Moneylife Foundation Submits Concerns and Key Issues to RBI’s Customer Services Committee
Moneylife Digital Team 25 March 2023
Moneylife Foundation, which is involved in advocacy and financial literacy initiatives, has raised 10 key consumer concerns with the Reserve Bank of India’s (RBI) committee for review of customer service standards in RBI regulated entities (REs) headed by a former deputy governor. 
These include ongoing issues such a poor grievance redress but also the need to adopt global best practices on customer issues and leverage technology for better customer service. These are detailed below:  
1. Tech Traceability: The use of technology makes all communication traceable. The Foundation said that REs must be asked to produce proof of communication before initiating coercive action such as freezing bank accounts of customers for delay in updating their know-your-customer (KYC) documents. Banks are required to give at least three notices before initiating coercive action. Yet in innumerable cases, banks have ignored this requirement. They are also never asked to produce proof of having sent email/SMS notices to update KYC. The Foundation said that unless banks are made accountable and penalised for freezing accounts without due care, there will be no change in the callout treatment of customers.
2. Faceless Customer Service: When customers have a problem, they are invariably at the mercy of a customer care email ID, where the process is faceless, centralised and, often, heartless. This has caused a lot of hardship for senior citizens and those who are not financially literate or computer-savvy. suggestion has been made to make RMs responsible for escalating and sorting grievances at the branch level, at least for senior citizens. 
3. Branch Visits for Closing Accounts: While accounts can be opened, loans availed and financial products purchased online, the process of closing them requires a needless visit to the branch with physical proof of identity documents. Sometimes, it requires multiple visits, because physically verified documents are rejected during central scrutiny. A suggestion was made to the committee to ensure appropriate directions are issued so that online systems are extended to closure of accounts as well. 
4. Absence of Punishment Encourages Bad Service: As there is no punitive action against banks, issues such as sloppy handling of KYC requirements, verification of documents, failure to upload KYC on the core banking system and freezing of bank accounts continue to happen in large numbers. A suggestion has been made to introduce deterrent penalties which in turn will improve grievance redress.
5. Lack of Standard Operating Procedures (SOPs): Each bank follows its own set of completely different rules and, often, different branches of the same bank have divergent rules, for various practices. It is vital that RBI issues SOPs for various necessary processes such as nominations and transmission of benefits to nominees or heirs, where each bank, finance company and even individual branches make up their own rule. 
6. Unclaimed Benefits: The process of recovering unclaimed bank deposits in India is both opaque and harrowing for legal heirs and descendants. Developed countries have found ways of dealing with unclaimed financial asets in a fair and equitable manner and we have suggested that a central authority for unclaimed funds be setup in India along the lines of global practices.  
7. Public Liability and General Liability Insurance: Although all banks purchase comprehensive general liability insurance cover, there is no process in place to ensure that customers who meet with accidents or are injured at the bank premises are paid costs or compensation. Moneylife Foundation has requested the committee to consider suggestions from our recently released Public Liability Insurance report and has asked that SOPs be put in place to ensure that liability insurance is used to compensate customers when applicable.
8. Lost or Misplaced Documents: There are numerous cases where banks and finance companies have caused permanent damage to the value of properties by losing all or part of the document chain kept in their custody against loans. Banks responsible for such losses simply do not compensate customers, even when they admit that it is their fault. The Foundation said that RBI or the National Housing Bank (NHB) issues SOPs for handling and rectifying lost and misplaced documents in a time-bound manner and also specify compensation to the customer.
9. Grievance Redress by Digital Companies: The Foundation pointed out that the existing pilot application of the Union ministry of home affairs - CyberSafe, which has been deployed by the police. NCPI ( National Payments Corporation of India) and other payment companies are gradually joining the platform and supporting it, but it needs to be widely publicised after eliminating some issues with the process. 
10. Bank Lockers: RBI has recently asked banks to sign stamp paper agreements with customers for opening bank lockers. In the absence of SOPs, each bank is making its own demands and there is no standardisation on the value of stamp paper either. Clear guidelines need to be issued and it must be mandatory for banks to provide a copy of the agreement to customers. 
A full list of the concerns and issues brought up by Sucheta Dalal, trustee of Moneylife Foundation on 20th March can be read here:
6 months ago
A very comprehensive list of concerns well presented. The sensitivity to attend to customer grievances is unfortunately missing and time has come for the Regulator to sensitise the banks that banks existence depends on Customers and they cannot be ignored in banks own interest. Those customers having technological ignorance and having other handicaps to be in touch with banks for their needs should have some open correspondence mechanism or contact points to be in touch with banks for their redressal of grievances.
Kamal Garg
6 months ago
All points submitted by ML Foundation are extremely relevant and require full consideration by the relevant authorities.
6 months ago
Bank officials do not communicate their full contact information, they camouflage under the garb of digital generation of documents. For example, as Secretary of the Housing Society, I need clarification from the Bank on formal closure of housing mortgage loan to assure full closure of loan on our records. On almost every occasion, the bank and its officials remain incommunicado. As much as the Bank requires KYC of its customers, it must provide full details of the signatories on its communications.
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