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Informist, Wednesday, Jan. 14, 2026

 

--RBI issues internal ombudsman directions for regulated entities

 

NEW DELHI – The Reserve Bank of India Wednesday issued final directions on internal ombudsman in regulated entities. The directions lay out the role and function of the ombudsman, procedures to be followed by regulated entitiies and the oversight function of the regulator. 

 

"The aforesaid directions are expected to strengthen the internal mechanism for resolution of customer grievances within the regulated entities," a release said. The RBI had floated a draft for the directions in October. The new regulations apply to commercial banks, small finance banks, payments banks, non-bank finance companies, non-bank prepaid payment instructions issuers, and credit information companies.

 

The directions come into effect immediately except for clauses related to periodic reviews, which may be performed by Jun. 30. The internal ombudsman shall not handle complaints directly from the public but those that have already been addressed by the entity's grievance redressal mechanism, the RBI said.

 

Internal ombudsmen must be a retired or serving officer at a minimum level of general manager in any regulated entity and can serve multiple entities in the role. They must not be an employee of the same entity and must give up any other employment. A deputy internal ombudman can be a person in the deputy general manager-experience bucket. Any ombudsman contracted under extant directions issued in 2023 can continue to serve in the role. The minimum tenure for appointment is three years, with a maximum of five years.

 

A regulated entity's internal audit function must ensure the new directions are being implemented but not make value judgement on the ombudman's decisions. The internal ombudsman will be permanent invitee to the meetings of the customer service committee of the entity's board and will have to furnish reports at least once every half year. The role will report to a competent authority, which will be a whole-time director or executive director in charge of customer service.

 

Regulated entities must make their own standard operating procedures for the flow of complaints and information in a time-bound manner, with the final decision communicated to the complainant within 30 days, the RBI said. An automated complaints management system must direct necessary complaints to the internal ombudsman. All partially resolved and wholly rejected complaints by the bank's internal grievance redressal mechanism will be auto escalated to the ombudsman's office.

 

The ombudsman will not deal with complaints related to corporate frauds on the part of the bank that do not impact the customer. Service deficiencies can be attended to but suggestions of a regulated entity's commercial decisions will not be taken up by the ombudsman, the RBI said. Internal administration, human resources, and staff pay-related complaints will also not be taken up, and neither will matters pending or decided by legal remedies. The ombudsman shall also not deal with disputes where the remedy has been provided under Section 18 of the Credit Information Companies (Regulation) Act, 2005.

 

"The areas relating to customer service and customer grievance redress, as well as the implementation of these directions, shall be a part of the supervisory review by the Department of Supervision of the Reserve Bank," the directions said. The RBI may also review cases that have not been accepted by complainants and reach the central bank's ombudsman. Regulated entities must also periodically report information related to internal ombudsman activities by the 15th of the month after the quarter-end.  End

 

Reported by Aaryan Khanna

Edited by Vandana Hingorani

 

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