RBI Mulls Uniform Compensation Policy for Customer Complaints under Ombudsman Scheme: ET

Moneylife Digital Team 03 October 2025

Consumer Interest

Reserve Bank of India (RBI) is considering the introduction of a uniform compensation policy across all entities it regulates, as part of efforts to strengthen customer grievance redressal. According to a report from Economic Times (ET), the proposal is under discussion within a broader framework on customer compensation and complaint handling.

People familiar with the matter told ET that the banking regulator is also weighing a provision to grant additional compensation to customers in cases where their grievances are escalated and resolved at the level of RBI or the RBI ombudsman. This, officials say, could make grievance mechanisms more effective and consistent across banks and other regulated institutions.

On Wednesday, after the monetary policy review, RBI governor Sanjay Malhotra proposed significant enhancements to the internal ombudsman (IO) mechanism within regulated entities (REs), including banks and financial institutions. To improve the effectiveness of this independent complaint review system, the IOs will be given compensation powers and direct access to complainants, aligning their role more closely with that of the RBI ombudsman, the governor says.

RBI's ombudsman scheme is being overhauled to improve efficiency, ensure quicker resolution of complaints, and extend coverage to rural cooperative banks, Mr Malhotra says. The revised scheme, aimed at simplifying procedures, reducing timelines and enhancing clarity, will soon be released in draft form on the central bank’s website for public feedback.

According to the ET report, banks have already been consulted on the matter. Most lenders are in favour of a uniform policy but prefer flexibility to account for differing risk profiles and product categories. However, several banks have expressed reservations about the idea of additional compensation when cases are resolved at the regulator’s level, arguing that such provisions might encourage frivolous escalation by customers and place undue strain on grievance redressal systems.

The proposed reforms are also expected to include a two-tier grievance redressal structure within REs, prior to escalation to the IO. Internal ombudsmen would be given compensation powers and direct access to complainants, aligning their role more closely with that of the RBI ombudsman.

The Indian Banks’ Association (IBA) has reportedly sought more time for lenders to adapt their systems and automate data submissions as required under the new framework.

Comments