Numerous complaints against banks indicate poor services
14 Nov 2008
|Poor Show: SBI topped the complaints list (Pic by
Dealing with banks is not always a pleasant experience for customers. Most
disgruntled clients either bear with it or change their banks on a bitter note.
But some take a step forward and lodge a complaint with the banking ombudsman.
Going by the Reserve Bank of India's (RBI) data on customers' complaints
against 83 scheduled commercial banks with the ombudsman, 34,500 complaints
were lodged as of 27 November 2007. The top five categories were credit cards
(7,669 complaints), deposit accounts (5,578), non-housing general loans
(4,169), remittances (3,919) and charges without prior notice (2,527).
Lenders and borrowers make up a bank's customer base. As a lender to a bank,
you invest your money in deposit accounts that can earn interest and that can
be withdrawn or transferred whenever you desire. As a borrower, you take a loan
for your business, home or general purpose, or you could have outstanding
transactions on your credit card. Worldwide, most customers experience lukewarm
response on problems with their deposit accounts as lenders, and as borrowers
they receive aggressive response on problems in their repayment of loans.
On the other hand, serving customers isn't an easy task for banks either, given
the diversity of their client base. What may be good for one may not be
suitable for another. Take a bank that offers smooth internet banking but poor
customer service. It may not be an issue with a net-savvy young or middle-aged
customer who doesn't have the time to visit a branch. However, it may not be of
any use to a senior citizen who relies more on visiting the nearest branch. So,
the bank has to understand the need of the different segments of its customers.
The above number of complaints
are aggregate received by the
banking ombudsman as of 27
Source: RBI Report on Trend and
Progress of Banking in India,
Most senior-citizen customers do not use either home or internet banking
services. They rely more on visiting the nearest branches or sometimes even the
ATMs. Here, the nationalised banks score over the private ones, feel customers.
Holding mostly savings and deposit accounts, their demands are mainly to
enquire about their account balance, deposit a cheque or withdraw money.
Young executives of private banks have the advantage of fresh approach to
solving problems of senior citizens, but suffer from lack of patience in
dealing with their queries. Senior citizens seek small concessions in
procedures that private banks are wary of giving.
K. Rengaswamy, CEO of his own Mumbai-based firm Amal Infosystems, has high
regard for personalised services of nationalised banks. "If you have a problem,
there is a hierarchy in the nationalised bank's branch that deals with it,
unlike in private banks where the highest you can go to is the floor manager of
the bank's call centre who knows little about banking."
But not all agree that nationalised banks' services have improved. Joy
chandran, a technician in a private company at Mumbai's Santacruz airport
complains about the SBI branch at Vakola, "There is a long queue just to get in
and senior citizens are made to stand in the same queue." The branch's chief
manager, S.K. Kulkarni, says "Yes, first week of a month is busy, but that
doesn't mean that we are not working enough. Anybody can open a savings account
with SBI for just Rs 500 while the minimum amount is Rs 5,000 in other banks,
so we have to cope with more customers."
Not that private banks are customer-friendly all the time. Sharmila Phadke, a
freelance writer, went through a harrowing time trying to get internet banking
activated with the largest private sector bank in the country. It took her
three weeks of following up with call centre executives and branch-level
officials to sort out her problem. "The executives at the call centre and the
branch are quite dumb," she says. "I got fed up. It was only when I told them I
want to close the account that they acted quickly and solved the problem."
The banking system even discourages small and medium-sized entrepreneurs who
require business loans of less than Rs 20 lakh. "Foreign banks don't look at
loan amounts below Rs 30 lakh and they lend to you only through over-draft
facility," says Rengaswamy of Amal Infosystems. "Either they don't have the
skills to evaluate a business proposal or they don't want to." Rengaswamy took
an over-draft with Oriental Bank of Commerce as it was receptive to his needs
and its service charges were lower than private banks.
Credit Card Concerns
Credit card issuance and service is an area most customers have had unpleasant
experiences with banks, both nationalised and private. Cards sent that were not
asked for, cards billed for that were never received, data errors showing
double debits or higher outstanding, bad treatment from recovery agents — the
list is endless.
The menace of recovery agents hired by banks extends to all retail loans.
Despite having the legal recourse of Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interests Act (SARFAESI), Debt
Recovery Tribunal and civil courts, banks resort to behaviour that, many say,
is offensive under the Indian Penal Code.
In August 2005, an ICICI Bank car loan borrower Someshwari Prasad, who was an
advocate with Allahabad High Court, was forcibly taken by the bank's recovery
agents to the branch and beaten up by bank officials. Prasad filed an FIR and
had the bank officials and collection agents arrested. The Allahabad High Court
raised the question "whether ICICI Bank or its collection agency can take
coercive action against the borrower by snatching the vehicles or taking
possession of the property without following the procedure established by law
and take further coercive action by locking the individual borrower in the bank
or at some other place?"
Clearly, RBI has not been forceful enough to direct banks to follow the law of
the land when it comes to recovery of dues.
With inputs from Satheesh Nair
(Businessworld Issue 18-24 Nov 2008)