When DFS Secretary Nagaraju played the role of King Vikramaditya

Legend has it that King Vikramaditya of the Gupta Dynasty frequently disguised himself as a commoner to assess the wellbeing and conditions of his subjects. Recently, the secretary in the Department of Financial Services (DFS), Ministry of Finance, played the role of Vikramaditya to check how banks were serving their customers. Of course, unlike the ruler of Ujjain, he was not in disguise. 

On April 8, after lunch, M Nagaraju, a 1993-batch Indian Administrative Service officer, left North Block, which houses the finance ministry, and drove down to the Parliament Street branch of a large public-sector bank. Posing as a customer, he wanted to say hello to the branch manager. 

The secretary was directed to an officer by the head of the branch who was too busy talking on his mobile phone. Even the second banker didn’t care much to talk to him. At that point, Nagaraju politely revealed that he was the boss of the bank’s boss. Even that did not cut the ice, as name-dropping is not uncommon in Delhi culture. 

Neither the branch manager, holding the rank of an assistant general manager (AGM), nor the other executive, was willing to talk to the “customer”, who had walked in after office hours. In the public-sector banking industry, an AGM rank is part of the senior management grade, typically a Scale-V officer. Deputy general managers, general managers and chief general managers form the top man­­a­gement grade. 

Without losing time, Nagaraju relayed his first-hand experience of the branch's customer service to the bank's headquarters. The consequences were swift: The AGM was transferred to a remote village. 

This was one of the three branches – of three different public-sector banks – which the DFS secretary visited that evening. I believe his experience at the other two banks was not as bad as the first one, but the ambience of the branches and the demeanour of the bankers convinced him of the urgent need for better customer service at banks. 

Customer service and excellence are buzzwords in the Indian financial system now. Both the government and the Reserve Bank of India (RBI) are writing a new chapter in Indian banking. 

Surely, the Centralised Public Grievance Redress and Monitoring System (CPGRAMS) – an online platform available to citizens 24x7 to lodge their grievances to the public authorities on any subject related to service delivery – has been there for close to two decades. But it has never been so active. Created in June 2007 by the Department of Administrative Reforms & Public Grievances, this portal is connected to all ministries/departments of the central and state governments.

CPGRAMS is also accessible to citizens through standalone mobile applications downloadable from Google Play store and mobile applications integrated with the Unified Mobile Application for New-age Governance (UMANG). Developed by the Ministry of Electronics and Information Technology and National e-Governance Division to drive mobile governance in India, UMANG offers a single platform to all citizens for accessing pan-Indian e-Gov services – ranging from central to local government bodies. 

The status of the grievance filed on CPGRAMS can be tracked with a unique registration ID given when the complainant is registered. If a complainant is not satisfied with the resolution of her grievance, she can file an appeal. The nature of complaints may vary from a delay in getting pension to difficulty in buying a train ticket. Different ministries are ranked on the basis of how they have been solving the problems. 

I understand that there are too many unresolved complaints against banks and insurance companies and the finance ministry’s current rank is 21. This is why the DFS is taking this head-on. If banks and insurance companies are not able to address the issues within 21 days of complaints filed, the top brass of the entities concerned are contacted. 

Typically, the DFS secretary calls the meetings where the managing directors and/or executive directors of banks and insurance companies are present along with the complainants. The first such meeting was held on January 18, 2024. Since then, till April 22 this year, nine such meetings had been held. Notices for such meetings are served seven days ahead of the meetings. 

In one such complaint dealt with recently, action was taken against a bank officer who was not clearing a payment because of a missing file. The complainant, a senior citizen, had to climb stairs to the fourth-floor office of the entity in Gurugram, Haryana, many times for no fault of his own. In another, a health insurance company was forced to settle a claim which it was not willing to as the customer allegedly didn’t disclose a pre-existing ailment while buying the policy. Why did the insurance company sell the policy in the first place, without checking?

In yet another instance, a regional rural bank (RRB) was not clearing a claim for Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), a life insurance scheme that offers a one-year term life insurance cover, renewable annually. The sponsored bank of the RRB had to make sure the claim was settled. PMJJBY provides a sum assured of ₹2 lakh upon the death of the insured, regardless of the cause. The annual premium is ₹436. 

The DFS last met the top management of banks and insurance companies on customer service on April 21.

  At the annual conference of the RBI’s ombudsmen in March, titled “Transforming Grievance Redress: The AI Advantage,” Governor Sanjay Malhotra came down heavily on banks and non-banking financial companies (NBFCs) for a spike in customer complaints in recent years. He told them, in no uncertain terms, to improve services and strengthen grievance redress in a timebound manner. For that, the senior executives, including chief executive officers, should spend time on the issue at least once a week.

  “This is a must. All great CEOs find time to do it. We too must keep some time in our schedule to improve customer service and grievance redress,” Malhotra said, adding that the goal should not only be to resolve complaints but also to ensure similar issues do not recur.

  Going by the data of the RBI’s Integrated Ombudsman Scheme, the number of complaints increased at a compound annual growth rate of almost 50 per cent in the past two years, reaching 934,000 in 2023-24. The number of complaints processed by the office of the RBI Ombudsman grew by 25 per cent – from about 235,000 in 2022-23 to almost 294,000 in 2023-24. A large proportion (nearly 57 per cent) of maintainable complaints in 2023-24 required formal intervention by the RBI Ombudsman.  Maintainable complaints are those related to frauds, mule accounts, ATM charges, charges for prepayment and foreclosure of loans, among others. Typically, complaints related to bankers’ behaviour are non-maintainable. In 2023-24, 95 scheduled commercial banks received over 10 million complaints from their customers.

  Deputy Governor Swaminathan J has also been repeatedly emphasising customer service from different fora. He has made it clear that customer-centricity is attracting substantial supervisory focus of the banking regulator.

  Both Malhotra and Swaminathan have flagged that update of know your customer (KYC) norms is a concern as banks are often freezing accounts in the absence of KYC renewal, denying customers access to their funds. The process of KYC at many banks has become “HYC” – harass your customer. There are many complaints about that. 

More complaints relate to mis-selling. There’s a twist to the conventional mis-selling tale. We are familiar with the scene of bank customers being hounded at branches for selling insurance and mutual products mostly to urban and semi-urban customers. Rural folks are suffering from a different kind of mis-selling. Let’s talk about that next week.

The writer is an author and senior advisor to Jana Small Finance Bank Ltd. His latest book: Roller Coaster: An Affair with Banking. To read his previous columns, log on to www.bankerstrust.in. X: @TamalBandyo