The Reserve Bank of India (RBI) has issued new directions requiring eligible commercial banks to strengthen internal grievance redress by ensuring that customer complaints are reviewed by an Internal Ombudsman before they are wholly rejected or only partially resolved. The directions take effect immediately, with the December 2023 Master Direction on Internal Ombudsman arrangements repealed and existing appointments and actions deemed to continue under the new framework. The regime applies to commercial banks with 10 or more banking outlets in India as of March 31, 2025, including banks incorporated outside India, and to banks that meet the threshold after that date from six months after eligibility is met. Banks must appoint at least one independent Internal Ombudsman, with Deputy Internal Ombudsman support as required, subject to eligibility, independence and tenure conditions, functional oversight by the board’s Customer Service Committee, and defined override controls. A fully automated complaints management system is required to auto-escalate partially resolved or wholly rejected complaints to the Internal Ombudsman for review, with final communication to the complainant required within 30 days of the bank receiving the complaint; decisions must be reasoned, and certain complaint categories are excluded from the Internal Ombudsman’s scope. The directions also set expectations for annual internal audit coverage and impose reporting to the RBI on appointments and quarterly functioning. Specific provisions on the board committee’s periodic determination of the required number of ombudsman positions and on complaint system design and closure controls must be complied with by June 30, 2026.
Reserve Bank of India 2026-01-14
Reserve Bank of India issues new Internal Ombudsman Directions for commercial banks and repeals 2023 framework
The Reserve Bank of India mandates eligible commercial banks to enhance grievance redress mechanisms by requiring an Internal Ombudsman to review customer complaints before rejection or partial resolution, effective immediately. This applies to banks with 10 or more outlets in India as of March 31, 2025, and includes automated complaint management, independent ombudsman appointments, and compliance with oversight and reporting standards by June 30, 2026.