Sachet and the PM’s Grievance Redress Agenda: How Far Will It Work for the Financial Consumer?
At prime minister Narendra Modi’s first Town Hall meeting on 6th August, he said, the “most powerful thing in democracy is a grievance redress system. I raise one issue but the whole system is addressed. We are taking a few initiatives for good governance. Grievance redressal is an essential component of democracy; every citizen should have their problems addressed and responded to. We want to develop good governance where processes are less and things get done easy for citizens.”
Although the Town Hall was held to celebrate two years of MyGov, which is a government-citizen engagement platform, it would be too much of a coincidence to think that the Reserve Bank of India’s (RBI’s) sudden move to set up Sachet (a Hindi word that means aware), a grievance redress forum with all the financial regulators and the state level coordination committee (SLCC) on board, was not part of the PM’s broad vision outlined above. As the first step in this much-needed area, Sachet is a very positive development; but it is just the beginning and a lot more remains to be done.
The site, sachet.rbi.org.in provides links to entities that are regulated by RBI, SEBI (Securities and Exchange Board of India), the insurance and pension regulators and the National Housing Bank (NHB). At the launch of the website, RBI governor, Raghuram Rajan, said, “Initiating quick follow-up and taking cases to logical conclusion by punishing the guilty is paramount to deter entities in future from carrying out unlawful activity. I hope ‘Sachet’ would help regulators in doing this, as much as it would help members of public in depositing their hard earned money with genuine entities by giving them timely information about these entities.” As always, governor Rajan’s words gladden the hearts of all concerned citizens. But here is what we found on attempting to explore the website.
1. Complaint Registration: This has links to the investor complaint pages of various regulators and even a link for those who are confused about the appropriate regulator. Ironically, RBI has yet to set up a complaint mechanism for non-banking finance companies (NBFCs), since that link opens a blank page. Curiously, there is no link to the banking ombudsman who handles a large swath of complaints against banks, including those on credit cards and bank charges.
2. Complaint Tracking: This is an interesting feature that allows a search, based on a mobile number, email or complaint number. Over time, we will know whether complaints filed through Sachet are, indeed, fast-tracked or go into the same spin as those filed directly from the regulators’ websites. RBI needs to ensure that people are able to view all complaints filed on Sachet. This is a standard feature of all crowd-sourced review sites, allows consumers to stay away from entities that have too many complaints and encourages swift grievance redress too. In fact, grievance resolution and the time taken for it should also be accessible publicly. Only then will Sachet catch on in a big way with people and serve the purpose.
3. Forum: Sachet has a discussion forum which has remained empty five days after the launch. It indicates the absence of any attempt at outreach, barring a hurried launch and media release. Contrast this with the outreach by all forums set up by the PM’s office!
4. Registered Entities: The segment on registered entities also has links to multiple regulators. RBI itself lists 10 types of entities, of which only two are updated to 1 August 2016 (companies holding a certificate of registration from RBI to accept deposits and those not accepting deposits); the rest date back to November 2015. These are mere Excel sheets with no guidance or explanation to people on whether or not to stay away for them. At the launch, the governor spoke about phishing, lottery and scam emails about escrow accounts maintained by RBI that go out in the name of the RBI governor. Sachet has no information on these. Wouldn’t it have been nice if RBI itself had started a Sachet discussion on these scams? That would have been a real indicator of intention to engage with people.
5. SEBI: The link to SEBI, under registered entities, carelessly connects to one specific entity (Gift Collective Investment Company).
6. NHB: The NHB page has important lists of entities whose registration has been withdrawn or cancelled, or have prohibitory orders against them. This is very useful for Indians who invest a big chunk of their savings in their homes and must be widely publicised through better engagement with civil society and NGOs. So far, NHB does neither.
7. Pension: Clicking on registered entities under the pension regulator only takes you to its home page and the insurance regulator takes you to a list of registered entities with no link to those where action has been taken against dubious insurers or agents. Given the rampant mis-selling in this segment, this must become a key focus of Sachet’s effort.
8. What’s New: The ‘what’s new segment’ has two pointless entries after five days. Does it indicate a lack of seriousness in running the website?
9. Help Your Regulator: This is another interesting feature which allows people to post information on illegal and unauthorised fund-collection or deposit-taking. This can be a useful tool if the regulators ensure swift and visible action. However, as someone pointed out, the Sahara India group continues to collect money, despite Subrata Roy spending over a year in jail. Will some regulator clarify whether it is safe or illegal?
10. Language Version: The Orissa government has already suggested that Sachet must be available in Indian languages. This is an important suggestion that needs to be taken on board.
11. States’ Involvement: There is also nothing to indicate what various states, enforcement agencies and government departments, who are credited for being part of the SLCC which set up Sachet, will contribute to it. In fact, multi-level marketing schemes (MLMs) and money circulation schemes (under the Prize Chits And Money Circulation Schemes Act), which are not under SEBI’s purview, are regulated by states. Many states have separate statutes for illegal deposit collection with draconian powers. None of these is reflected on Sachet and there are no links for filing complaints with state agencies. Thousands of dubious schemes proliferating in each state would have come to the attention of regulators if this had been addressed. There is a closed user group for SLCCs on the website which, we are told, will share market intelligence as well as information on their own meetings. We would think that sharing state-level intelligence on dubious schemes with the public in an open forum is far more important.
12. Where Is FIU?: It is not clear why the finance intelligence unit (FIU), under the finance ministry, is included in Sachet. After all, it claims to be a central repository of cash transactions and an agency that collects, analyses, coordinates and shares information on financial crime with all regulators and investigation agencies.
At first glance, Sachet seems to be a hurriedly cobbled together platform with good intentions and great potential. It will work, if the regulators are true to the PM’s objective of ensuring investor protection and efficient grievance redress. In fact, the PM has gone a step further and said, “Mere good governance is not enough; it has to be pro-people and pro-active. Good governance is putting people at the centre of development process.” There is a lot that Sachet and the SLCCs can do in making processes simpler for consumers and depositors (as the PM wants); but, in order to do it effectively, it has to start engaging with stakeholders.