Reserve Bank of India (RBI) Governor Sanjay Malhotra has raised concerns over the rising number of customer complaints in the banking sector, urging bankers to prioritise grievance redressal. He warned that unresolved complaints could weaken consumer trust and called for immediate action.
Speaking at the annual conference of the RBI ombudsmen in Mumbai, Malhotra pointed out key areas of concern: know-your-customer (KYC) issues, digital frauds, mis-selling of financial products, and aggressive loan recovery practices.
Malhotra revealed that in the 2023-24 financial year, 95 scheduled commercial banks alone received over one crore complaints from customers. If complaints from other RBI-regulated financial institutions were included, the number would be even higher.
While some may argue that this equates to just four complaints per thousand accounts annually—given India’s 2.5 billion bank accounts—Malhotra made it clear that for RBI, even a single complaint is a matter of concern. He cautioned that with the growing customer base and an expanding range of banking products, this number could increase further if corrective steps are not taken immediately.
The Governor noted that banks and non-banking financial companies (NBFCs) are fundamentally in the business of customer service. However, he suggested that many financial institutions are not giving enough time and priority to customer grievances.
“Not only are banks and NBFCs receiving a large volume of complaints, but many are also being escalated to RBI Ombudsmen due to inadequate resolution at the institution level,” he said.
According to RBI data, the number of complaints filed under the Integrated Ombudsman Scheme surged at an annual rate of nearly 50% over the last two years, reaching 9,34,000 in 2023-24. Of these, 2,94,000 complaints were processed by RBI Ombudsmen, a 25% increase from 2,35,000 in 2022-23.
Malhotra also pointed out that 57% of maintainable complaints required mediation or formal intervention by RBI Ombudsmen, calling it a “highly unsatisfactory situation.” He urged bank CEOs, regional managers, and branch managers to personally focus on grievance resolution, stressing that top executives of successful companies always make time for customer service.
The Governor again stressed that banks and NBFCs should aim to improve the entire customer experience rather than just addressing complaints after they arise. He described each complaint as a “test of trust,” highlighting that disputes over digital transactions, unfair charges, and poor service indicate deeper flaws in banking operations.
“When a consumer files a grievance—whether about a disputed transaction, miscommunication, or unfair charges—it signals that our system has fallen short,” Malhotra said.
