Will make banks pay for grievance redress, says RBI

The Reserve Bank of India (RBI) has asked banks to enhance their disclosures on customer complaints and said it will make lenders pay for the cost of redress if they has an excessive number of complains filed against them. It also announced undertaking intensive review of the grievance redress mechanism and taking supervisory action against banks that fail to improve their redress mechanism in a time-bound manner.

At the end of March 2020, the number of complaints across various offices of the RBI stood at 308,630. This is a steep rise from 195,901 complaints outstanding at the ombudsman offices, according to the data from the Trends and Progress Report. maintain higher unresolved complaints, the cost of addressal, over and above the average of peer banks, will be recovered from the bank. At present, the redress is cost-free for banks. The customers, however, will continue to enjoy free redress.

The central bank said this was necessitated because of increasing customer grievances lodged with the banking ombudsman, which merited greater attention by banks. Disclosures, according to the RBI, “serve as an important tool for market discipline as well as for consumer awareness and protection”. “Appropriate disclosures relating to the number and nature of customer complaints and their redress facilitate customers and interested market participants to better differentiate among banks to take an informed decision in availing their products and services.”