Banks, NBFCs should treat customer complaints with due gravitas: RBI Deputy Governor M. Rajeshwar Rao

Regulated entities’ actions on the ground vis-à-vis customer conduct and transparency in operations have fallen short of expectations, said RBI Deputy Governor M Rajeshwar Rao.

He urged all regulated entities (such as Banks and NBFCs) to treat customer complaints with due gravitas and use it as a feedback mechanism to improve their processes and products.

“Despite continuous supervisory and regulatory focus, this (customer conduct and transparency in operations of regulated entities) is one area where the actions on ground by the entities have fallen short of expectations.

“Certainly, we all understand that poor customer service can have significant repercussions on customers’ trust and satisfaction,” Rao said in his address at a BFSI Summit organised by CareEdge Ratings.

However, RBI continues to observe instances of slow response times to customer queries and complaints, lengthy wait times on customer service hotlines and delayed email responses, contributing to customer dissatisfaction.

Misleading sales practices

The Deputy Governor noted that some entities continue to face criticism for their lack of transparency regarding fees, charges, and penal provisions associated with their products and services.

“Customers are often surprised by hidden fees or unclear terms, leading to disputes and complaints. Obviously when such practices have come to our notice, we have acted proactively.

“The recent instructions on fixation of EMIs or providing a Key Fact Statement (KFS) along with Annual Percentage Rate (APR) are examples where probably transparency at the level of industry would have taken care of the issue itself without the regulator having to step in,” Rao said.

He observed that RBI continues to receive increased volume of complaints regarding misleading sales practices to attract customers including misrepresentation of product features, false promises of benefits, or aggressive sales tactics that pressure customers into purchasing products they do not need or understand.

“One unique set of complaints relates to customers encountering difficulties when attempting to close accounts or terminate services.

“Lengthy and cumbersome account closure procedures, coupled with unclear requirements and documentation, frustrate customers, and prolong their association with the entity against their wishes, the Deputy Governor said.

Automation and human touch

Rao underscored that the aforementioned examples highlight the importance of prioritising and implementing robust mechanisms to address customer concerns promptly, transparently, and effectively.

“While automation can help in faster response to the complaints, there is an underlying need for an experienced man in the middle to ensure the human touch and understanding in dealing with customer grievances. The Reserve Bank attaches highest importance to these issues and this is an area of regulatory focus,” he said.