RBI Enhances Banking Ombudsman Scheme with Increased Compensation for Aggrieved Customers

The Reserve Bank of India (RBI) proposes to empower the banking ombudsman to award up to ₹30 lakh compensation to aggrieved bank customers for consequential losses. The ombudsman can also provide up to ₹3 lakh for harassment and time spent on grievances. Customers of state co-operative banks and central co-operative banks can raise grievances with the banking ombudsman structure from November 1. Customers can escalate complaints to RBI if banks do not respond within 30 days.

The Reserve Bank of India (RBI) has announced a significant enhancement to its consumer grievance redressal system, which includes empowering the banking ombudsman to award up to ₹30 lakh compensation to aggrieved bank customers for consequential losses. This measure, effective from November 1, 2025, aims to provide more robust support to customers, especially those of state co-operative banks and central co-operative banks RBI strengthens consumer grievance resolution: Banks’ internal ombudsman and RBI ombudsman system will be overhauled^[1].

The ombudsman can now provide up to ₹3 lakh for harassment and the time spent on grievances, in addition to the existing compensation limits. This move is part of a broader initiative to strengthen the internal ombudsman systems of regulated entities, including banks, to make the grievance redressal process more effective RBI strengthens consumer grievance resolution: Banks’ internal ombudsman and RBI ombudsman system will be overhauled^[1].

Customers can raise grievances with the banking ombudsman structure and escalate complaints to the RBI if banks do not respond within 30 days. This extension of coverage and the increase in compensation limits are expected to bolster customer confidence and ensure that their grievances are addressed promptly and fairly RBI strengthens consumer grievance resolution: Banks’ internal ombudsman and RBI ombudsman system will be overhauled^[1].

The RBI's decision to empower the ombudsman with these new powers is part of its ongoing efforts to improve the consumer-centric measures within the banking sector. This move aligns with the Reserve Bank of India's Integrated Ombudsman Scheme, 2021 (RB-IOS, 2021), which integrates various ombudsman schemes to provide a unified and cost-free redressal mechanism for customer complaints .