know of the matter. Customers are also complaining through emails that are getting included in the ombudsman scheme.  

According to sources familiar with the matter, the central bank plans to convert complains raised in the social media as formal complaints lodged with the integrated system sometime in the future. But this is under consideration, and no work has been done.  

The RBI is now striving to resolve the complaints within 30 days, almost half from its existing system of an average of 56 days. The call centres will be manned by the central bank’s own employees as the central bank wants to have a first-hand experience, before considering to outsource the front-office job to external agencies.  

Importantly, customers can also lodge complaints if banks are not able to resolve cyber fraud even after reporting the fraud within the stipulated period (72 hours), but the central bank will take into account several factors before resolving this particular kind of complaints. For example, it will investigate, and if need be, take help of law enforcement agencies to establish the culpability of the fraud, sources said.