RBI Tightens Grievance Redress Framework for Banks

RBI/2020-21/87 CEPD.CO.PRD.Cir.No.01/13.01.013/2020-21 January 27, 2021 All Scheduled Commercial Banks (excluding Regional Rural Banks) Madam/Dear Sir, Strengthening of Grievance Redress Mechanism in Banks Please refer to the ‘ Statement on Developmental and Regulatory Policies ’ issued as part of the Monetary Policy statement dated December 4, 2020 , wherein it was stated that with a view to strengthen and improve the efficacy of the grievance redress mechanism of banks and to provide better customer service it has been decided to put in place a comprehensive framework comprising certain measures. 2. Reserve Bank of India has taken various initiatives over the years for improving customer service and grievance redress mechanism in banks. Detailed guidelines on customer service were issued to banks encompassing various aspects of operations that impact customers. The Banking Ombudsman Scheme was introduced in 1995 to serve as an alternate grievance redress mechanism for customer complaints against banks. In 2019, Reserve Bank also introduced the Complaint Management System (CMS), a fully automated process-flow based platform, available 24x7 for customers to lodge their complaints with the Banking Ombudsman (BO). 3. As part of the disclosure initiative, banks were advised to disclose in their annual reports, summary information regarding the complaints handled by them; and certain disclosures were also being made in the Annual Report of the Ombudsman Schemes published by the Reserve Bank. To further strengthen grievance redress mechanisms, banks were mandated to appoint an Internal Ombudsman (IO) to function as an independent and objective authority at the apex of their grievance redress mechanism. 4. Effective grievance redress should be an integral part of the business strategy of the banks. It is, however, evident from the increasing number of complaints received in the Offices of Banking Ombudsman (OBOs), that greater attention by banks to this area is warranted. More focused attention to customer service and grievance redress will ensure satisfactory customer outcomes and greater customer confidence. 5. In view of the above, and to further strengthen the customer grievance redress mechanism in banks, it has been decided to put in place a comprehensive framework comprising of, inter-alia, enhanced disclosures by banks on customer complaints, recovery of cost of redress from banks for the maintainable complaints received against them in OBOs in excess of the peer group average, and undertaking intensive review of the grievance redress mechanism and supervisory action against banks that fail to improve their redress mechanism in a time bound manner. Details of the framework are provided in the Annex . 6. The framework will come into effect from the date of the circular. Yours faithfully, (Ranjana Sahajwala) Chief General Manager Annex Strengthening of Grievance Redress Mechanism in Banks The framework for strengthening grievance redress mechanism in banks will have the following major components: I. Enhanced disclosures on complaints 2. Disclosures serve as an important tool for market discipline as well as for consumer awareness and protection. Appropriate disclosures relating to the number and nature of customer complaints and their redress facilitate customers and interested market participants to better differentiate among banks to take an informed decision in availing their products and services. To ensure provision of relevant and important information in this regard to bank customers and other stakeholders, the current set of disclosures made by the banks are being enhanced as indicated below: Disclosures by banks 3. Disclosures currently made by banks regarding customer complaints and grievance redress in their annual report are made in terms of Para 16.4 of the Master Circular on ‘Customer Service in Banks’ dated July 01, 2015 1 . The disclosures are summary in nature and comprise the following: Current disclosures made by banks on complaints and grievance redress Customer complaints (received by the bank)     Previous year Current year (a)

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2020-21/87 · issued 27 Jan 2021. The plain-English explanation above is BankPulse’s own independent summary.

🖨 Print / Save as PDF 🔗 Copy link☆ Save for later