How should we give privileges/permissions to group to access different db's
Here is one thing, there is no difference between regular PostgreSQL and RDS PostgreSQL when it comes to ROLES,GRANT, PRIVILEGES, and GRANT. In your case, the user must be connecting to other than y DB. Maybe he connection default DB Postgres.  Tested in my rds instance. 

GRANT USAGE ON SCHEMA public TO dev_role;
GRANT ALL PRIVILEGES ON ALL TABLES IN SCHEMA public TO dev_role;


with this working fine for me, ref.docs: 

y=&gt; \dt
         List of relations
 Schema |  Name  | Type  |  Owner   
--------+--------+-------+----------
 public | table1 | table | postgres
 public | table2 | table | postgres
(2 rows)



and when I connected to other than y DB,

postgres=&gt; \dt
No relations found.


Since you didn't give permission here.