RBI mandates auto transfer of unresolved plaints to internal ombudsman

The RBI has directed banks and eligible NBFCs to automatically escalate partially resolved or rejected complaints to the internal ombudsman and convey final decisions within 30 days

Banks and non-banking financial companies (NBFCs) should put a fully automated complaints management system with access to the Internal Ombudsman (IO) and Deputy Internal Ombudsman (DIO), and all unresolved grievances should be auto-escalated to the office of the IO for review, the Reserve Bank of India (RBI) said on Wednesday.

 

The regulator said the IO should get at least 10 days for review of complaints for which RBI, National Payments Corporation of India, or card network guidelines prescribe a timeline for resolution. For all other cases, a 20-day timeline from the receipt of the complaints has been prescribed.

 

In the draft guidelines, released on October 7, the timeline to transfer the complaint that has been rejected by regulated entities to the office of the IO is within 20 days and in case of credit information companies, such complaints should be referred to the office of the internal ombudsman within 25 days of receipt.

 

 

According to the directions, the office of the IO should not handle complaints received directly from the public, and should deal with the complaints that have already been examined by the bank, but have been partially resolved or being wholly rejected by the bank.

 

A bank should have three categories on this issue, which are ‘fully resolved’, ‘partially resolved’ and ‘wholly rejected’ in its Complaint Management System for recording the decision on the complaints before escalation to the office of the IO.

 

Banks have been asked to ensure that the final decision is communicated to the complainant within a period of 30 days from the date of receipt of complaint. The norms are applicable with 10 or more banking outlets in India as on March 31, 2025.

 

“The bank shall ensure that a complaint is not closed by the same branch/unit/other touch points, whether it has been resolved (fully or partially) or rejected,” RBI said.

 

The regulator has clarified that complaints related to corporate frauds, misappropriation etc., on the part of the bank that do not impact the customer in any manner should not be under the purview of the IO.

 

The final directions are aimed to strengthen board-level oversight, with Customer Service Committees (CSCs) of banks’ boards given responsibilities, including determining the number of IO and DIO. Further, only with the approval of competent authority at the level of a whole-time or executive director, management can overrule the decision of the IO.  

 

“All such cases where the decision of the internal ombudsman has been overruled by the competent authority shall be placed before the CSC of the Board of the bank for review,” the RBI said.

 

Further, the RBI introduced a detailed quarterly reporting requirement and empowered itself to review cases where customers succeed before the RBI Ombudsman after a bank has rejected an IO’s recommendation.

 

For NBFCs, the final guidelines are applicable only to deposit-taking NBFCs with 10 or more branches and non-deposit-taking NBFCs with asset size of ₹5,000 crore and above having a public customer interface, as on March 31, 2025. Several categories, including housing finance companies, core investment companies, infrastructure finance entities and NBFCs under insolvency or liquidation, have been excluded, unlike draft guidelines.

 

The central bank has also introduced the same guidelines for other regulated entities such as small finance banks, payments banks, non-bank prepaid payment issuers, and credit information companies.