RBI To Recover Grievance Redressal Costs From Banks

The Reserve Bank of India mandated that banks must partially pay the cost of redressal of complaints by the ombudsman as the regulator aims to improve customer service.

Currently, the process of grievance redressal through the Office of the Banking Ombudsman is free for banks and customers, the apex bank said in a new framework released late Wednesday. “With a view to ensure that banks discharge this responsibility effectively, the cost of redress of complaints will be recovered from those banks against which maintainable complaints in the OBOs exceed their peer group average,” the RBI said.

To calculate the peer group average, the central bank said every year peer groups of lenders will be created by looking at their asset size as on March 31 of the preceding year. These peer groups would track three parameters:

• Average number of maintainable complaints per branch
• Average number of maintainable complaints per 1,000 accounts (total of deposit and credit accounts) held by the bank
• Average number of maintainable digital complaints per 1,000 digital transactions executed through the bank by its customers.

If complaints against a bank exceed the peer group average in one of the three parameters, the OBO would recover 30% of the grievance redressal cost from it. In case of two parameters, 60% of the cost, and in cases where complaints exceed in all three parameters, 100% of the cost would be recovered, the RBI said.

The cost of redress to be recovered will be the average cost of handling a complaint at the OBOs during the year.

Besides, the RBI has ensured that banks offer more detailed disclosures in their annual report for higher transparency in the grievance redressal process. Till now, banks were required to release details such as pending complaints at the beginning of the year, fresh complaints received, complaints redressed by the bank and those that were pending by the end of the year.

The disclosure table now, however, will be more detailed with information about the number of complaints rejected by the banks, the number of complaints received by the banks from the OBO, the number of complaints resolved in favour of the bank, those that were resolved through mediation or conciliation, the number of complaints resolved after awards were passed by the ombudsman and the number of such awards unimplemented within the stipulated time.

“These disclosures are intended to provide to the customers of banks and members of public greater insight into the volume and nature of complaints received by the banks from their customers and the complaints received by banks from the OBOs, as also the quality and turnaround time of redress,” the RBI said.

Banks are also required to release the top five grounds on which customer complaints have been received and how many were redressed under each ground. Popular grounds for complaints include debit cards, credit cards, internet or mobile banking, account opening or difficulty in the operating account, mis-selling of para-banking services and recovery agents, among others.

Banks with persisting issues in grievance redress, according to the RBI, will be subjected to an intensive review of their redress mechanism to better identify the underlying systemic issues and initiate corrective measures. Depending on this review, the RBI would come up with remedial action and communicate it to the banks concerned. If the redressal mechanism of these banks does not improve within stipulated timelines, the regulator would initiate corrective action.