The Reserve Bank of India maintains that new private sector banks and foreign banks, while increasing their share of affluent customers, also get more customer complaints than old private- and public-sector banks.
The number of customer complaints per 1,000 accounts, excluding credit cards, for foreign and new private sector banks at 0.61 and 0.33 is higher than that for old private- and public sector banks at 0.05 and 0.07, respectively.
"New generation private sector banks and foreign banks have got a share of affluent and high networth individuals. These are higher negative moments of truth for them," said Usha Thorat, deputy governor, RBI.
The complaints relate to delays in clearing of outstation cheques, high charges, and entries not being properly recorded, according to Thorat. The majority of complaints by home loan borrowers relate to a lack of transaparency of interest rates.
"When you have a floating interest rate, and the customer signs a document, he does not know the benchmark rate and the spread over the benchmark rate. When it is a fixed rate loan, the customer does not know whether or not the bank has a right to refix the rate after 2-3 years," noted Thorat.
The deputy governor added that the need was to educate customer properly while selling products to ensure that the customer knows what he is getting into.
Banks need to engage in responsible banking and lending which together with credit counselling and customer education would prevent over-leveraging of customers.
"There is a consciousness among banks. We are sensitising banks. Look at your agents that they are trained properly. There should be responsible banking and customer education. Customer is also responsible,"said Thorat.
The highest number of customer complaints are in the credit card segment with one out of every five customer complaints relating to a credit card.
However, in this regard, old age private- and public sector banks have a higher complaint ratio at 2.08 and 0.79 respectively per 1000 credit cards issued. New private sector banks and foreign banks have a lower complaint ratio at 0.20 and 0.26 respectively.
"These banks have issued many more credit cards so the ratio is lower. There is a lot of variation among public sector banks," noted Thorat.
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