If a covered bank rejects a customer complaint, that rejection must be reviewed by an independent Internal Ombudsman inside the bank before the customer is told to approach the RBI Ombudsman, and the bank must be able to show it has the system, the people and the staff awareness to make that happen reliably.
On 14 January 2026 the RBI replaced its single 2023 Internal Ombudsman Master Direction with six entity-class-specific Directions. This one applies to commercial banks. It carries forward the core Internal Ombudsman architecture, auto-escalation of rejected complaints, independent reasoned decisions binding on the bank, and Board oversight, while pinning applicability to a fixed measurement date and tightening reporting.
Who it applies to
The Direction binds larger commercial banks measured at a fixed date. If you are below the threshold today, monitor your outlet count, crossing it starts a clock.
- Commercial banks with 10 or more banking outlets in India as on 31 March 2025, whether incorporated in India or abroad, including the State Bank of India and the corresponding new banks.
- Excludes Small Finance Banks, Payments Banks and Local Area Banks, each covered by its own 2026 Direction, and any bank in resolution, winding up or under directions.
- A bank meeting the criteria after 31 March 2025 must comply within six months of doing so.
What it requires
Grouped by what each obligation is about. Described in plain terms; verify the exact clause text against the source before acting.
The office
An independent Internal Ombudsman
An IO appointed for a fixed contractual term, independent of the bank, sitting at the apex of the grievance-redress mechanism and reporting functionally to the Board. A Deputy IO may be appointed where complaint volume warrants.
How complaints reach the IO
Board-approved SOP + automated escalation
A Board-approved Standard Operating Procedure and an automated complaints-management system that auto-escalates every partly or wholly rejected complaint to the IO within 20 days, or, where an RBI/NPCI/card-network timeline applies, sufficiently in advance that the IO gets at least 10 days to review.
30-day final decision
The final decision must reach the complainant within 30 days of the bank first receiving the complaint.
Binding decisions & the customer's next step
The IO's decision binds the bank unless the competent authority formally disagrees through a narrow Board-level route. Where a complaint is still rejected after IO review, the bank must inform the customer of their right to approach the RBI Ombudsman.
Governance, staff awareness & reporting
Disseminate across all offices & train
Widely disseminate the IO guidelines among staff across all branches and administrative offices when communicating the appointment, and feed analysis of complaints handled by the IO into staff training and conferences.
Board oversight & supervisory review
Periodic reporting to the Board committee handling customer service; implementation forms part of RBI's supervisory review.
Reporting to RBI
Notify any IO/Deputy IO appointment to RBI's Consumer Education and Protection Department within 5 working days, and file the prescribed quarterly returns by the 15th of the month following the quarter.
What changed from the 2023 Direction
If your framework was built on the 2023 Master Direction, these are the moves that matter:
- The single 2023 Master Direction was repealed and split into six entity-class Directions; this is the commercial-banks one. Existing IO appointments continue under it.
- Applicability is now anchored to branches as on 31 March 2025, with SFBs, Payments Banks and LABs explicitly carved out into their own directions.
- The quarterly return due date moved from the 10th to the 15th of the following month.
- Certain provisions are given a transition runway to 30 June 2026.
What RBI has penalised under the IO framework
A recurring FY25-26 theme: rejected complaints not escalated to the IO in time. Each entry states only the reason cited in the RBI press release; where a penalty covered several issues, the amount is the total and isn't attributable to any single reason.
Background & lineage
The IO framework has been consolidated steadily. Knowing the lineage helps when older institutional documents still reference the repealed names.
- 3 Sep 2018Internal Ombudsman Scheme, for banks.
- 22 Oct 2019IO Scheme for Non-Bank System Participants.
- 15 Nov 2021Appointment of IO by NBFCs.
- 6 Oct 2022RBI (CIC - Internal Ombudsman) Direction, 2022.
- 29 Dec 2023RBI (Internal Ombudsman for Regulated Entities) Directions, 2023, consolidated all of the above; repealed 14 Jan 2026.
- 14 Jan 2026Six entity-class Directions, 2026, this Commercial Banks Direction is one of them.
Knowing the rule is step one
See how banks distribute the IO SOP across every branch and prove who acknowledged it.