MUMBAI: A Call for Transparency in Banking

In a recent speech at the annual conference of the banking Ombudsmen, Reserve Bank of India (RBI) governor Sanjay Malhotra criticized banks and financial institutions for a concerning practice. He highlighted the misclassification of customer complaints, which are often labeled as 'requests, queries, and disputes', as a 'gross violation' of RBI norms.

Malhotra emphasized the importance of correct categorization and efficient resolution of complaints to avoid escalation to the RBI Ombudsmen. 'Every complaint is a test of trust,' he stated, urging banks to prioritize customer service to maintain consumer trust and address the growing number of grievances.

With over one crore complaints recorded in the past year across 95 scheduled commercial banks, the governor pointed out that this figure is likely to increase as financial services expand. 'Handling complaints well can define success. Each unresolved grievance is a missed opportunity to reaffirm customer trust and loyalty,' he added, encouraging banks to see grievances as indicators of deeper systemic issues.

Despite advancements in digital banking, such as UPI transactions, mobile banking, and video KYC, which have improved accessibility, Malhotra acknowledged that issues like digital fraud, mis-selling, and aggressive recovery practices continue to undermine consumer confidence.