RBI's Integrated Ombudsman Scheme Annual Report Reveals a 33% Surge in Complaints

Are you tired of dealing with frustrating banking issues? Hold onto your hats, because the latest report from the Reserve Bank of India (RBI)'s Integrated Ombudsman Scheme is out, and it reveals a shocking surge in consumer complaints! Prepare to be amazed (or perhaps alarmed) by the incredible 33% spike in grievances reported in FY24. Let's dive deep into this explosive report and uncover the biggest banking complaints plaguing Indian consumers.

Loans and Advances: The Top Complaint Category

Unsurprisingly, loan-related complaints reigned supreme, comprising a whopping 29% of the total complaints. With a staggering 43% increase in grievances compared to the previous year, borrowers' issues related to loans and advances continue to top the charts. This massive increase suggests something has to change. Let's not just talk about it - Let's analyze the why.

This area saw complaints related to issues in processing the loans, issues in repayments, lack of transparency in terms and conditions, high interest rates and several other factors which caused borrowers to file complaints.

Mobile and Internet Banking Woes

Following closely behind, issues surrounding mobile and internet banking caused 57,242 complaints or about 19.8% of the total complaints. With a surge in the adoption of digital transactions and channels, many are finding that more accessibility may not always lead to more convenience.

Deposit Account Disputes

Deposit accounts are causing problems, with grievances seeing a sharp 34.5% increase. More Indians are using these methods, and while they are improving, consumers have experienced problems regarding security, fraud, misrepresentation and interest discrepancies that has led to several disputes with their banking channels.

The Unexpected Drop in ATM/Debit Card Complaints

While most categories saw a jump in complaints, a notable exception is ATM and debit card-related issues. The adoption of UPI (Unified Payments Interface) could explain this unexpected decrease; it is possible the drop was a result of the increasing popularity of mobile banking apps.

Who is to Blame? Banks Take the Lead!

Banks face a serious PR nightmare here, as complaints against them constituted a considerable 82.28% of the total grievances! That is certainly a cause for concern. Non-Banking Financial Companies (NBFCs) weren't far behind, accounting for about 14.53% of the total reported complaints. Clearly, improvements are necessary throughout the system. However, it's not entirely hopeless!

Complaints Resolved through Mutual Agreement

Despite the overwhelming number of complaints, many complaints did receive amicable resolution through mutual agreement (57.1%). This indicates the potential for improvement through more efficient conflict-resolution strategies by banks.

Complaints Rejected Due to Absence of Service Deficiencies

Interestingly, almost 41% of the total received complaints were rejected. The reason provided was a lack of service deficiencies which means that the bank acted accordingly as expected in most complaints filed. However, this data still points to better communications which could solve many misunderstandings at the roots before they result in an official complaint.

What Digital Trends Are Shaping Consumer Banking Experiences?

This new digital banking landscape has drastically changed how users lodge their grievances, with 88.8% using online methods like the CMS portal, email, or CPGRAMS. Consumers prefer faster processing times than calling over the phone, it's understandable. While many may be comfortable filing complaints via the mobile app, this shift suggests banking institutions need to refine their online systems to ensure efficient grievance handling and immediate redressal.

Ways Banks Can Improve

To resolve many of the current complaints, banks should address and fix underlying concerns and make changes like improving communications with consumers, fixing technology that causes problems, investing in their technology and employees. Creating efficient dispute resolution mechanisms is incredibly vital and is necessary to improve the experience for customers.

Takeaways

• The RBI's annual report spotlights a significant surge in banking-related consumer complaints.
• Loan and advance complaints are leading the pack, while complaints against ATM/debit cards saw a significant drop, partly due to UPI.
• Most complaints came against banks (82.28%) followed by NBFCs (14.53%).
• Banks successfully resolved many complaints via mutual agreements.
• Digital channels are now the leading platforms for lodging banking complaints.
• Improvements at the banks are needed, especially to address underlying root causes for the issues.