Banks asked to offer basic services to customers at all branches

Lenders nudged to cut charges and maintain uniformity

Commercial banks have been asked to offer basic services to customers from all branches, and not just home branches, said a senior banker aware of the development. Also, the lenders have been prodded to cut service charges levied by them and maintain uniformity, the banker added. 

Currently, many services are not provided by branches if it is not a home branch of a customer. “In an age where there has been so much progress on the technology front, the regulator is baffled that a customer has to go to the home branch for certain services,” said the banker. “The Reserve Bank of India (RBI) now wants to identify services that should be mandatorily offered by all the branches to every customer,” the person added. 

Banks have been asked to list on their websites the services that are offered by all branches. The regulator has also noticed wide variations in charges levied by banks for the same service offered to retail customers. Banks have been asked to work out uniformity in these charges. 

Sources said the regulator wants to refrain from prescribing charges to the banks and has instead asked the lenders to come up with a solution that brings parity. According to sources involved in the discussion, two options are being considered by the lenders: prescribing a range for each of the service charges and fixing a cap. 

Improving customer service and strengthening grievance redress have been key focus areas for RBI Governor Sanjay Malhotra, who just completed one year in office. During an interaction with managing directors and CEOs of public and private-sector banks last week, Malhotra emphasised the need to improve customer service, reduce grievances, and strengthen internal systems. 

Capping service charges will have revenue implications, said bankers. Earlier, public-sector banks had waived penalties for non-maintenance of minimum balance in savings accounts, which impacted their income. The capping of charges is, however, applicable for all types of banks — public, private as well as foreign banks. 

According to latest data, 296,321 customer complaints were registered against RBI-regulated entities in FY25. Complaints against banks accounted for the largest share at 81.53 per cent, followed by NBFCs at 14.80 per cent, according to the Office of the RBI Integrated Ombudsman.

 

Among banks, private-sector lenders accounted for the highest share of complaints, rising to 37.53 per cent in FY25 from 34.39 per cent in FY24. Complaints against public-sector banks, which had the highest share in FY24, declined to 34.80 per cent in FY25 from 38.32 per cent. 

RBI-regulated entities have been advised to present a statement of complaints before their boards or customer service committees, along with an analysis identifying frequent grievance areas, sources of complaints, systemic deficiencies, and corrective measures taken. 

Customer-first steps

• Many services are not offered by non-home branches
• Banks asked to list services offered by all branches
• Regulator wants banks to propose solutions on service charge uniformity
• Focus on reducing grievances, strengthening internal systems
• Bankers warn capping charges could impact revenues