RBI's Rao Flags Shifting Focus Of Banks To Client Acquisition Than Grievance Redressal

Banks have been focusing more towards innovative customer acquisition procedures and less on addressing the customer grievance redressal mechanisms, said Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao on Thursday.

Rao said this trend does not align with the banking sector which takes pride in itself for being a service industry.

While speaking at the annual FICCI-IBA banking conference, Rao said that, though banks are highly occupied with forging new and innovative ways of customer acquisition, minimal effort seems to be given to improving the customer grievance redressal mechanisms.

He emphasised the need for banks to strengthen their cyber security and prevention of cyber fraud. The deputy governor of the central bank observed that there is a persistent rise in cases of fraud and data breaches among customers. However, the efforts of the banks to cater to the need for timely solutions to customer grievances have not kept pace with the rapidly advancing technology and products.

“The banking landscape is evolving exponentially with increased convenience, customer access, financial inclusion and product choices. Although the risks to the consumer have also risen, there are multiple instances of frauds and data breaches,” Rao said in his speech at the conference.

The deputy governor also highlighted that extensive exposure to risk within banks and financial institutions can lead to catastrophic results if not effectively executed.