RBI’s new initiative raises the question: have Customer Services Committees failed?
On 14th May, the Reserve Bank of India (RBI) asked banks (all public sector banks and only certain private and foreign banks) to appoint an ‘internal ombudsman’ to resolve consumer complaints. Importantly, the ombudsman, to be designated ‘chief customer services officer’ should not have worked with the bank in which s/he is appointed.
The private and foreign banks asked to appoint an ombudsman include ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, IndusInd Bank, Standard Chartered Bank, Citibank and HSBC. This move is a change from RBI’s earlier adamant stance that a three-layer customer services committee, prescribed during the tenure of Governor Dr YV Reddy, was adequate to resolve customer complaints. But an internal ombudsman is only half a solution.
RBI is now saying that the internal ombudsman would ensure ‘undivided attention’ to resolution of customer complaints. This is probably its way of giving some sanctity to the Charter of Customer Services that it released in December 2014.
This Charter asks banks to treat customers fairly and has identified all their key concerns; however, it is rendered meaningless by failing to prescribe costs and consequences for deficiency in service or harassment of customers.
Will the internal ombudsman, appointed by the bank be empowered to issue tough orders, or grant costs and compensation?
Detailed guidelines on the working of the ombudsman are yet to be released; but RBI says it is a step prior to approaching RBI’s Banking Ombudsman. Rajiv Lall, chairman of IDFC, which is turning into a bank, was quoted recently as saying, “All the research we have done suggests that customers have an uncomfortable relationship with their banks.” Had RBI started out with a recognition of this fact, it would have realised that we have a long way to go before customers begin to trust their banks again.