Avoid calling customers repeatedly to submit KYC docs: RBI Governor

Malhotra rued that most banks and NBFCs have not enabled their branches or offices to access information from the central database due to which customers have to face the avoidable inconvenience

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Reserve Bank of India (RBI) Governor Sanjay Malhotra on Monday asked banks to avoid calling customers repeatedly for "know your customer" (KYC) documents. 

Speaking at the annual conference of RBI Ombudsmen here, Malhotra made it clear that submitting the documents to an entity overseen by any financial regulator makes it possible for others to access the same from a common database, and termed the repeat requests as "avoidable inconvenience". 

"We need to ensure that once a customer has submitted documents to a financial institution, we do not insist on obtaining the same documents again," the RBI governor said. 

He rued that most banks and NBFCs have not enabled their branches or offices to access information from the central database due to which customers have to face the avoidable inconvenience. "This may be facilitated early. This will be in the interest of all," Malhotra added. 

The comments from the RBI governor come at a time when banking customers repeatedly complain of inconvenience due to KYC re-submission requests, especially on social media platforms. 

Meanwhile, Malhotra also warned banks against misclassifying customer complaints to suppress its numbers, saying doing so amounts to a "gross regulatory violation". He said in FY24, banks received 1 crore customer complaints and the number will grow higher if one were to include complaints against other regulated entities. 

The governor said 57 per cent of these required mediation or intervention by RBI ombudsmen. "All of you will agree that this is a highly unsatisfactory situation and needs our urgent attention," he said. 

Banks need to improve consumer services, not only because it is their duty to do so, but because it is in their "selfish interest", Malhotra said, reminding the audience of competition in the industry. 

He advised leadership at banks, starting with the managing directors down to the branch managers, have to keep time off every week for complaint redressal. 

This is a "must" for all the banks, Malhotra said, adding that CEOs across the world find time in their schedules for this. 

"Left unresolved, every such issues can corrode consumer confidence and tarnish the entire ecosystem," he said, underlining that complaints should not be seen as a "nuisance". 

It is necessary to avoid repeat complaints, as they expose systemic flaws, he said. The career bureaucrat-turned-regulator also strongly advocated the usage of artificial intelligence for complaint redressal but asked them to consider essential aspects like privacy. 

Other areas where the banks need to focus on from a customer service perspective are misselling, digital frauds, and aggressive recoveries practices, he said.