RBI concerned over rising mis-selling, pricing plaints

Mumbai, Oct 29, 2022

RBI governor Shaktikanta Das on Friday expressed concern over grievances regarding mis-selling, disproportionately high charges, high penal rates and lack of transparency in pricing by RBI-regulated entities. The governor called upon the boards of banks to ensure that products are customer centric and asked the banks to do a ‘root cause analysis’.

“In a large and vibrant financial system like ours, some level of complaints is understandable. What is of concern is that still a large number of complaints pertain to traditional banking. This calls for serious review of the working of the customer service and grievance redress mechanism in the regulated entities. The root cause of persistence of such grievances need to be analysed and necessary corrective measures undertaken,” said Das.

The governor was delivering the inaugural address at the annual conference of RBI ombudsmen in Jodhpur. The governor’s highlighting mis selling assumes significance in view of the fact that this is the first time that the regulator is speaking on the topic. So far, the RBI has not made public any data with regard to mis-selling complaints that it has received.

The governor also pulled up lenders for using strongarm recovery tactics. “Stories in social-media about use of strong-arm tactics by some recovery agents overshadows the good work that is being done for customer protection, both by the regulated entities (banks, NBFCs, etc) and the Reserve Bank,” said Das.

Highlighting the role of the board and top management, Das said, “They need to engage and ensure that there is customer centricity in the design of products, the supporting processes, the delivery mechanism of the products and post sales services. Commercial considerations are important, but they must necessarily be aligned with customer orientation in every aspect, including strategy and risk management,” said Das.

[The Times of India]