Private, Foreign Banks See The Highest Share Of Customer Complaints: RBI Report
Private sector banks and foreign lenders saw more customer complaints as a share of total accounts in 2019-20 when compared with public sector peers.
Private sector banks reported 0.14 complaints per 1,000 accounts against their credit and debit card services, while complaints against other services stood at 0.16 per 1,000 accounts, according to the RBI’s annual ombudsman report for year ended June 2020. Foreign banks saw 0.25 complaints per 1,000 accounts in the case of credit and debit cards, along with 0.21 complaints for every 1,000 accounts across other complaints, he said.
Public sector banks saw 0.09 and 0.08 complaints per 1,000 accounts for card and other services, respectively.
The RBI had launched ombudsman schemes for different financial services providers regulated by it for better quality grievance redressal. If customers are not satisfied with the resolution provided by banks or digital transaction service providers, they can approach an ombudsman and file a complaint. If the complaint is maintainable, the office of the respective ombudsman scheme will investigate and resolve the issue.
Among private banks, Yes Bank Ltd. and Kotak Mahindra Bank saw the highest share of complaints per 1,000 accounts. HDFC Bank Ltd. and ICICI Bank saw maximum complaints in absolute terms.
The annual report, which covers complaints filed between July 2019 and June 2020, also covered the share of complaints against digital services offered by each category of banks. Digital complaints are those relating to services such as automated teller machine, debit card, credit card, mobile and electronic transactions.
As per the analysis provided in the report, payments banks had the highest share of complaints against every 1 lakh digital transactions, at 0.864. Small finance banks had the lowest share of digital complaints per 1 lakh digital transactions at 0.165, as per data provided in the annual report.
Total Complaints Rise
In absolute numbers, the banking ombudsman received more than 3 lakh complaints in 2019-20, a 57% year-on-year rise. The complaints were largely related to ATM or debit card transactions, electronic or mobile banking and non-adherence to fair practices code of the RBI.
While almost all categories showed a sharp rise in number of complaints in 2019-20 compared with previous years, number of complaints fell marginally in the case of non-adherence of fair practices code.
According to the annual report, the total cost of handling complaints fell to Rs 2,412 per complaint compared with Rs 3,145 a year earlier. This is because complaints rose while staffing in the banking ombudsman offices remained unchanged.
The turn around time to resolve complaints rose significantly to 95 days in 2019-20, from 47 days a year ago. This was largely because of the transition to a new complaint management system. While the system allowed all complaints to be seamlessly filed by customers, it took some time for officials at the ombudsman scheme offices to get used to it, the annual report said.
The turn around time of complaints during the second half of the year (January-June 2020) improved considerably to 45 days; a significant drop from the yearly average, showing perceptible increase in disposal efficiency over time, the report said.
Complaints Against Non-Banks
The annual report also focussed on ombudsman schemes launched for the non-banking finance companies and digital transaction services providers, launched in 2018 and 2019, respectively.
In 2019-20, NBFCs saw a significant rise in number of complaints filed against them under the ombudsman scheme. During the financial year, 19,432 complaints were filed against NBFCs compared with 3,991 complaints a year ago.
Most of the complaints against NBFCs were with respect to non-adherence of the fair practices code, non-observance of RBI directions and non-transparency in contracts or loans.
Bajaj Finance Ltd alone saw 4,979 complaints against it during the year, while other large NBFCs such as Fullerton Capital and Aditya Birla Finance saw over 400 complaints against each of them, as per the annual report.
The Office of Ombudsman for Digital Transactions received 2,481 complaints in 2019-20, as compared with 470 complaints received in the five months of 2018-19 when it was initiated.
This included 1,089 transactions received against the Unified Payments Interface, Bharat Bill Payment System and Bharat QR code. Other reasons for complaints included electronic fund transfer, non-reversal of funds despite system error and non-adherence to RBI guidelines for prepayment payment instruments.
While 11 complaints were filed against National Payments Corporation of India, PhonePe received 1,095 complaints and Amazon Pay received 305 complaints, according to data available in the annual report.
While announcing the latest monetary policy decision on Friday, RBI Governor Shaktikanta Das said the regulator was working on creating a centralised scheme for grievance redressal across entities, rather than having three separate schemes to make the process smoother for customers.
(Updates an earlier version after the RBI revised data on complaints against private banks, foreign banks and payments banks.)