The Reserve Bank of India has issued comprehensive new guidelines to strengthen the internal grievance redressal mechanism across regulated entities, marking a significant step toward enhanced customer protection. The enhanced framework mandates a robust review process before customer complaints are rejected or partially resolved, while significantly expanding the roles and responsibilities of internal ombudsmen.

Scope and Implementation

The new directions, which come into force immediately, apply to a wide range of financial institutions. The regulatory framework covers multiple entity types as outlined below:

The RBI emphasized that "these directions are issued with a view to strengthen the internal grievance redress mechanism and ensure a speedy and meaningful resolution of customer complaints by enabling a review before their rejection, by an apex level authority within the bank."

Enhanced Review Mechanism

Under the new framework, all complaints that are partially resolved or wholly rejected by the internal grievance redress mechanism shall be auto-escalated to the office of the internal ombudsman for review. The guidelines establish strict protocols to ensure thorough examination of customer grievances.

The RBI has mandated that regulated entities ensure complaints are not closed by the same branch or touchpoints, regardless of resolution status. Additionally, any complaint being wholly rejected or partially resolved must be reviewed at a senior level before being sent to the internal ombudsman's office.

Internal Ombudsman Framework

The enhanced internal ombudsman scheme incorporates stakeholder feedback received on draft proposals shared on October 7, 2025. The framework establishes clear qualification and operational criteria for internal ombudsmen:

Internal ombudsmen will serve as permanent invitees to customer service committee meetings, ensuring board oversight on customer grievance redressal. However, they will not handle complaints received directly from complainants or represent the entity in legal proceedings.

Compensation and Board Oversight

The new guidelines empower banks and NBFCs to offer compensation to aggrieved customers for various forms of loss, including material loss, time expenses, and harassment or mental agony suffered. The regulator has also mandated specific board oversight mechanisms and suggested involvement of internal audit departments in overseeing implementation.

All decisions by internal ombudsmen or deputy internal ombudsmen must be submitted to the RBI Ombudsman, ensuring regulatory oversight of the enhanced grievance redressal process. The comprehensive framework represents the RBI's commitment to strengthening customer protection across the financial services sector.

The Reserve Bank of India has issued comprehensive new banking regulations for calculating capital charges on foreign exchange risk, marking a significant shift toward continuous risk monitoring and international alignment. The central bank released these enhanced requirements on Wednesday, mandating that banks compute foreign exchange risk capital requirements on a continuous basis at both consolidated and standalone levels.

Enhanced Capital Requirements and Daily Monitoring

The updated framework introduces stringent daily monitoring requirements that represent a departure from previous practices:

Structural Position Exclusions with Strict Conditions

Under the revised framework, banks may exclude specific "structural" foreign exchange positions from net open position calculations, subject to stringent conditions. The RBI emphasized that this methodology must be comprehensively documented in the bank's risk management policy for structural foreign exchange positions. These exclusions encompass:

• Foreign-currency denominated investments in subsidiaries
• Investments in overseas branches
• Investments in affiliated but non-consolidated entities

Technical Modifications to Calculation Methods

The proposed changes introduce several technical enhancements to existing calculation methodologies. The draft amendments specifically target provisions governing net open position calculations and associated capital charges for foreign exchange risk. Banks will need to include all accumulated surplus or un-remitted surplus from overseas operations under net spot position calculations, ensuring comprehensive risk capture.

Implementation Timeline and Stakeholder Engagement

The Reserve Bank of India has established April 1, 2027, as the effective date for these regulations, providing banks with adequate preparation time for system modifications and compliance frameworks. The central bank has invited comments on the draft amendments, emphasizing the goal of creating internationally consistent foreign exchange risk governance standards across India's banking sector.

The RBI's enhanced framework represents a significant step toward aligning domestic currency risk management practices with global regulatory standards while ensuring robust daily monitoring of foreign exchange exposures.