Pain Points of Bank Depositors and How To Redress Them
“Do you know that RBI is winding up its customer services department and also BCSBI (Banking Codes and Standards Board of India)?” asked a rather agitated former bank chairman who was instrumental in the creation of BCSBI along with the late SS Tarapore. 
The dissolution of BCSBI, a well-meaning but deeply flawed organisation, was long overdue. Announced in the Reserve Bank of India (RBI) annual report, in August 2020, it went largely unnoticed due to the disruption caused by the COVID pandemic. The winding up of RBI’s customer services department is what interest us more. 
RBI’s annual report in August says that the CEPD (consumer education and protection department) will now look at grievance redress; do a root-cause analysis of complaints; review the banking ombudsman scheme, consider extending the internal ombudsman concept to non-banking finance companies; review its consumer education cells and set up an interactive voice response system (IVRS) for online support to the complainants.
I have it on very good authority that RBI is serious about better grievance redress system. There is already some indication of which way the wind is blowing. On 2nd December, the powerful HDFC Bank was, finally, whacked with stiff punishment for the frequent outages in its Internet and mobile banking and payment utilities over the past two years. The Bank has been told to temporarily stop all business-generating tech applications and sourcing of new credit cards until its systems are fixed. 
Given the ferocious rate at which the Bank works at getting new businesses, this is a far stiffer punishment than a mere fine. HDFC Bank is India’s most valuable bank and the action sends a powerful signal to other banks, including public sector banks (PSBs), which are notorious for systemic issues. In December, RBI governor Shaktikanta Das said that RBI planned to institute a “disincentive-cum-incentive framework to encourage banks to improve their grievance redress mechanism.” This also sounds encouraging. But an institutional mechanism works only when there is a clear-headed understanding of pain points along with intent to work for customers, rather than banks. I would submit that RBI has been tinkering with institutional mechanisms for well over a decade, at great cost, and repeatedly failed because it does not engage with customers for feedback; most of its interactions are with banks or data submitted by banks and various government-sponsored consumer helplines. The latter is useful but limited.
RBI has even gone so far as to take the stand that customers cannot use litigation as a ‘weapon to challenge financial or economic decisions’, such as levy of surcharge on credit and debit cards, in a public interest litigation (PIL) filed in the Delhi High Court. 
Consider these examples of how institutional mechanisms haven’t worked. 
BCSBI: Set up in 2006 due to mounting consumer complaints, BCSBI is a classic example of how good intention disconnected from ground reality will end up in a disaster. In fact, our cover story in 2017, titled “Your Friendly Bankster” had categorically suggested that it should be shut down. Housed in a sprawling office, fully funded by RBI (initially) and headed by a retired deputy governor (later funded by Indian Banks Association and headed by a retired public sector bank chief), BSCBI was never likely to be an ‘independent watchdog’ for consumers or ever bark at its masters. So, the organisation spent time on pointless codes and customer surveys. That it is being dissolved and not morphed into yet another white elephant (like Planning Commission into NITI Aayog) itself deserves kudos. 
Consumer Charter and Internal Ombudsman: In December 2014, under governor Raghuram Rajan, RBI first created a framework for consumer protection which ought to have been BCSBI’s first task. It was a consultative process that identified five basic rights of bank customers as:  right to fair treatment; right to transparency, fair and honest dealing; right to suitability; right to privacy; and right to grievance redress and compensation. Unfortunately, these have ended up like commandments with no consequences for violation. Expectedly, banks simply ignore them. The charter itself, under pressure from banks, had dropped the right to non-discriminatory treatment, which is why the unfair practice of offering lower interest to new borrowers, while harassing existing ones on reduction of floating rate interest continues, despite our PIL in the Supreme Court in this regard. 
The Present: On 18th December, RBI board “reviewed RBI’s customer education initiatives and resolution of customer complaints.” It will be interesting to know what material was presented to the board and how it was presented.
In the past three years, the functioning of the banking ombudsman’s office has, indeed, improved. From a rejection rate of over 57% of cases as non-maintainable just three years ago, it is down to 29% and the number of cases settled through mutual settlement is also at a high of 70%. But the awards against banks, at 0.11% or just 98 out of over 1.94 lakh complaints, seems abysmally low. More importantly, at Moneylife Foundation, our not-for-profit financial literacy organisation, we have found that awareness about the banking ombudsman’s office and its online redress mechanism is itself low. 
Now here is an idea. RBI governor Shaktikanta Das is a rare bureaucrat and central bank governor who is on Twitter. Last week, he tweeted that RBI’(@RBI) twitter account has over one million followers. But this account is a mere broadcast channel. There is no evidence that it monitors feedback. As a first step to better grievance redress and customer services, it would be nice if RBI were more active on Twitter. 
The late Sushma Swaraj had won hearts by doing it effectively for Indians abroad. The Mumbai police, Mumbai municipal corporation and many others have been doing it well too. Why not RBI? Just the fact that RBI is watching will ensure that all banks respond seriously to grievances on social media, instead of posting automated responses through bots.
I experimented with this idea, by sending the tweet below on 22nd December, asking people to highlight customer service issues that agitated them the most. 
Here is what I found:
  • The number one complaint is mis-selling of products, mainly insurance. It often boils down to coercion and extortion and ought to be punishable. Bankers themselves complain about being forced to mis-sell in order to meet corporate targets. RBI has been silent to this egregious loot of depositors. 
  • Cheating borrowers on interest charges and on conversion to lower rates is another widespread complaint.
  • Technological glitches and poor user experience of their websites and apps is a problem across the system. A root-cause analysis would go back to software giants who have written the core banking software. One recurring complaint that can be easily fixed by prescribing standard templates is that of ‘incomprehensible’ e-statements with inadequate information. 
  • Harassment of know-your-customer (KYC) updates and the unilateral powers granted to banks to freeze customer accounts causing enormous pain and hardship. 
  • Usurious and unfair charges for services, poor treatment of senior citizens, especially pensioners, frequent outages (especially at PSBs), harassment while closing bank accounts and credit cards, levy of cheque return charges on the receiver who is not at fault, are issues that cause great anger.
  • Although RBI had cracked down on banks issuing credit cards without customers having specifically asked for them, the feedback indicates that this mischief has started again and needs to be fixed with stringent penalties. 
If RBI interacts with actual users, via social media and technology, it can dramatically improve customer services and fair treatment of borrowers. The good news is that RBI has agreed to look at the feedback and there is hope that it will take up such an exercise on its own and give us better banking services. 

2 years ago
In 2018, due to merging of CIF of two different branches bank account for my pensioner mother, SBI did something unbelievable and deducted 20% TDS for Interest from both branches and PAN number vansihed from both and that means total 40% TDS was deducted and not mentioned in 26AS.... we went pillar to pole in SBI and nothing was done, finally I went to Kanpur Ombudsman and all I got from him a letter after 40 days that your compliant is closed as everything is in 26AS. Seriously, they didn't read the compalint and just closed it, I had attached all documents but no help from anybody, even SBI Chanirperson didn't bothered to reply. This is a plight of a common retired people in India, now she a account there as her pension is coming but on Day 1, I transfer it to a private bank, which at least listens when there is an issue... Banks in India can never do good come what may till the power to deduct money without signed authorization from customer is there.
Dilip Modi
2 years ago
Sucheta mam, not sure if you mean improvement in cases handled by Internal Banking Ombudsman or the RBI's BO. If it is former, even now I am faced with a situation where I am not allowed to approach the IBO directly, nor allowed to know his contact details, nor can I ask for the actual order passed by IBO. Only my bank can access IBO, present my complaint on my behalf and convey IBO's findings in a summary like ............

"We have referred the case details to our Internal Ombudsman of the Bank (Appointed on the directive of Reserve Bank of India to look into the complaints), who has examined the case and expressed that the reply being given by the Bank's internal grievance mechanism is in order."

I have on record one case where this entire process was conducted by the bank in one day and IBO's finding conveyed to me the following day! The whole process is a mockery of "fair and honest dealing and transparency".

Replied to Dilip Modi comment 2 years ago
Customer complaint, Nodal Officer, Apellete officer and now IBO, they are all Bank employees and with due respect for all of them, we need to remember that they all come under pressure of top Bank Management. In my own case, the Operations head in consultation with the Branch Head, put in writing twice that my complaint letter will be attended to shortly. I NEVER GOT ANY REPLY FOR THREE MONTHS. I do sympathize with them and therefore went to BO.
Actually BO is a good watchdog and if you go through BOS 2006 guidelines it is an excellent guidebook-only BO observes it in the BREACH!
That is where RBI need to keep a hawk's eye on its working as well as on the working of its Departmental CEPD, to ensure they do serve the purpose for which they are set up.
Dilip Modi
Replied to ssk.pab comment 2 years ago
Sir, thanks, the list of areas for complaints in BOS 2006, is very specific and leaves gaping holes for a bucketful of instances that will not be entertained by BO. some examples are, unilaterally deregistering a mobile phone from an account making the account unoperable, seeking KYC documents in the middle of Covid Pandemic from NRIs sitting 4000 miles away, not responding to issues for weeks, seeking a DOB confirmation from NRIs despite providing PAN card, passport, Driving license, not updating records, giving a new complaint reference number as it progresses from Dept to Dept, never attaching trailing correspondence for ease of access, e-statements with meaningless numbers and characters, .... it goes on.
Replied to Dilip Modi comment 2 years ago
You have perhaps a valid point Mr. Modi - there could be any number of areas - not specifically covered under BOS 2006 and if the Banks do not cooperate, we have nowhere to go.
That is where what Sucheta Dalal mentions in the last para of her article - "If RBI interacts with actual users ----it can dramatically improve customer service.......". can be very useful tool for rendering the service we need.
The question again boils down to how effective any mechanism is in the absence of its strong quality audit, supervised at the highest level? Will RBI start with imposing such an audit on BO and CEPD, to prove its seriousness in providing the necessary service through the existing channels at least?
2 years ago
How do the Govt agencies compete in competitive environments??? use sovereign force to eliminate the competitor
2 years ago
Excellent article, with very sensible suggestions. Thank you for the work you are all doing. Keep up the great work, Ms Sucheta Dalal and ML team.
2 years ago
RBI is another Government bureau. It leads a life where the ordinary citizen is irrelevant to its being, Why would it listen to an entity who has no power over it or, for that matter, any power at all?
2 years ago
The speed at which banking customers complaints are resolved is total disastrous at BO.It takes months.If RBI wants to really help bank customers,BO must resolve max 1 week.Else BO is hogwash.

Donot take advise of any stock broker and do yr own research.If you donot know learn and still do yr own research.If yr own stock broker pressurises you,change the stock proker but donot take any stock broker advise.Do yr own research.

Donot allow bankers to pressurise you.Set clear boundaries and if crossed complaint to owner of bank directly.
2 years ago
Normally when Sucheta Dalal writes, we take it seriously-you do your homework RIGHT. Not this time-you have not looked into the reality of the operations at Banking Ombudsman Office nor you seem to be aware of the way CEPD works. I will narrate my personal experience in brief to tell you the facts.
1. Besides imposing many charges not originally specified, on my spends abroad, HDFC Bank also hot listed my International Debit Card for entirely its own fault, depriving me of my Banking facility and my own Funds. When I took up the matter with BO, after sitting on my complaint for three months, BO says this complaint does not come under the provisions of BOS 2006!!! No logic was assigned to this kind of outlandish decision-just the rejection. BOS 2006 contains many provisions for resolving the issues like making it mandatory for BO to give complainant a copy of the reply of the Bank and in turn give him an opportunity to counter the wrong claims of the Bank etc. It also mandates BO to try and organize meeting between Bank and Complainant-no such rule was followed by the BO-just rejected my application as not coming under provisions of BOS 2006. When an application gets rejected as not coming under BOS 2006, you can not approach the Appellete Authority within RBI - you can only approach a CIVIL Court.
2. I decided to approach CEPD against the obviously faulty and insincere working of the BO itself. Over a year has elapsed and CEPD has not even bothered to allot me a Complaint number. How do you track a complaint if there is no reference number?
CEPD tried to hoodwink me by sending my complaint against the working of BO to the same BO Office for the reply!!!
Can you beat it-they tried to set up a KANGAROO COURT!
I obviously rejected its answer with clear logic and demanded that the office of CGM CEPD should investigate as provided by RBI guidelines. To that there is no reply at all, though over the telephone they keep assuring that the matter is being looked into for the last 9 months.

The problem with RBI is that it has not put in place very strong quality audit - neither for Banking Ombudsman nor for CEPD. It simply relies on the the stats being churned out by these outfits, just as you did, without understanding that these stats can be very misleading in the absence of strong AUDIT.
Replied to ssk.pab comment 2 years ago
You have made a sweeping charge based on ONE personal experience. Surely you realise that a writer has to take a broader perspective and one that notes what has happened over a period of time. While highlighting a very valid personal experience, why ensure that you put off the reader with a baseless charge? How about reading all the links to what we have said and done over the past few years?
Replied to sucheta comment 2 years ago
1. At the outset, in my original comment, I have said when Sucheta Dalal writes, we take it seriously. Hope that answers your last point. Please do rest assured we mean it.
2. I have not made any sweeping comment-like my case I understand there are other cases at CEPD against BO.
3. By all means a broader perspective is necessary for everyone when something is put in writing. What I have suggested is there is need for some home work when we talk about asking more out of BO and CEPD. Are they doing the current job effectively? The stats they put out do need quality audit-for sure!!! That will determine how effective they are and what needs to be done to make them really effective.
4. In view of the foregoing I am sure you will agree that there is no charge-leave aside the question of any baseless charge.
We value your contributions and shall continue to do the same in future, too.
2 years ago
Sentiments of bank customers echoed very nicely and effectively. Hope the rare bureaucrat listens to what you are saying. Please keep up the good work.
2 years ago
PSB employees don't pick up phone calls. Either landlines are busy or ringing no one picking.Unless you know someone's mobile,it's difficult to contact branches
2 years ago
I am a joint account holder with my super senior citizen at the ICICI bank. I have lately experienced the pain you refer to with regards to harassment of know-your-customer (KYC) updates and the consequent freeze of cash with-drawl from savings account against bearer's cheque. The account was operational in Delhi for many years. We had to bring her over to Mumbai in 2017 because of her advancing age. Her Delhi accounts in Bank of India and ICICI were transferred to Mumbai with all required formalities including submission of documents as required. The ICICI bank failed to update the systems and I kept getting calls from Relationship Managers at Delhi and E-mails/SMS to update KYC. All proofs submitted twice at the Chembur branch. Emails had stopped so I presumed all was okay.
In December 2020 I requested for home delivery of cash with abundant caution to protect her from Covid. I am the usual signatory and a Bearer cheque photo was sent by WA as asked. Cash would be delivered on handing over the cheque. Since the cash didn't arrive for few days, I called the bank only to be told that my KYC is not done since the Name and Date of Birth have been entered wrongly. The relationship manager visited home after several calls and the correction formalities completed with fresh set of photo, Aadhar and PAN photocopies. There is no time limit for settling the issue. Every call demands another DOB proof. Last evening I was asked to send a photo of the D/L and again the PAN Card. Evidence of poor treatment of senior citizens if needed.

Registration of her share certificates in the Demat account is another story. The shares are old with companies like DCM etc having split into other entities. Demat account services have rejected the request, reasons coming in piece meal!
2 years ago
I do not wish to grudge against Bank service as a former banker. However, one lacunae I observe since past 5-6 years is that customer service meeting which branches are supposed to conduct has become conspicuously stopped. That apart, I also observe that initial training being imparted to new comers is not upto the mark, if at all banks have conducted, as can be seen from the rude faces, not attending to customers needs in a courteous manner and so on. May be they have been taken to jobs after rigorous selection process but practical behavioural training is very much needed. Thanks to the advent of technology due to the illustrious efforts of thousands of my farmer colleagues the present generation of highly educated, computer savvy, new comers are in a way "enjoying" the fruits. Senior personnel atleast should have to guide them. If the trend continues in this fashion for another 5 years, I don't know where goes the banking service and where else these newly recruited will end up.
2 years ago
I hope your site would also be perused by RBI to know customers' grievances and their redressal.

I am a Pensioner aged 79 years and draw my Pension though PNB (A/c No. 0176000100166013). They continue to deduct TDS of Rs 2320/- pm from me even though none is actually due. Now, they are not even crediting since July'20 monthly interest on some of my FDs with them. I have already furnished my Form 15H with all details. I have represented many times even up to their highest authority, but to no avail. They mostly do not reply and when they do, it is useless. I had written to RBI also but nothing happened. Where to go from here?
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