Banks to NBFCs, customer complaints rise as redressal system slows down

Complaints about mobile or e-banking form majority of those received by the RBI ombudsman against banks

Complaints by customers of banks and other financial entities under the Reserve Bank – Integrated Ombudsman Scheme (RB-IOS), 2021 soared by 32.81 per cent in 2023-24 from 2022-23 levels, according to an annual report of the regulator.

 

The number includes complaints received by the Reserve Bank of India (RBI) ombudsman as well as the Centralised Receipt and Processing Centre. The national average of 2.85 complaints per 100,000 accounts in March 2022 surged to 8.9 complaints in March 2024, said the report on the ombudsman scheme.

 

However, the disposal rate of complaints by the ombudsman fell from 97.99 per cent in 2022-23 to 95.1 per cent in 2023-24, despite only two-thirds of the complaints received by the ombudsman in 2023-24 being 'maintainable'.

 

The report highlights the need for improving grievance redressal at the regulated entity level (such as banks). Complaint conversion ratio is the proportion of complaints received against an entity at the RBI’s ombudsman offices to the total number of complaints received by that entity from its customers. A rise in the ratio indicates a need to strengthen the grievance redressal mechanism at the entity level so as to obviate the need to approach the RBI ombudsman.

  Complaint conversion ratio for all major bank groups, except payments banks, inched up in 2023-24 compared to the year before. Notable was the ratio rising at private sector and foreign banks, reaching 4.05 per cent and 6.88 per cent in 2023-24 respectively. For small finance banks, the ratio doubled from 1.66 per cent in 2020-21 to 3.32 per cent in 2023-24. Payments banks saw considerable improvement in the ratio from 13.77 per cent in 2020-21 to 2.77 per cent in 2023-24.    

Complaints about mobile or e-banking formed the bulk of the complaints received by the RBI ombudsman against banks (22.48 per cent) in 2023-24. Grievances related to loans and operations of deposit accounts increased, too. Rapid adoption of new products and digital technology seems to be a contributing factor to this increase.

 

However, the share of complaints about ATMs or debit cards fell from 21.97 per cent in 2019-20 to 10.41 per cent in 2023-24, while those about credit cards registered a modest rise. Complaints about other products and services (such as for pensions or remittances) plummeted from 47.18 per cent in 2019-20 to 11.76 per cent in 2023-24.  

 

In case of non-banking financial companies (NBFCs), 7,052 complaints about loans and advances, and non-adherence to Fair Practices Code were recorded in 2019-20 with a share of 36.29 per cent. These have grown manifold to 27,471 complaints in 2023-24, constituting 64.34 per cent of total complaints against NBFCs.