The Reserve Bank of India (RBI) on January 14, 2026, issued the Reserve Bank of India (Small Finance Banks - Internal Ombudsman) Directions, 2026.
The following has been stated namely: -
• It aims to strengthen the internal grievance redressal framework of Small Finance Banks by mandating the appointment of an independent Internal Ombudsman (IO).
• These Directions apply to Small Finance Banks having ten or more banking outlets and require that all customer complaints that are partially resolved or rejected by the bank shall be automatically escalated to the Internal Ombudsman for independent review through an automated system.
• The IO, supported by a Deputy Internal Ombudsman, is responsible for reviewing such complaints, recommending corrective action or compensation where warranted, and identifying systemic issues in customer service.
• The Internal Ombudsman functions independently, reports to the Customer Service Committee of the Board, and acts as a crucial link between customers and the bank’s grievance redressal mechanism.
• The Directions also emphasize strong board oversight, prescribed tenure and eligibility criteria for the IO, periodic reporting, and internal audits to ensure effective compliance and improved customer protection.
• These Directions shall come into force with immediate effect except clause 7(2), 14(2), and 14(4), which shall be complied with, latest by June 30, 2026.
[Notification no. - RBI/CEPD/2025-26/382 CEPD.PRD.No. S1029/13.01.019/2025-26]
