Private banks misreporting complaints as queries: Shaktikanta Das

MUMBAI: RBI Governor Shaktikanta Das has criticised private banks for mishandling customer grievances, flagging a concerning trend of misclassifying complaints as mere queries.

"It is disheartening to see complaints being misclassified, which undermines the very foundation of customer trust," Das said at the Conference of Directors of Private Sector Banks in Mumbai. He urged banks to ensure that grievances are properly addressed and escalated to internal ombudsmen when necessary, highlighting the importance of robust redress mechanisms. "We have come across instances of rejected grievances not being escalated to the internal ombudsman of banks. I would like to urge the boards and their customer service committees to closely look into these aspects to ensure that banks have a genuine commitment to customer centricity," he added.

Das emphasised that banks must adopt a genuine customer-centric approach and move beyond profit-driven motives. "Boards should give a close look at service charges and penalties when they are treated as avenues of profit or when forced bundling of products is done, or when disclosures to customers are non-transparent or selective. Ensuring fair lending practices and implementing robust grievance redress systems are critical to protecting customers' interests," Das said.

The governor noted that issues like forced bundling of products and non-transparent service charges need immediate attention from the board-level committees. "Service charges and penalties should not be treated as avenues of profit," he cautioned, stressing the need for fair lending practices.

RBI, on Monday, held its second annual conference with over 200 directors from private banks, including chairmen, MDs, and CEOs. RBI deputy governors M Rajeshwar Rao, Swaminathan J, and senior officials from the supervision, regulation, and enforcement departments were also present.

The governor pointed out gaps in financial literacy, particularly among rural and marginalised populations, who are often susceptible to exploitative lending practices. He urged banks to enhance their outreach and education efforts to protect these vulnerable groups. He concluded by calling for stronger governance and ethical conduct from banks, warning that unethical practices, such as misselling products, could lead to long-term reputational damage and regulatory scrutiny.


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