Summary of this article
RBI asks entities to prevent complaints bypassing Internal Ombudsman
Complaint trends should help identify systemic service weaknesses
Boards must strengthen grievance redressal and customer service
The Reserve Bank of India (RBI) has asked banks and other regulated entities to review their internal grievance redressal processes and ensure that eligible customer complaints do not bypass the Internal Ombudsman because of process gaps or incorrect classification.
Speaking at the Internal Ombudsman Conference organised by RBI, the Deputy Governor, Swaminathan J, has mentioned that customer grievance redressal should be treated as an important part of governance rather than a compliance requirement.
Trust Linked To Fair Complaint Resolution
According to Swaminathan, customers entrust financial institutions with their savings, financial security and increasingly their digital lives. He has noted that this relationship is sustained not only by strong financials and technology, but also by how fairly and promptly institutions respond when something goes wrong.
The RBI Ombudsman mechanism, the Internal Ombudsman framework and customer service regulations are the key parts of the central bank's consumer protection framework. Together, these are intended to ensure that customer grievances are examined impartially and resolved within a reasonable time.
Complaint Data Can Reveal Weaknesses
Every unresolved complaint carries a financial, reputational and regulatory cost, Swaminathan has cautioned. Complaint trends, he has added, should not be viewed as routine statistics but as business intelligence that can highlight weaknesses in products, processes, delivery channels or specific geographies.
He has also flagged that a significant proportion of complaints eventually resolved in favour of customers by the RBI Ombudsman were never referred to the Internal Ombudsman. According to him, this undermines the objective of the Internal Ombudsman framework.
To address this, regulated entities have been asked to review their grievance redressal processes and ensure that every complaint requiring Internal Ombudsman review is referred without exception. Complaint management systems should also be designed to prevent cases from bypassing the process because of classification errors or operational gaps.
Boards Have Major Responsibility
The deputy governor has stressed that the effectiveness of the Internal Ombudsman framework depends largely on the approach taken by an institution's board and senior management. If customer service is treated only as a compliance requirement, grievance redressal is likely to become a compliance exercise as well.
Boards and their Customer Service Committees, he has said, should use complaint trends to identify systemic issues and improve governance instead of treating them as routine management information.
Technology Has Changed Customer Expectations
Swaminathan has observed that technology has made financial services faster and more accessible while also raising customer expectations. Customers who can complete transactions in seconds naturally expect failed transactions and service issues to be resolved quickly.
While grievance resolution may not always be immediate, he has added that institutions should continue working to reduce delays and make the process simpler, more transparent and more responsive.
