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RBI Plans Overhaul of BSBD Accounts, Strengthening of Internal Ombudsman and Wider Grievance Redress Mechanism
Moneylife Digital Team 01 October 2025
Investor Interest
The Reserve Bank of India (RBI) has announced a series of measures to strengthen consumer protection in the banking sector, including a comprehensive review of the basic savings bank deposit (BSBD) account framework, new powers for internal ombudsman mechanisms in regulated entities (REs) and expansion of the RBI ombudsman scheme to cover rural cooperative banks.
 
The decisions were unveiled by RBI governor Sanjay Malhotra, following RBI’s latest monetary policy meeting, with the central bank emphasising the need to align financial services with digitalisation, customer requirements, and global best practices in grievance redress.
 
BSBD Accounts To Be Enhanced for Wider Usage
BSBD accounts, introduced to promote financial inclusion, currently offer basic facilities without minimum balance requirements. The extant instructions on BSBD account require banks to provide certain minimum facilities free of charge, without the requirement of minimum balance, to the holders of such accounts. RBI says the ongoing digitalisation in the banking sector necessitates a BSBD account that is in sync with the customer’s changing requirements.
 
With growing digitalisation and evolving customer needs, RBI has decided to review the framework to ensure affordable banking facilities and drive greater usage of BSBD accounts. The move is aimed at deepening financial inclusion while keeping services relevant to the digital age, it added.
 
Strengthening the Internal Ombudsman System
RBI also proposed significant enhancements to the internal ombudsman (IO) mechanism within REs, including banks and financial institutions. To improve the effectiveness of this independent complaint review system, the IOs will be given compensation powers and direct access to complainants, aligning their role more closely with that of the RBI ombudsman, Mr Malhotra says.
 
Additionally, a two-tier grievance redress structure within REs is under consideration before escalation to the IO, with the aim of ensuring meaningful and timely resolution of customer complaints. RBI says a draft master direction outlining these changes will be issued shortly for public comments.
 
Expansion & Review of RBI Ombudsman Scheme
In a further consumer-centric reform, RBI has also decided to bring state cooperative banks (StCBs) and district central cooperative banks (DCCBs)—previously under the ambit of NABARD—within the scope of the RBI ombudsman scheme, 2021. This move will provide rural cooperative bank customers with direct access to the RBI’s alternate grievance redress mechanism.
 
The ombudsman scheme, launched in 2006 and revised four times since then, currently covers commercial banks, regional rural banks, select non-banking financial companies, urban cooperative banks of a certain size and credit information companies.
 
According to Mr Malhotra, RBI is also undertaking a comprehensive review of the scheme, taking into account operational experience, stakeholder inputs and global standards. "The revised draft aims to enhance clarity, simplify procedures, and reduce timelines to ensure quicker, fairer, and more effective grievance redress. It will be released on the RBI’s website for stakeholder feedback," he added.
 
The measures mark a broad push by the central bank to improve customer service standards, strengthen grievance resolution and ensure financial inclusion keeps pace with the digital transformation of India’s banking sector.
 
Comments
r_ashok41
1 month ago
Good idea and if it is informed to customers and in that some senior citizens also should be there to give feedback not only PSB but also private sector banks to get a first hand information.
Reply
tsalwayswise
1 month ago
I hold a savings account in a large PSU bank and a prestigious private sector bank. About six months back, RBI's officers visited these banks to meet their clients. Since I give suggestions to these banks, they invited me to this meeting. However, both the banks politely requested me to speak only about the positive aspects and not to suggest any improvements. I informed them that I will not attend these meetings. I wrote to the RBI's banking division based on the email-ids that I got from the internet that the visits of their officers do not achieve their purpose because the meetings are 'rigged'. Instead, RBI should earmark and then popularize an email-id for clients of all banks to send in their suggestions, feedback and shortcomings. However, till date I have yet to see that my suggestion being implemented. The point is that every organisation does their work without applying their mind as to whether the procedure can be 'rigged'; and if yes, how they can prevent it. Finally RBI's goal should be to improve the interaction between a client and his bank. Thanks.
Reply
tenkaraimohan
Replied to tsalwayswise comment 1 month ago
Well said ????????
Reply
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