RBI Ombudsman Scheme Report 2024-25: Complaints Rise 13.5%
Why in the news
RBI’s Integrated Ombudsman Scheme (IOS) report for 2024-25 showed a sharp jump in customer complaints, linked mostly to private banks pushing retail lending fast. It points to weak grievance handling and credit discipline.
Key facts
| Indicator | 2024-25 finding |
|---|---|
| Total complaints | 13.34 lakh (up 13.5%) |
| Share from individual retail customers | 87% |
| Private sector banks’ share | 37.5%, highest among bank groups |
| Public sector banks | Complaints down 9% |
| Credit bureaus | Complaints up four-fold |
Why complaints are climbing
- Retail lending grew quickly once corporate lending slowed, especially unsecured personal loans and small-ticket loans at private banks.
- Hasty or faulty loan appraisal led to disputes on dues.
- Aggressive recovery practices in unsecured lending.
- Poor onboarding left customers confused about interest, charges and repayment schedules.
- Grievance systems did not keep pace with retail exposure.
About the Ombudsman Scheme
It is an RBI mechanism to settle customer complaints on banks, NBFCs and digital payments, offering free, fair and quick resolution against regulated entities. Its goals are an accessible complaint platform, transparent, timely and impartial settlement, and better consumer protection.
Concerns
- Many complaints remain unresolved or poorly resolved; Governor Sanjay Malhotra had earlier flagged weak resource allocation for grievance management.
- Credit bureaus depend financially on banks, often accept bank-reported data unverified, and give consumers low priority even in rating disputes.
- Banks still treat retail clients mainly as depositors; as savers move to mutual funds, gold, bonds and market products, deposit inflows and net interest margins could suffer.
- Growing unsecured exposure with weak consumer protection raises systemic risk; tighter rules on digital lending, credit cards and customer protection may follow.
Way forward
- RBI to firm up rules on onboarding, collections, bureau data accuracy and bank spending on grievance systems.
- Banks to build service capacity matching retail ambitions, or risk losing trust and revenue.
Exam angle
- Scheme name: Integrated Ombudsman Scheme (IOS), run by RBI.
- Bank group with the most complaints: private sector banks (37.5%).
- RBI Governor named: Sanjay Malhotra.