Reserve Bank of India Governor Sanjay Malhotra on Monday urged banks to stop repeatedly calling customers for know-your-customer documents, calling the practice an “avoidable inconvenience”, PTI reported.
Speaking at the annual conference of RBI ombudsmen, Malhotra said that submitting documents to any entity regulated by a financial authority allows others to access them from a central database.
“We need to ensure that once a customer has submitted documents to a financial institution, we do not insist on obtaining the same documents again,” Malhotra was quoted as saying.
He said that most banks and non-banking financial companies have not enabled their branches or offices to retrieve information from the central database, leading to repeated KYC requests and inconvenience for customers.
“This may be facilitated early,” Malhotra added. “This will be in the interest of all.”
The comments come amid frequent complaints on social media by bank customers about repeated requests to resubmit KYC documents.
Malhotra also cautioned banks against misclassifying customer complaints to suppress numbers, saying such actions amount to a “gross regulatory violation”, PTI reported.
He said that banks received one crore customer complaints in the financial year 2023-’24, and the figure would be higher if complaints against other regulated entities were included, reported PTI. Of these, 57% required mediation or intervention by RBI ombudsmen.
“All of you will agree that this is a highly unsatisfactory situation and needs our urgent attention,” Malhotra said, adding that improving consumer service was not just a duty but also in banks’ “selfish interest”, given the competition in the industry.
Malhotra advised bank leadership, from managing directors to branch managers, to set aside time every week for addressing complaints.
“This is a must for all the banks,” he said, adding that chief executive officers across the world manage to include this in their schedules. “Left unresolved, every such issues can corrode consumer confidence and tarnish the entire ecosystem.”
Malhotra said that complaints should not be seen as a nuisance and that repeated complaints exposed systemic flaws in the banking system, the news agency reported. He suggested the use of artificial intelligence for complaint redressal and emphasised the importance to respect consumers’ privacy.
He added that banks must focus on solving other problems such as misselling, digital fraud and aggressive recovery practices that customers face.
Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.