RBI panel proposals on customer service send out wake-up call to banks

RBI

A set of critical proposals put up by an expert panel of the Reserve Bank of India (RBI) comes as a reminder to the banking system to improve customer care standards in line with evolving products and services.

The RBI set up the panel on May 23, 2022 under the chairmanship of former deputy governor BP Kanungo. On June 5, 2023, it proposed a list of recommendations to improve customer service standards in regulated entities.

One of the major proposals is to empower the RBI Ombudsmen (RBIOs) to direct the regulated entities concerned to review and undertake suitable corrective action in all such cases and confirm compliance to the apex bank.

Chandan Sinha, former executive director (ED), RBI, welcomed the proposal saying a timely review of the ombudsman scheme can help address customer queries faster.

"The efficacy of solving customer queries can become quicker with the timely review of the ombudsman scheme," Sinha said.

Also read: RBI committee proposes new rules to improve customer service standards

Call centres

Time and again, many banking customers have complained about harassment by call centres of banks such as delay in solving complaints, templated responses from the executives and persistent cold calls.

On improving the efficiency of the call centres, the committee recommended that the call centre of regulated entities may be designed with a dedicated interactive voice response system (IVRS) flow, sharing the important ‘do’s and don’ts’ with the customer, based on the customer profile, queries, including provision of in-house financial advisors for complex queries or sophisticated customers.

That apart, the panel suggested an automated call back feature, when a call is dropped midway and allowing an option to speak to the customer care executive should be part of all menu options, the committee said in its report.

Here, Sinha highlighted that there is a need to clearly work on the issues of call centres so that there is clear communication between the executives and customers.

"Efficiency in handling customer queries through call centres is a thing that banks should focus on. Depending on the traffic they receive, banks should have somebody to address customer queries in regional languages," said Sinha.

Cross-selling and deposit insurance cover 

The proposals also included making cross-selling of third-party products by the sales team of the regulated entities, subject to verification by the audit function to ensure that there was no mis-selling and all instructions / guidelines with respect to sale of such products were adhered to, the panel has recommended.

Naresh Malhotra, a former SBI banker and banking industry consultant, said that in a commission-based selling of third-party financial products, mis-selling, though a dishonest practice, gets entrenched in the value chain. This needs to be curbed with exemplary penalties, he said.

“These proposals are in line with the evolution of products and services in the banking industry and is a reminder to banks to constantly improve the standards of customer service,” Malhotra added.

The panel also proposed reviewing charges levied by entities and extending deposit insurance cover to bank PPIs (prepaid instruments) and later to non-bank PPIs.

“PPIs need to be covered with deposit insurance. With almost every financial intermediary (including payment service providers) offering some form of a prepaid wallet/PPI, the need for DI is becoming a necessity. The insurance premia for such deposits can be modelled on the lines of existing mechanisms for coverage of bank deposits,” Malhotra said.

The RBI had set up the panel on May 23, 2022. The terms of the reference of the Committee were to evaluate and review the quality of the customer service, examine the evolving needs, identify the best practices and suggest measures for bringing about improvements in quality of customer service and grievance redress mechanism in the regulated entities.

New technology

Also, the RBI committee recommended that regulated entities may use artificial intelligence (AI), machine learning (ML) algorithms, etc. to provide auto and instant resolution for complaints involving financial disputes of low amounts.

Here, experts highlighted that the use of AI and ML can not only help in solving smaller problems but also can modernize banking experience for customers.

“The use of artificial intelligence (AI) and machine learning (ML) is increasingly important. These tools can help banks to serve as trusted advisors and partners to their customers rather than the lowest-common-denominator providers of commoditized banking and transaction services,” said Vijay Oddiraju, Chief Executive Officer (CEO), Volante Technologies.

Increasingly, experts suggested that fintech partnerships can make this easier for banks as they would not have to focus much on AI and ML and for them tech-oriented fintech would work around the same.

“Banks can work around to improve their technology service through fintech partnerships. These partnerships can help banks build new, digital-first products and services for customers on top of legacy systems,” said Aditya Kumar, chief executive officer (CEO), Niro, a fintech company.

Further, the committee recommended that RBI may put in place a suitable structure of incentives and disincentives to encourage the regulated entities (REs) to take proactive steps in customer protection and services.

The RBI has invited comments from stakeholders by July 7.

"Globally, the central banking regulators have continuously been emphasizing on what they call as a Treating Customers Fairly (TCF) framework. The RBI is rightly seeking for comments from the industry reflecting the consultative approach, while yet remaining firm on the direction it wants the financial services ecosystem to take," said Vivek Iyer, Partner and Leader, Financial Services Risk, Grant Thornton Bharat.