RBI Update - Reserve Bank of India (Commercial Banks - Internal Ombudsman) Directions, 2026

The Reserve Bank of India has issued the Reserve Bank of India (Commercial Banks – Internal Ombudsman) Directions, 2026 to further strengthen the internal grievance redress mechanism in Commercial Banks. The Directions aim to ensure an independent and objective review of customer complaints before rejection and to reduce escalation to external dispute resolution mechanisms.

Applicability

These Directions apply to Commercial Banks having ten or more banking outlets in India as on March 31, 2025.

For the purpose of these Directions, 'Commercial Banks' mean banking companies (other than Small Finance Banks, Payment Banks, and Local Area Banks), corresponding new banks, and the State Bank of India, as defined respectively under clauses (c), (da), and (nc) of Section 5 of the Banking Regulation Act, 1949, but does not include a bank in resolution or winding up or under directions.

The Directions do not apply to banks under resolution, winding up, or under specific RBI directions.

The directions shall also be applicable to the commercial bank, which meets the above mentioned criteria after March 31, 2025, with effect from six months from meeting the eligibility criteria.

Amendments

The Directions repeal the Master Direction Internal Ombudsman for Regulated Entities, 2023, insofar as applicable to Commercial Banks, and introduce a strengthened Internal Ombudsman framework. All partially resolved and wholly rejected complaints are mandatorily required to be reviewed by an Internal Ombudsman before final disposal. The framework also provides for the appointment of Deputy Internal Ombudsman, prescribes fixed tenure and independence norms, and strengthens Board-level oversight, reporting, and supervisory review.

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