RBI Establishes New Internal Ombudsman Guidelines for Banks and NBFCs

The Reserve Bank of India has issued final directions asking banks and eligible non-banking financial companies (NBFCs) to set up fully automated complaint management systems, as per PTI reports.  

These systems must allow access to the Internal Ombudsman (IO) and Deputy Internal Ombudsman (DIO). Complaints that remain unresolved must be automatically escalated to the IO for further review. 

Timelines for Review and Resolution 

The regulator has prescribed specific timelines for handling complaints. Where guidelines from the RBI, the National Payments Corporation of India or card networks already apply, the IO must be given at least 10 days to review the case.  

For other complaints, the review period has been fixed at 20 days from the date of receipt. Banks must communicate a final decision to customers within 30 days. 

Complaint Classification and Escalation 

Banks are required to classify complaints as ‘fully resolved’, ‘partially resolved’ or ‘wholly rejected’ in their systems before escalation to the IO.  

Complaints that are rejected must be referred to the IO within 20 days. In the case of credit information companies, this period has been extended to 25 days. The RBI has also said that complaints cannot be closed by the same branch or unit that examined them. 

Role and Limits of the IO 

The office of the Internal Ombudsman will not handle complaints received directly from customers or members of the public. It will only review cases that have already been examined by the bank or NBFC and are either partially resolved or rejected.  

Complaints relating to corporate fraud or misappropriation that do not affect customers have been kept outside the scope of the IO. 

Board Oversight and Reporting 

The directions place additional responsibilities on Customer Service Committees of bank boards, including deciding the number of IOs and DIOs.  

Management can overrule an IO’s decision only with approval from a whole-time or executive director. Such cases must be placed before the board committee for review. The RBI has also introduced quarterly reporting requirements. 

Applicability of the Norms 

The norms apply to banks with 10 or more outlets in India as of March 31, 2025. For NBFCs, they cover deposit-taking entities with at least 10 branches and non-deposit-taking NBFCs with assets of ₹5,000 crore or more and a public customer interface.  

Housing finance companies and certain other categories have been excluded. 

Read More:  List of 35 NBFCs Whose Registration Was Cancelled by the RBI! 

Conclusion 

The guidelines lay down uniform processes, timelines and oversight mechanisms for internal grievance redress across regulated entities. 

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