The quality of service in Indian banks has deteriorated badly since June 2006. Or customers have suddenly become more discerning.
According to banking regulator the Reserve Bank of India, or RBI, the number of customer complaints increased by over 500% to 34,499 in the 12 months between July 2006 and June 2007. In the previous 12 months, the number of complaints was 5,772.
None of the big banks has been spared: there were 8,597 complaints against the country’s largest bank, the state-owned State Bank of India Ltd; 5,048 complaints against the largest private sector bank ICICI Bank Ltd; and 1,182 complaints against Citibank. The complaints were received by RBI.
H.N. Sinor, CEO of Indian Banks’ Association, an industry body, attributes the rise in customer complaints to rising business volume. “Banks’ retail portfolio has gone up to Rs5 trillion and there are 50 million customers. There cannot be 100% customer satisfaction with such a huge volume of transaction,” he says.
The banks themselves blame customers, and not the poor quality of service, for the increase in the number of complaints. “People now complain at the drop of a hat,” says an SBI official, who does not wish to be identified. According to him, most complaints relate to credit card usage. He adds that in the case of some products such as education loans, those who do not even qualify for a loan complain directly to the finance ministry.
However, the official admits that there could be some slip-ups on the part of the bank. SBI is in the process of implementing a new technology platform and there could be “some gaps that lead to complaints,” he concedes.
Among private banks, ICICI Bank has the maximum number of complaints related to credit cards. The bank has issued 9.5 million cards which record more than 219.75 million transactions a year. “There are 0.19 complaints per thousand customers. Even these pertain to sticky issues such as disputes between the merchant and the customer regarding services or products that they are dissatisfied with; or (they) are contesting the transaction itself,” says Sachin Khandelwal, head, cards division, ICICI Bank. “Most complaints relate to charge-backs where a customer is not willing to wait for 45 days to 60 days for completion of investigations of a disputed transaction,” he adds.
The numbers in RBI’s report contrast sharply with the results of a recent study by consulting firm McKinsey & Co., which says Indian customers (of banks and financial institutions) are the most satisfied in Asia. “The average Indian customer is most satisfied with services offered by financial institutions across Asia. This could partly be attributed to their limited experience of superior customer services,” adds the McKinsey survey.
Public sector banks have seen the most increase in complaints, according to RBI. The number of complaints against them increased 537%. New private banks (which started operating in the mid-1990s) follow with a 525% increase, and foreign banks, 332%.
The maximum number of complaints against public sector and old private banks have to do with deposit accounts and in the case of new private banks and foreign banks, it has to do with credit cards. By location, Mumbai has seen the most complaints (5,525), followed by Delhi (5,481), Kanpur (4,321), Guwahati (1,170) and Bhubaneswar (689).