RBI Internal Ombudsman Directions-2023 vs Draft 2025

The Reserve Bank of India (RBI) has proposed the Master Direction – Internal Ombudsman for Regulated Entities, 2025, to replace the 2023 framework. Issued under Section 35A of the Banking Regulation Act, 1949 and allied statutes, the new draft seeks to strengthen internal grievance redressal mechanisms and ensure speedy, meaningful resolution of customer complaints through a structured, independent review within each regulated entity (RE). This article compares the new draft with the 2023 Master Direction and highlights key changes.

Topic	Master Direction 2023	Draft Master Direction 2025
Appointment — IO eligibility	IO: retired/serving GM-equivalent; min. 7 years relevant experience; not over 70; must not have been employed by the RE or related parties.	Adds if serving, must relinquish prior post. Explicit permission mechanism for IO to serve multiple REs (subject to RBI approval).
Appointment — Dy. IO eligibility	Dy. IO: retired/serving DGM-equivalent; min. 5 years’ relevant experience; not over 70; Dy IO may act as IO temporarily (up to 15 working days, extendable to 30 with notice).	Similar eligibility, but 2025 Directions clarifies Dy. IO shall not be employed in more than one RE simultaneously (stronger exclusivity). Also Dy. IO functionally reports to IO; temporary substitution arrangements remain but tightened.
Number of IOs / Dy IOs	RE may appoint more than one IO / Dy IO depending on volume.	Same, but 2025 Directions requires the Board / Customer Service Committee to determine number annually.
Tenure / reappointment / removal	Fixed contractual term 3–5 years;explicitly: no reappointment or extension in same RE; removal only with RBI approval; minimum overlap (1 month) between incumbents.	Tenure still 3–5 years; Draft 2025 Directions is silent on an absolute bar on reappointment (i.e. the explicit prohibition in 2023 Directions is not repeated); (Practical implication: 2025 Directions may allow reappointment/ extension unless RBI/ RE policy states otherwise) Removal still requires RBI approval; 2025 mandates RE begin fresh appointment process 3 months ahead and ensure overlap.
Secretariat / infrastructure	RE to provide officers/staff and IT support; IO office preferably at Head Office; emoluments decided by Board committee; facilities not to be changed adversely during tenure.	Adds explicit requirement that officers/staff assigned to IO shall not be attached to any other department (including Principal Nodal Officer).
Internal audit	Annual internal audit of implementation focused on adequacy of infrastructure, adherence to auto-escalation and timelines; audit excludes assessing correctness of IO decisions.	2025 Directions expands the internal audit scope to explicitly include: adequacy of resources vs complaint volumes; auto-escalation functioning (20 days; 25 days for CIC); IO’s use of complaint analytics, reports submitted to RBI/RE, and training/awareness activities. (Still excludes correctness assessment of IO decisions.)
Complaint handling & escalation	Fully automated CMS; auto-escalation of partly/wholly rejected complaints within 20 days to IO; final reply to complainant within 30 days; IO decision binding unless Competent Authority disagrees (with approval).	Adds: three-status classification mandatory before escalation (Fully Resolved / Partly Resolved / Wholly Rejected); auto-escalation timeline 25 days for CIC. IO/Dy IO to record a reasoned decision in each case.
IO powers — awards & remedies	IO may recommend redress; decisions are binding except where Competent Authority disagrees with approvals/ reporting to Board; IO cannot represent RE in courts.	2025 Directions explicitly empowers IO to provide compensation in accordance with RBI Integrated Ombudsman Scheme and internal RE compensation policy for consequential loss, loss of time, expenses, harassment, etc. 2025 also emphasises IO’s role in recommending policy changes.
Access to RBI systems	IO to be given read-only access to RBI Complaints Management System (CMS) after RE requests access.	2025 Directions reiterates read-only access for IO & Dy IO and requires RE to seek access for IOs from RBI CEPD. Also requires IO to record analysis & use CMS information for aligning with RBI Ombudsman decisions.
Reporting to RBI	RE to report appointment details within 5 working days and furnish quarterly & annual reports to CEPD by the 10th day of the month following the quarter/year.	Same timelines retained; 2025 Directions emphasises structured annexures, quarterly submission deadlines, and additional returns on IO functioning.
Board oversight & review	IO to furnish periodic reports to Board committee (quarterly preferred). Rejection of IO decision requires Competent Authority approval and quarter review by Board committee.	Strengthened: 2025 Directions requires quarterly updates to Board on RBI Ombudsman outcomes, top complaint categories and remedial measures; all rejections to be placed before Board for information.