If a covered NBFC rejects a customer complaint, that rejection must be reviewed by an independent Internal Ombudsman inside the NBFC before the customer is told to approach the RBI Ombudsman, and the NBFC must be able to show the system, people and 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 NBFCs. It keeps the core architecture, auto-escalation of rejected complaints, binding reasoned decisions, Board oversight, while spelling out, in detail, which categories of NBFC are in and out of scope.
Who it applies to
Applicability is measured as on 31 March 2025 and is the part most worth reading carefully, the exclusion list is long.
- Deposit-taking NBFCs (NBFC-D) with 10 or more branches.
- Non-deposit NBFCs (NBFC-ND) with asset size ₹5,000 crore and above and a public customer interface.
- Excludes Housing Finance Companies, Core Investment Companies, Infrastructure Debt Fund-NBFCs, NBFC-Infrastructure Finance Companies, Non-Operative Financial Holding Companies, Primary Dealers and Mortgage Guarantee Companies, and any NBFC under insolvency, liquidation or directions.
- An NBFC meeting the criteria after 31 March 2025 must comply within six months.
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 NBFC, 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 NBFC first receiving the complaint.
Binding decisions & the customer's next step
The IO's decision binds the NBFC unless the competent authority formally disagrees through a narrow Board-level route. Where a complaint is still rejected after IO review, the NBFC 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.
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 NBFC one. Existing IO appointments continue under it.
- The excluded categories are spelled out, HFCs, Core Investment Companies, IDF-NBFCs, NBFC-IFCs, NOFHCs, Primary Dealers and Mortgage Guarantee Companies are out of scope.
- 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 among NBFCs: rejected complaints not escalated to the IO in time, or no auto-escalation system at all. 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 NBFC Direction is one of them.
Knowing the rule is step one
See how NBFCs distribute the IO SOP across every branch and prove who acknowledged it.