Banks And NBFCs: The Reserve Bank of India (RBI) has issued revised guidelines to strengthen how banks and other financial institutions handle customer complaints internally before they reach regulatory authorities.
On January 14, 2026, the Reserve Bank of India (RBI) introduced the Reserve Bank of India (Internal Ombudsman) Directions, 2026, which lay down new guidelines for the appointment and functioning of Internal Ombudsmen for all entities supervised by the central bank.
These guidelines apply to a wide range of RBI-regulated entities, including commercial banks, Small Finance Banks (SFBs), Payment Banks (PBs), Non-Banking Financial Companies (NBFCs), Non-bank Prepaid Payment Instrument (PPI) issuers, and Credit Information Companies (CICs).
The RBI states that the objective is to improve the grievance redressal mechanism internally within these regulated entities so that complaints are resolved more quickly and satisfactorily. A provision for a top-level review within the regulated entity has been made for complaints that have already been investigated but have been partially resolved or are proposed to be rejected.
Background and Consultation Process
The RBI stated that the draft Internal Ombudsman Directions were issued on October 7, 2025, and suggestions were invited from all stakeholders and the general public. After considering the feedback on the draft, the guidelines have been finalized after incorporating any necessary changes.
An annexure accompanying these guidelines indicates the feedback received and the action taken thereon.
Who can be appointed as an Internal Ombudsman
Under this new framework, each regulated entity is required to appoint at least one Internal Ombudsman. The Internal Ombudsman can be a serving or retired officer of a rank equivalent to a General Manager in the regulated entity. Candidates must have at least seven years of experience in banking, NBFCs, regulation and supervision, payment and settlement systems, credit information, consumer protection, or related fields.
Role and Scope of the Internal Ombudsman
The RBI has clarified that the Internal Ombudsman will not directly address customer complaints. The purpose of this body is to review complaints that have already been examined by the regulated entity.
This includes complaints that have been partially resolved or those that the entity proposes to reject entirely. The main idea is to provide an additional layer of scrutiny before a complaint is finally closed. RBI’s Supervisory Oversight
Customer service and grievance redressal processes, including the implementation of the Internal Ombudsman guidelines, will be part of the supervisory review conducted by its Department of Supervision.
The RBI has indicated that these rules will improve the in-house handling of complaints, enhance accountability within regulated entities, and facilitate the faster resolution of consumer grievances.