If anyone needed corroboration of customer dissatisfaction with banking services, the annual report (2006-07) of the Banking Ombudsman Scheme published this April by the Reserve Bank provided it. As per the data put out by the RBI, in the last five years, there has been a 700 per cent jump in the number of complaints filed by bank customers before the Ombudsmen. From 5399 complaints in 2002-2003, the number of complaints almost doubled in 2004-2005, when it went up to 10560. Then the number shot up to 31,732 in 2005-2006. and 38,638 in the subsequent year.
The report attributes the steep rise in the number of complaints in 2005-2006 to the modified scheme notified in 2006, bringing complaints pertaining to credit cards under the purview of the Ombudsman and also facilitating online registration of complaints. To put it differently, the sharp increase in the number of complaints following enlargement of the scope of the scheme bears further testimony to consumer discontent with banking services in general and credit card services in particular.
Much more than the poor service, these numbers indicate the absence of an effective and credible system of complaint redress within the banks. They also highlight the fact that banks are unwilling to invest in systems and processes that address consumer concerns and problems and try to resolve them in a fair and just manner. They also show how banks are violating the regulators' directives on customer services with impunity.
The RBI’s communication to the banks on the subject in September last year makes sad reading . Saying that the branch level customer service committees that banks were supposed to constitute were either still non-existent or in a dormant stage, the regulator advised banks to rejuvenate them and strengthen them with greater involvement from customers. "It is desirable that branch level committees include their customers too. Senior citizens may preferably be included,” RBI said. This, the regulator said, would not only open a formal channel of communication between the customers and the bank, but also help banks get a good feedback on their services and what needs to be done to improve them. I wonder how many bank branches are even aware of this or are willing to involve their customers in the customer service committees?.
Again in May this year, the RBI reminded all commercial banks of its earlier instructions of February 2007, when they were asked to submit a proper analysis of complaints received and the resolution of those complaints. Saying that such an analysis and disclosure would only be possible with an effective machinery for redress of grievances in banks, the RBI advised banks to ensure that complaint registers are kept in prominent places in their branches to enable customers to enter their complaints. It also asked for specific time-frames to resolve complaints.
I asked some bank branches why they have not followed the RBI instructions. Their explanation was that it takes time for the RBI advisory sent to their main office to percolate down to the branches! That speaks volumes about the attitude of the banks. First of all, these are basic customer services that any bank should have. Do they need to be told about this by the banking regulator and reminded constantly about it? They just do not want to open a complaint register because they know they would be flooded with complaints and they will have to deal with them.
It is time the regulator came up with a system of disincentives for banks that do not resolve consumer complaints and allow them to go to the Ombudsman or the consumer court, for that matter. In fact one loses faith in the regulator , if all that one sees are advisories and reminders without any concrete action to ensure compliance. .