RBI Integrated Ombudsman Scheme (2021): Strengthening Consumer Protection in Digital Banking

Policy Update
Divya Natarajan

Background

The Reserve Bank – Integrated Ombudsman Scheme (RB-IOS) is a cost-free, quasi-judicial mechanism letting customers of RBI-regulated entities take unresolved complaints straight to the central bank. It was launched on November 12, 2021, at a virtual ceremony held by Prime Minister Narendra Modi, drawing its legal backing from Section 35A of the Banking Regulation Act, 1949, Section 45L of the RBI Act, 1934, and Section 18 of the Payment and Settlement Systems Act, 2007 (Reserve Bank of India, 2021).

Before this, a customer with a complaint against a bank, a Non-Banking Financial Company (NBFC), or a digital payment provider first had to work out which of three separate schemes even applied to their case, each with its own jurisdiction and rules. The Banking Ombudsman Scheme (2006) handled complaints against commercial banks, regional rural banks, and scheduled primary co-operative banks, things like delayed cheque clearance or ATM failures.

A separate scheme followed in 2018 for NBFCs, non-bank financial companies such as housing finance firms, gold loan lenders, and consumer finance companies that take deposits or hold sizeable assets, extending similar grievance coverage to their customers for the first time. A third scheme in 2019 covered digital transactions specifically, UPI failures, mobile banking issues, and prepaid instruments, as India’s digital payments volume began to scale rapidly (Reserve Bank of India, 2021).

This split created real gaps. An unauthorised UPI debit from an NBFC-issued prepaid card, for instance, could leave a customer stuck between schemes, unsure which one even applied, and each scheme carried its own definitions, compensation ceilings, and procedures besides. RB-IOS 2021 was built to fix exactly this, merging all three under a “One Nation, One Ombudsman” approach and dropping territorial jurisdiction, so redress no longer hinged on which office was nearest or which rulebook technically applied (Reserve Bank of India, 2021).

One caveat: the 2021 scheme this article examines has since been replaced. RB-IOS 2026 came into effect on July 1, 2026, keeping the same basic design but tightening several provisions in ways discussed later in this article (Reserve Bank of India, 2026). Complaints filed and appeals pending before that date continue to be governed by the 2021 scheme’s terms (Reserve Bank of India, 2026).

Functioning

RB-IOS 2021 applies to all Commercial Banks, Regional Rural Banks, and Primary or State/Central Co-operative Banks with deposits of ₹50 crore or more, along with Non-Banking Financial Companies (excluding Housing Finance Companies) that either accept deposits or have a customer interface with assets of ₹100 crore or above, Payment System Participants and Credit Information Companies.

The complaint process itself is quite straightforward in design. A customer must first approach the Regulated Entity (RE) directly. If the bank or company doesn’t respond within 30 days, or the customer isn’t happy with the response, they can take the complaint to the RBI Ombudsman. This can be done online through the Complaint Management System (CMS) portal, by email, or by post to the Centralised Receipt and Processing Centre (CRPC) in Chandigarh, which handles and uploads physical and email complaints onto the CMS. There’s no fee involved and no need for a lawyer or any third party to file or follow up on a complaint.

Two definitional features of the scheme are worth noting because they shape what actually gets accepted as a valid complaint. First, “deficiency in service” is defined broadly as any shortcoming or inadequacy in a financial service that an RE is statutorily or otherwise required to provide, whether or not it results in a quantifiable financial loss, subject to a specified list of exclusions (such as matters already before a court or tribunal).

Second, each RE must designate a Principal Nodal Officer, at the rank of General Manager or equivalent, responsible for representing the RE and furnishing information on complaints filed against it, which gives the Ombudsman a single accountable point of contact within each institution rather than an ad hoc one.

Under the 2021 scheme, compensation was capped at ₹20 lakh for consequential financial loss and ₹1 lakh for harassment, mental anguish, and loss of time, with no cap on the value of the underlying dispute itself. The Executive Director in charge of the Consumer Education and Protection Department (CEPD) of the RBI serves as the Appellate Authority, and a complainant dissatisfied with an Award or with a rejection can appeal within 30 days. Notably, REs themselves cannot appeal an Award issued against them for failing to furnish satisfactory or timely information.

Table 1: Evolution of the RBI Ombudsman Framework

Source: Reserve Bank of India press releases and Scheme documents (compiled by author).

Performance

The clearest performance trend under RB-IOS 2021 is that complaint volumes rose sharply and consistently every year since launch, while the system’s capacity to keep pace with that volume did not rise at the same rate.

Table 2: RBI Ombudsman Complaint Volume and Disposal Rate

Source: RBI Annual Reports of the Ombudsman Scheme (2022-23, 2023-24, 2024-25), as reported by RBI, March 2025.

Figure 1: RBI Ombudsman – Complaint Volume vs Disposable Rate 

Source: RBI Annual Reports of the Ombudsman Scheme (compiled by author).

The direction of this data is worth reading carefully rather than at face value. Complaint growth naturally decelerated in percentage terms as the base grew larger but the disposal rate moved in the wrong direction, falling from 95.10 percent in FY2023-24 to 93.07 percent in FY2024-25, even as the RBI’s own communications continued to present the scheme’s expanding digital reach (91.22 percent of complaints were filed digitally in FY2024-25, up from 88.77 percent the year before) as an unambiguous success story. A rising share of digital filing and a falling disposal rate can both be true at once, and the second trend deserves at least as much attention as the first.

Table 3: RBI Ombudsman Complaint Breakdown, FY2024-25

Source: RBI Annual Report of the Ombudsman Scheme, 2024-25.

In FY2024-25, loans and advances accounted for the largest share of complaints at 29.25 percent, followed by credit cards (17.15 percent), mobile banking (16.86 percent), and deposit accounts (16.84 percent). Complaints against banks made up 81.53 percent of the total, with private sector banks’ share of complaints rising from 34.39 percent to 37.53 percent even as public sector banks’ share fell from 38.32 percent to 34.80 percent, a shift that runs counter to the assumption that private banks’ better-resourced service infrastructure would generate proportionately fewer complaints.

Geographically, 45.86 percent of complaints originated from metro cities, against just 10.04 percent from rural areas, a distribution that likely reflects awareness and digital access gaps rather than an actual concentration of grievances in cities.

Impact

RB-IOS 2021’s clearest achievement is the elimination of jurisdictional confusion. Before 2021, whether a customer’s complaint was even heard often depended on which of three separate schemes applied and which regional office held jurisdiction, an arrangement that left many complainants stuck in procedural limbo rather than receiving substantive redress. The single CRPC and CMS portal model has substantially reduced this. RBI’s own data supports the claim: in FY2024-25, 51.91 percent of maintainable complaints were resolved through settlement, conciliation, or mediation rather than requiring a formal Award, indicating that the mechanism functions as a working dispute-resolution channel rather than a mere complaint registry.

The scheme’s limitations, however, have been acknowledged candidly by RBI officials. RBI Governor Sanjay Malhotra, speaking at the Annual Conference of RBI Ombudsmen in March 2025, noted that complaints under the scheme grew at a compound annual rate of nearly 50 percent over the two years to FY2023-24, while the RBI’s own processing capacity grew by only about 25 percent over the same period, a widening gap between complaint volume and resolution capacity (Malhotra, 2025). He further noted that nearly 57 percent of maintainable complaints that year required mediation or direct intervention rather than resolution at the regulated entity’s own level, a situation he described as highly unsatisfactory.

More significantly, the 95 scheduled commercial banks alone received over 10 million complaints directly from customers in FY2023-24, against the roughly 9.34 lakh that actually reached the Ombudsman. This indicates that the majority of grievances continue to be absorbed, or left unresolved, within individual banks’ internal systems, with RB-IOS functioning as a visible but comparatively narrow escalation channel atop a considerably larger underlying problem.

A second, less examined issue concerns scope. RB-IOS 2021 covers only RBI-regulated entities, which means unregulated digital lending apps and fintech platforms, those not operating as licensed banks, NBFCs, or as a Lending Service Provider on behalf of one, remain entirely outside its jurisdiction. Complaints against such platforms, a documented and growing source of consumer harm involving exorbitant interest rates, opaque interest calculation, and coercive recovery practices, must instead be routed to the Sachet portal or local Cyber Crime cells. For a customer without legal or financial literacy, the distinction between a regulated lender’s outsourced partner and an unregulated app operating outside the perimeter altogether is rarely apparent until after harm has already occurred.

Emerging Issues

First, resolution capacity has not kept pace with complaint volume. This is not a peripheral operating issue but one the RBI’s own Governor has publicly named as the scheme’s central weakness. Complaint volumes grew at roughly double the rate of Ombudsman processing capacity between FY2022-23 and FY2023-24, and the disposal rate has since declined further, from 95.10 percent to 93.07 percent (Malhotra, 2025). A grievance mechanism whose backlog is growing even as digital filing becomes easier points to a bottleneck in adjudication capacity, not in complaint intake.

Second, the regulatory perimeter excludes a growing category of consumer harm. Because RB-IOS 2021 covers only RBI-regulated entities, complaints against unregulated digital lending apps and fintech platforms fall outside its jurisdiction, even though these platforms are frequently the source of the most severe harm, including harassment by recovery agents and unauthorised use of personal data (Reserve Bank of India, 2022). Customers are instead directed to the Sachet portal or Cyber Crime cells, a bifurcated system that assumes a level of regulatory literacy most complainants simply do not have.

Third, internal grievance mechanisms at regulated entities remain weak. Governor Malhotra’s own figures show that scheduled commercial banks received over ten million complaints directly from customers in FY2023-24, more than ten times the number that reached the RBI Ombudsman (Malhotra, 2025). His predecessor, Governor Shaktikanta Das, had earlier acknowledged “certain gaps” in the systems and procedures of regulated entities’ internal grievance mechanisms. This means RB-IOS, however well-designed, functions as an escalation layer atop a foundational internal grievance system that RBI’s own leadership has repeatedly described as inadequate.

Fourth, the frequency of scheme revisions signals institutional uncertainty as much as it does improvement. RB-IOS 2021 was itself superseded within five years by RB-IOS 2026, which tightened complaint filing timelines from one year to 90 days, expanded the definition of “deficiency in service” to cover all services rather than only financial ones, and made annual reporting mandatory rather than discretionary. Each change is individually defensible, but the pace of revision also suggests the 2021 scheme’s design carried gaps that took years of live operation to surface, and that today’s version should not be assumed a settled, final architecture either.

Finally, geographic and demographic access gaps persist. With 45.86 percent of complaints originating from metro cities against just 10.04 percent from rural areas, the scheme’s actual reach appears heavily skewed toward customers who are already digitally literate and aware of the escalation process (Reserve Bank of India). Whether this reflects a genuinely lower incidence of grievances in rural India, or simply a much larger gap in awareness and access, is not clarified by the available data, but the skew itself is significant enough to warrant investigation rather than being read as evidence of urban-rural parity in service quality.

Way Forward

First, Ombudsman adjudication capacity should be expanded in line with complaint growth. The RBI should size the Ombudsman offices’ staffing and adjudication capacity against actual complaint growth, rather than treating the CRPC and CMS digital infrastructure as sufficient on its own. A rising disposal rate should be an explicit, publicly tracked institutional target, not merely a by-product of digitisation.

Second, the regulatory perimeter should be extended to cover lending service providers more directly, on a graduated basis. Rather than leaving customers to work out the difference between a regulated entity’s outsourced digital lending partner and a wholly unregulated app, the RBI should continue tightening its Digital Lending Directions to ensure that any platform effectively performing lending functions on behalf of a regulated entity falls unambiguously within the Ombudsman’s reach, with clear, prominent disclosure to the customer about which category applies before a complaint is even filed.

Third, minimum standards and public reporting should be mandated for internal grievance redressal at regulated entities. The RBI should require regulated entities to publicly report complaint volumes, resolution timelines, and root-cause analysis at the internal ombudsman level, similar to what it has now mandated for its own Annual Report under RB-IOS 2026.

Fourth, the 2026 revision should be treated as a starting point for continuous evaluation rather than a finished product. Given how quickly the 2021 scheme needed revision, the RBI should commit to a standing, periodic review cycle for RB-IOS 2026, informed by disposal rate trends, appeal volumes, and complaint-category shifts, rather than waiting for another multi-year gap before the next structural revision becomes necessary.

Finally, rural and semi-urban awareness and access deserve dedicated investment. The stark metro-to-rural skew in complaint origin warrants a focused outreach effort, potentially routed through the RBI’s existing Contact Centre and town-hall programmes, rather than relying on digital-first channels that structurally favour customers who are already comfortable navigating the CMS portal.

References 

Reserve Bank of India. (2021, November 12). The Reserve Bank – Integrated Ombudsman Scheme, 2021. https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=52549

Reserve Bank of India. (2026, January 16). Reserve Bank – Integrated Ombudsman Scheme, 2026. https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=62052

Reserve Bank of India. Frequently Asked Questions: Reserve Bank – Integrated Ombudsman Scheme, 2026. https://www.rbi.org.in/commonman/Upload/English/FAQs/PDFs/RBIOS01072026.pdf

Reserve Bank of India. Annual Report of the Ombudsman Scheme, 2024-25.

Malhotra, S. (2025, March 17). Transforming grievance redress: the AI advantage [Speech]. Reserve Bank of India, via Bank for International Settlements. https://www.bis.org/review/r250319j.htm

Department of Financial Services, Ministry of Finance, Government of India. Banking Ombudsman. https://financialservices.gov.in/banking-ombudsman

Vinod Kothari Consultants. (2026, January 17). RBI Integrated Ombudsman Scheme 2026 – Key Changes. https://vinodkothari.com/2026/01/rbi-integrated-ombudsman-scheme-2026-key-changes/

Business Standard. (2025, March 17). Perform or perish: RBI Guv Sanjay Malhotra to banks on customer service. https://www.business-standard.com/finance/news/perform-or-perish-rbi-guv-s-tough-message-to-banks-on-customer-service-125031701229_1.html

The Tribune. (2025, December). RBI Ombudsman sees 13.34 Lakh complaints in FY25; Loans, Credit Cards dominate. https://www.tribuneindia.com/news/banking-complaints/rbi-ombudsman-sees-13-34-lakh-complaints-in-fy25-loans-credit-cards-dominate

About the Contributor

Divya Natarajan is a Research and Editorial Intern at IMPRI and a recent Economics graduate from Stella Maris College, Chennai. She has experience in public policy research, editorial writing, and policy analysis through internships with think tanks and research organisations. Her interests include public policy, governance and development economics

Acknowledgements

The author extends gratitude to IMPRI for this opportunity. She also extends sincere thanks to Nivedya Murali and Madhuritha D for their constructive reviews and editorial support.

Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.

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