Private Bank Complaints Stem From Credit Cards; Public Sector Banks Face Mobile Banking Challenges: Report

Elara Securities noted that complaints originating from rural and semi-urban areas are experiencing an upward trend, constituting over 30 per cent of the total grievances

Furthermore, it has been noted that a significant proportion of these complaints originate from regions such as Chandigarh, Delhi, Haryana, Rajasthan, and Gujarat

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The predominant category of grievances reported by customers of public sector banks pertains to issues related to mobile banking, whereas for private banks, the most common source of complaints is associated with credit cards, according to Elara Securities, a brokerage firm’s observation. Additionally, there has been a notable year-on-year increase of 68 per cent in customer complaints during Fiscal Year 2023, resulting in an average of 6.69 complaints per 100,000 accounts. 

Furthermore, it has been noted that a significant proportion of these complaints originate from regions such as Chandigarh, Delhi, Haryana, Rajasthan, and Gujarat, which collectively exhibit complaint rates three times higher than the national average.

Elara Securities noted that complaints originating from rural and semi-urban areas are experiencing an upward trend, constituting over 30 per cent of the total grievances.

In Fiscal Year 2023, over 85 per cent of complaints are directed towards banks, with public sector banks (PSBs) accounting for a larger share at 43 per cent, although down from 51 per cent in the previous fiscal year. Meanwhile, complaints against private banks, constituting 32 per cent of the total, as well as small finance banks (SFBs) at 4 per cent, have witnessed an increase, as per the brokerage firm.

In the realm of lenders, Non-Banking Financial Companies (NBFCs) witnessed the most significant surge, escalating from 7 per cent in FY22 to 14 per cent in FY23, mainly attributed to non-compliance with the Fair Practice Code. Moreover, credit cards account for the largest proportion of complaints against private banks. At the same time, loans and advances are the primary source of grievances for Small Finance Banks (SFBs), and mobile banking issues prevail among Public Sector Banks (PSBs).

According to Elara Securities, customer complaints and grievances have prompted numerous regulatory actions by the RBI in recent times. The Central Bank has initiated a medium-term Strategy Framework for 2023-25, known as Utkarsh 2.0, with the objective of reviewing, consolidating, and updating the existing regulatory guidelines on customer service. To address these concerns, a Committee was established to investigate the issues and has submitted a report, the recommendations of which are currently under review for potential implementation.

"While it is difficult to ascertain actions with certainty, these datapoints does indicate directions and highlight key monitorable especially when seen in backdrop of recent RBI regulatory actions," Elara Securities added.