Just a couple of days back, the Reserve Bank of India (RBI) hit major headlines; not for any policy rate cut but for showing its concern over the deteriorating customer service in banks.
A committee appointed by the RBI has recommended penalties for entities (banks, non-banking financial companies, and other regulated institutions) that fail to meet customer service standards, while those making upgrades must be incentivised. The panel has raised an alarm on poor customer service.
The committee, chaired by former deputy governor B.P. Kanungo was established in May 2022 to assess the state of customer care services, evaluate the adequacy of existing regulations, and propose measures for improvement. It submitted a report on 24 April, and the findings were published on Monday (June 5).
Even as there is a comprehensive regulatory framework in place to address the customer grievances, the lack of enforcement action against regulated entities failing to meet customer service requirements has been found as a major concern by the committee.
As mentioned in the committee report, the number of complaints under RB-IOS (Reserve Bank –Integrated Ombudsman Scheme) is consistently rising.
Among other things, the panel has questioned the uniformity in classification of complaints, as some entities were categorizing certain complaints as suggestions or queries.
Notably, the panel has identified ‘misinterpretation’ of the word complaints by the registered entities and it’s here the complaints lodged by the customers are not handled fairly.
In other words, the lack of a standardized definition of complaints has remained a root cause for lackadaisical attitude of banks and other registered entities while handling customer complaints.
In this regard, the penal has urged the RBI to establish a clear definition of what constitutes a complaint under the Internal Grievance Redress mechanism for having a comprehensive view on the volumes, types, and the nature of complaints, and allow an accurate assessment of the state of customer service offered by the banks and other registered entities.
Over a period of time, we have been witnessing that deteriorating customer service in banks and increasing aggression in behavior of customers is spoiling the banker-customer relationship. Actually, there is a sea change in the concept of banking and the process still continues.
Even as these changes have paved the way for ease of doing business at a bank branch, at the same time frequent clashes between bank officials and customers have become the order of the day.
Gone are the days when customers blindly used to trust the banks and generations of customers were loyal to the banks. But, what now has disappeared is the trust in banker-customer relationship. Precisely, the element of trust in this relationship is today at its lowest ebb.
Why is customer service losing warmth? Why do we witness frequent over the counter encounters between bank staff and customers? Who is right and who is wrong? These are some critical questions which are debated, but most of the time without a logical conclusion. It’s not that the service model of the banks is not customer-friendly.
But the people (employees) responsible to deliver it conveniently to the customers most of the time tamper it and breed frustration among the customers. This happens mostly when it comes to the delivery of banking services to the small customers.
We have a plethora of cases involving bank staff fighting its small customers that has brought the inept attitude of banks to the fore. Frankly speaking, those wealthy and well-connected customers do not have to bother; banks are always at their doorsteps.
Let me explain in the context of the latest mandatory ‘know your customer’ (KYC) guidelines. Linking Aadhaar and PAN was a call from banks to its customers. Even as customers responded, most of them found their accounts not linked to their Aadhaar and PAN when they were not allowed to withdraw money. Their respective bank branches had not bothered to link these numbers to their accounts. Irony is that the customers are not allowed to ask any question in this regard, but advised to resubmit such documents.
Another small but significant issue is entry in passbook. Almost every customer wants his passbook to be updated. It’s considered as a meaningless job by the bank staff at the counter to pen down entries in a passbook. Many complaints against bank staff have base in ‘denying entries in passbook’ and then subsequently ‘misbehaving’ with the accountholders.
Most common practice among bankers on the counter is not only to hide their negligence but also to blame the customer for it. For example, an accountholder changed his/her signature in the account.
Later the account holder’s cheque was returned by the bank unpaid on the pretext of mismatch in his/her signature recorded in the bank.
Even cheque return charges were deducted from his account. When the customer objected to the action of the bank, it’s found that the new signature of the account holder was not uploaded in the bank’s system. So the customer suffered because of the negligence of the bank. Ironically the cheque return charges too were credited back to the account for which the customer had to plead many times.
Take the case of loan appraisal practices. These are not uniform even within branches of the same bank. They don’t have the same yardstick and these too have been breeding unrest among customers. It’s a common complaint that influential people get hassle free access to loan schemes and even eligibility criteria is overlooked while sanctioning and disbursing a loan in their favour. Precisely, issues related to credit and debit cards and unfair and discriminatory practices towards the borrowers keep cropping up.
So, there are many small but significant issues as described above which strains banker-customer relationship. Why does such a situation happen at the hands of bank staff at the counter?
To find an answer to this question, one needs to have a look at the other side of the banker-customer relationship.
Gone are the days when talented people used to quit an easy life gazetted officers’ job to join banks even as a clerk for lucrative salary and career opportunities in the bank.
Today, the time has taken a U-turn, people quit bank jobs to look for opportunities in other sectors just because of lower salary, more working hours, stress, risk of paying someone’s debt and frequent transfers.
Besides, there are no specific timings for their working and many a time, their work stretches from 9 to 10 hours every day. There is neither monetary compensation nor any kind of recognition for their toiling for extra hours.
Meanwhile, a set of critical proposals put up by an expert panel of the Reserve Bank of India (RBI) acknowledges that all is not well in the banks and other registered entities on the customer service front.
There is no denying the fact that customer expectations are changing much faster than the ability of the banks to adapt. Banks have to understand that customers in this modern era build trust differently than in the past.
Today’s customers build trust based on the quality, responsiveness, and consistency of their experience.
They are more tech-savvy than ever, and their reference benchmarks are always evolving. They have more choices and are more demanding. So giving more flexibility and the ability to customize products and services to meet their requirements cannot be overlooked by the banks.
The views are of the author & not the institution he works for
DISCLAIMER: The views and opinions expressed in this article are the personal opinions of the author.
The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.