The regulator has also given specific directions to banks and other non-bank entities to ensure board oversight to protect customer rights and suggested involvement of their internal audit department in overseeing the implementation of the new guidelines, which will come into force immediately.
The directions will apply to commercial banks, small finance banks, payments banks, non-banking finance companies (NBFC), non-bank prepaid payment instrument issuers and credit information companies.
“These directions are issued with a view to strengthen the internal grievance redress mechanism and ensure a speedy and meaningful resolution of customer complaints by enabling a review before their rejection, by an apex level authority within the bank,” RBI said Wednesday.
Housing finance companies, core investment companies, infrastructure debt fund-NBFC, NBFC-infrastructure finance companies, non-operative financial holding companies, primary dealers and mortgage guarantee companies are outside the purview of these rules.
The RBI has finalised the internal ombudsman scheme after incorporating the feedback it received from stakeholders on the draft proposals shared on October 7, 2025.
It said that all complaints that are partially resolved or wholly rejected by the internal grievance redress mechanism shall be auto escalated to the office of the internal ombudsman for a review.
It has mandated the regulated entities to ensure that a complaint is not closed by the same branch or touch points, whether it has been resolved fully or partially or rejected. “A complaint which is being wholly rejected or partially resolved shall be reviewed at a fairly senior level, which the bank may decide as deemed fit, before sending it to the office of IO,” RBI added.
Banks and NBFCs are allowed to offer compensation to aggrieved customers for material loss as well as for loss of time, expenses incurred and harassment, mental agony suffered by the complainant.
Besides detailing the complaint-handling procedures, RBI said that all decisions by IOs or deputy IOs must be submitted to the RBI Ombudsman.
An IO shall either be a retired or serving officer, in the rank equivalent to a general manager in the regulated entity. They will be appointed for a three-year period. They must be below 70 before the completion of the tenure. Every entity should appoint at least one IO.
The IO shall report to the competent authority of the entity administratively, and to the customer service committee of the board. “The IO shall be designated as a permanent invitee to the meetings of the customer service committee of the board to ensure board oversight on the customer grievance redressal,” RBI said.
The IO will not handle complaints received directly from the complainants or members of the public. It shall deal with the complaints that have already been examined by the bank but have been partially resolved or being wholly rejected by the bank. The IO or their deputy shall not represent the bank in legal cases before any court or fora or authority.