While customer experience at Banks has been enhanced over the years, the high number of customer grievances continues to be a matter of serious concern, said RBI Governor Sanjay Malhotra. He asked Bankers to spend some time every week on grievance redressal.
The Governor flagged KYC (know-your-customer), digital frauds, mis-selling, and aggressive recovery practices as major areas that need service improvement.
Customer grievances
“I am told that last year (2023-24), the 95 Scheduled Commercial Banks alone received over 10 million (or one crore) complaints from their customers.
“If we take into account the complaints received at other RBI-regulated entities (REs), the number would be even higher,” Malhotra said at the Annual Conference of the RBI Ombudsmen, Mumbai.
The Governor observed that one may argue that this amounts to only four complaints per thousand accounts per year, as there are about 2.5 billion bank accounts. But, for RBI, even one complaint is a cause of concern.
“We have 10 million complaints and with the rapidly growing customer base and expanding suite of products, this may grow, if we do not get our act together,” he cautioned.
Malhotra noted that banks and NBFCs are in the business of customer service.
“However, I suspect that we are not spending enough time on customer service and grievance redressal as a result of which not only are there a large number of complaints being received by banks and NBFCs but in the absence of satisfactory resolution, a large number of them are getting escalated to RBI Ombudsmen,” he said.
Ombudsman complaints
The number of complaints received under RBI’s Integrated Ombudsman Scheme increased at a compounded average growth rate of almost 50 per cent per year over last two years to 9.34 lakh in 2023-24.
The number of complaints processed at the Office of RBI Ombudsman increased by 25 per cent from about 2,35,000 in 2022-23 to almost 2,94,000 in 2023-24.
Referring to the aforementioned data, the Governor underscored not only are large number of complaints getting escalated, a large proportion of them – nearly 57 per cent of the maintainable complaints last year – required mediation or formal intervention by the RBI Ombudsmen.
“You would all agree that this is a highly unsatisfactory situation and needs our urgent attention. I would, therefore, strongly urge all the MD&CEOs, Zonal and Regional Managers and the Branch Managers to spend some time every week, if not every day on grievance redressal.
“This is a must. All great CEOs find time to do it. We too must keep some time in our diary for improving customer service and grievance redressal,” he said.
Malhotra emphasised that regulated entities (such as Banks and NBFCs) should strive to enhance the total customer experience.
“The experience should be such that there is no cause for a grievance that requires a redress. Let me state a fundamental truth: every complaint is a test of trust. When a consumer files a grievance – whether for a disputed transaction, a lapse in service, inappropriate pricing or charges or an unfair practice – it is a signal that our system has fallen short.
“Left unresolved, such issues can erode consumer confidence and tarnish the entire ecosystem….we are in the business of providing unalloyed customer service and not just selling banking and other financial services,” he said.
The Governor highlighted that customer complaints aren’t a nuisance – they are, in fact, opportunities to improve, innovate, and build trust.
“Handling them well can define your success. Each unresolved grievance is a missed opportunity for regulated entities to reaffirm customer trust and loyalty.
“It is also a warning signal as repeat complaints are often signs of systemic flaws. Today, complaints often surface on social media even before reaching official channels, highlighting the need for proactive measures,” he said.
Malhotra emphasised that the effort thus should be to not only resolve the complaints but also to ensure that the same type of complaint does not arise again.
Digital frauds
Referring to complaints like digital transaction disputes, unauthorised charges, or miscommunication frequently recurring, he said these are clearcut symptoms of underlying issues in the overall customer service framework of the regulated entities.
A thorough root cause analysis should be performed for each complaint so as to enable remedial action and avoid repetition of same type of complaint.
