Bring bank charges under supervisory purview: RBI customer service panel

Take a view of "reasonableness of charges" levied by banks, REs: RBI customer service panel

A committee set up to review customer service standards in the Reserve Bank of India’s (RBI’s) regulated entities (REs), headed by former deputy governor B P Kanungo, said that the regulator, during its supervisory review, should take a view of the “reasonableness of charges” levied by banks and other REs.

The Kanungo Committee was set up in May last year to evaluate and review the quality of customer service, examine evolving needs, identify best practices, and suggest measures for bringing about improvements in the quality of customer service and grievance redress mechanism in REs.

“The RBI, during its supervisory process, should take a view on the reasonableness of charges levied by REs for the services offered,” one of the recommendations said.

Another recommendation was that banks must not stop operations of an account for not updating know-your-customer (KYC) norms.

“While REs should take necessary steps to periodically update KYC, it must be ensured that operations in the account are not stopped,” the panel said.

Another important suggestion was penalising REs for delay in returning property documents to the borrower.

“The Reserve Bank may consider stipulating a time limit for REs to return the property documents to the borrower from the date of closure of the loan account, failing which a penalty/compensation linked to the extent of delay should automatically be paid by the RE to the borrower,” the report said.

In case of loss of property documents, the RE should not only be obligated to assist in obtaining certified registered copies of documents at their cost but also compensate the customer adequately, keeping in view the time taken to arrange the alternative copies of documents, the report said.

The committee reviewed the complaints received under the REs’ internal grievance redress mechanism in three years and observed that the number of complaints has been rangebound in the region of 10 million complaints per annum, the report said.

The panel said REs, “may adopt a nuanced approach for risk categorisation of customers. For example, salary earners with inflows and outflows consistent with the customer’s profile need not necessarily be categorised as high risk, even though they may be ‘high networth’ individuals”.

“Similarly, students can also be categorised as low–risk,” the report said.

To increase the effectiveness of REs’ internal ombudsman (IO), the committee recommended that the Indian Banks’ Association may be nudged by the RBI to set up a fund to directly pay the salary/compensation to IOs of banks.

“An RE-agnostic common portal for lodging complaints may be set up by the Reserve Bank so that the customers of any RE can lodge complaints on a single platform,” said another recommendation.

The committee said that pensioners should be able to submit the life certificate (LC) at any branch of the bank in which they maintain their pension account.

“Moreover, they should be allowed to submit LC in any month of their choice to avoid the rush in a particular month. Subsequent LCs can be submitted in the same month at annual intervals,” it said.

On mis-selling of third-party products, which is mainly undertaken through bank branches, the committee said: “Cross-selling of third-party products by the sales team of the RE should be subject to verification by the audit function to ensure that there is no mis-selling and all instructions/guidelines concerning the sale of such products are adhered to.”