Make customers' rights charter enforceable, says RBI panel

By Consultants Review Team Tuesday, 06 June 2023

A panelA panel set up by the RBI to examine and review the state of customer service in regulated entities (REs), has suggested that the central bank should consider making the charter of customer rights enforceable after reviewing and updating it. The central bank may consider extending the charter to on Banking Financial Companies (NBFCs) also, it has suggested.

The RBI had formed the seven-member committee under the chairmanship of former RBI Deputy Governor B.P. Kanungo on May 23, 2022 to evaluate the efficacy, adequacy and quality of customer service in entities regulated by the RBI vis-a-vis the existing RBI guidelines on customer service and identify gaps, if any. The committee has, in its report submitted to the RBI recently, has suggested the above-mentioned measures.

"With a view to ensure that there is uniformity in classifying, recording and reporting of complaints by the REs, the Reserve Bank should lay down a definition of a complaint under the internal grievance redress mechanism which should also capture the complaints which are outside the purview of Reserve Bank's integrated ombudsman scheme," the panel has recommended.

The committee has suggested further that the RBI Ombudsmen (RBIOs) should be empowered, based on the facts or a set of similar complaints, to direct the RE concerned to review and undertake suitable corrective action in all such cases and confirm compliance to the Reserve Bank. It has also recommended setting up of an RE - agnostic common portal for lodging complaints, so that the customers of any RE can lodge complaints on a single platform.

The portal may allocate the complaints to respective REs, enable facility for tracking of the complaints by the complainant and for automatic escalation of rejected complaints to the internal ombudsmen.

Going forward, the Reserve Bank may also consider integrating this platform with its Complaint Management System (CMS) portal to provide for seamless transfer and movement of complaints and data, the panel has said further.

To improve customer service in REs, the Indian Banks' Association may update its model operating procedure, in line with regulation, for hassle-free settlement of claims in accounts of the deceased account holders, in various scenarios. This model operating procedure may provide for the documents required to be submitted by the claimant.

In case nomination exists, the proceeds may be released immediately, upon submission of the required documents, the panel suggested. Obtaining nomination in deposit accounts may be made mandatory to facilitate hassle-free settlement of claims in case of death of the account holder.

Several existing accounts do not have nominations at present. The REs should be asked to obtain nominations in all such cases within a reasonable time period, say three years, the panel has recommended.

To obviate the need for visits to the branches or RE premises, by the nominee or heirs, the process for settling deceased claims may also be made available on-line, it has said further. The on-line facility may provide for submission of all the required documents and their verification.

A system of generating digital reference number upon submission of the claim and supportive documents may be made available. The claims may be settled within a reasonable time period, like 30 days from the date of submission of all necessary documents. The timeframe should also apply when the claims are physically submitted, the panel has recommended.

Beyond 30 days, the REs may be required to pay interest at a rate, say two per cent higher than the rate at which the deceased person's deposit was held. While the REs should take necessary steps to periodically update KYC, it must be ensured that operations in the account are not stopped.

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