The Reserve Bank of India (RBI) will expand the powers of Internal Ombudsmen (IOs) in banks to strengthen consumer protection and ensure faster grievance resolution. Governor Sanjay Malhotra said on Wednesday, October 1, that the changes will authorise IOs to award compensation and allow them direct access to complainants, making their role closer to that of the RBI Ombudsman.

The IO mechanism was introduced in regulated entities such as banks and non-banking financial companies to provide an independent review of complaints that had been rejected at the entity level. By giving IOs greater powers, the RBI expects the system to become more effective and credible.

Two-tier redress model proposed

The RBI is also looking at a two-stage system for handling complaints within banks and other r

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