RBI tightens customer complaint rules for banks, NBFCs
Overview
The Reserve Bank of India has mandated auto-escalation of unresolved customer complaints for banks and eligible NBFCs to internal ombudsmen. This directive aims to expedite grievance redressal, enforcing a strict 30-day final decision timeline and enhancing accountability across financial institutions.
The Reserve Bank of India (RBI) issued new directives Wednesday, compelling banks and eligible Non-Banking Financial Companies (NBFCs) to implement fully automated complaint management systems. These systems must facilitate auto-escalation of any partially resolved or wholly rejected customer complaints to the office of the internal ombudsman.
Automated Complaint Escalation
Under the new rules, complaints that fail to achieve full resolution through a bank's internal grievance mechanism will be automatically forwarded for review by the IO. This process aims to ensure a second layer of scrutiny for dissatisfied customers, preventing complaints from being prematurely closed by the originating branch or unit.
Tighter Resolution Timelines
The IO will be allocated specific timeframes to review escalated complaints. For cases with prescribed resolution timelines by the RBI, National Payments Corporation of India, or card networks, the IO will have at least 10 days. For all other matters, a 20-day period from the complaint's receipt is mandated. Banks must ensure a final decision is communicated to the complainant within 30 days of the initial complaint's submission.
Scope and Compliance
These stringent norms will apply to banks with 10 or more banking outlets in India as of March 31, 2025. For NBFCs, the guidelines target deposit-taking entities with 10 or more branches and non-deposit-taking entities with assets of ₹5,000 crore or more and a public customer interface as of the same date. Certain NBFC categories, including housing finance companies and core investment companies, are excluded.
Strengthened Oversight
The RBI's move also enhances board-level oversight, assigning responsibilities to customer service committees (CSCs) for determining the number of internal and deputy internal ombudsmen. Management's ability to overrule an IO's decision is restricted, requiring approval from a competent authority at the executive director level. Any such overruling must be reported to the bank's CSC for review. Furthermore, detailed quarterly reporting requirements are introduced, empowering the RBI to examine cases where customers successfully appeal to the RBI Ombudsman after an IO's recommendation was rejected.
