RBI Governor Slams Banks Over Poor Customer Service
Why in the news
RBI Governor Sanjay Malhotra sharply criticised banks for neglecting small customers and mishandling complaints, even though Indian banks held ₹103 lakh crore ($1.2 trillion) in fixed deposits in 2023.
Key facts
- Ombudsman-scheme complaints have risen at a 50% CAGR over the last two years.
- Banks logged over 1 crore complaints in FY24.
- Many complaints were wrongly recorded as queries or requests, breaching norms; window dressing of complaint data was also flagged.
| Newer complaint type | Issue |
|---|---|
| Credit score errors | Wrong downgrades affect loan eligibility |
| Misselling | Staff pushing investment and insurance products because of sales incentives |
| Weak due diligence | Gold loans, unsecured loans and top-up loans raise consumer risk |
Homebuyer-banker nexus
- The Supreme Court sought a CBI probe into suspected collusion between banks and builders.
- Banks released up to 60% of housing loans though construction had not begun, leaving lakhs of buyers paying EMIs without homes.
Concerns and way forward
- Unresolved problems will erode consumer confidence and hurt the financial system.
- Banks should move from aggressive selling to transparent, customer-first practice.
Exam angle
- Current RBI Governor: Sanjay Malhotra.
- Scheme mentioned: RBI ombudsman scheme.