Complaints Against Banks Rise: Understanding Common Issues, RBI Redressal System, and When to Go to Court

Complaints Against Banks Rise: Understanding Common Issues, RBI Redressal System, and When to Go to Court

Credit card, loan, and digital banking grievances dominate complaints under RBI Ombudsman Scheme

Customers advised to use RBI redressal channels before escalating disputes to civil courts

By Our Legal Correspondent

New Delhi: December 05, 2025:

The Reserve Bank of India (RBI) has reported a sharp rise in consumer complaints against private banks in FY25, even as grievances against public sector banks declined. According to the RBI’s Integrated Ombudsman Scheme (RB-IOS), over 13.34 lakh complaints were received in FY25, up 13.5% from the previous year.

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This surge highlights growing dissatisfaction with banking services, particularly in areas such as credit cards, loans, charges, and digital transactions. At the same time, it reflects increased awareness among customers about their rights and the availability of grievance redressal mechanisms.

Common Types of Complaints

Based on RBI’s Ombudsman report, the most frequent complaints include:

• Loans and advances: Delays in loan disbursement, wrongful recovery practices, and misrepresentation of terms.
• Credit cards: Unauthorized charges, hidden fees, and aggressive recovery agents.
• Digital banking: Failed transactions, double debits, and poor resolution of online payment issues.
• Service charges: Excessive or hidden fees deducted without customer consent.
• Customer service: Lack of timely response to grievances or misbehaviour by staff.

These issues reflect both operational lapses and aggressive expansion strategies by banks in retail lending and digital services.

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The Redressal System: RBI Integrated Ombudsman Scheme

The RB-IOS, launched in 2021, merged earlier ombudsman schemes for banks, NBFCs, and digital payment providers into a single framework. Key features include:

• Single portal: Customers can file complaints online, via email, or in writing.
• Coverage: All RBI-regulated entities, including banks, NBFCs, and payment system operators.
• Timeline: Banks must resolve complaints within 30 days before escalation to RBI Ombudsman.
• Resolution: Ombudsman can order compensation, refund of charges, or corrective action.

In FY25, 66% of complaints were filed online, showing growing reliance on digital grievance channels.

How to Raise a Complaint

1. Approach the bank first: File a written complaint with the bank’s grievance redressal cell.
2. Wait for resolution: Banks have 30 days to respond.
3. Escalate to RBI Ombudsman: If unsatisfied, file a complaint under RB-IOS through the RBI portal.
4. Provide documentation: Include account details, transaction records, and correspondence.
5. Track progress: RBI provides complaint tracking and resolution updates online.

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When to Escalate to Court

While RBI Ombudsman offers a strong redressal mechanism, some cases may require escalation to civil courts:

• Large compensation claims: When financial loss is substantial and beyond Ombudsman’s jurisdiction.
• Complex fraud cases: Involving multiple parties or criminal elements.
• Persistent non-compliance: If banks fail to implement Ombudsman’s orders.
• Constitutional issues: Cases involving violation of fundamental rights or systemic discrimination.

Courts are generally the last resort, as litigation is costly and time-consuming compared to regulatory remedies.

Expert Opinions

• Legal experts say the rise in complaints reflects both customer awareness and gaps in service quality.
• Consumer rights activists emphasize that RBI Ombudsman is effective but needs stronger enforcement powers.
• Banking professionals argue that digital expansion has increased transaction volumes, leading to more disputes.

Conclusion

The rise in complaints against private banks in FY25 underscores the importance of robust grievance redressal systems. Credit card, loan, and digital banking issues dominate customer grievances, while the RBI Integrated Ombudsman Scheme provides a structured mechanism for resolution.

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Customers should first approach their bank, then escalate to RBI Ombudsman if unresolved. Courts should be approached only when regulatory remedies fail or when compensation claims are large and complex.

This layered approach ensures faster resolution, reduces litigation, and strengthens trust in India’s banking system.

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