Private Sector Banks Top Customer Complaints in 2018-19: RBI Report

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SOURCEThe Wire.in

For the last three years, HDFC and Kotak Mahindra Bank have individually received more complaints than the all-banks average of 1.4 complaints per branch.

Shruti Jain

Shruti Jain BANKING

Jaipur: India’s private banks were once again the worse performers in terms of customer satisfaction, according to the annual report of the banking ombudsman scheme for the year 2018-19 published by the Reserve Bank of India (RBI).

Exceeding the all-banks average of 1.4 complaints per branch in 2018-19, HDFC Bank and Kotak Mahindra Bank recorded more than double the number of complaints. Kotak Mahindra Bank received 3.3 complaints per branch while the number for HDFC stood at 3 complaints per branch. The State Bank of India (SBI) received 2.7 complaints per branch.

The corresponding data for the past three years also reflects the same trend. In 2017-18, when the all-banks complaints per branch stood at 1.2 complaints per branch, HDFC had 2.5 complaints per branch and Kotak Mahindra Bank had 2.9 complaints per branch. Similarly, in 2016-17, all-banks complaints per branch was 0.98 while HDFC and Kotak Mahindra Bank had 2.1 and 2.56 respectively.

Experts highlight that despite poor performance, the banks have not sought to undertake any action.

“Kotak Mahindra Bank and HDFC Bank, in their annual reports do not even mention the customer dissatisfaction, let alone what steps they are taking to address this critical issue. Indeed, if it had not been for the annual RBI Ombudsman Report, nobody would be even aware that these banks score poorly on customer satisfaction,” Hemindra Hazari, a research analyst registered with the Securities and Exchange Board of India (SEBI), told The Wire.

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He also said the issue of rising customer dissatisfaction, if left unaddressed, would ultimately lead to a decline in their market share. “The issue is that in the last three years, complaints per branch in the industry have been rising and for banks like Kotak Mahindra Bank and HDFC Bank, which trade at extremely high price-to-book value multiples, customers are from relatively higher-income groups and more aware. If this problem is left unattended, it could lead to migration of customers to other banks and lead to a decline in market share,” he added.

The data also showed that the State Bank of India (SBI) has received 59,522 complaints which is the highest among the public and private sector banks. Complaints of all the nationalised banks combined stood at 61,755, while the private sector banks received a total of 54,922 complaints.

Among the public sector banks, after SBI, the Punjab National Bank stood in the second place and received 10,791 complaints, followed by the Bank of Baroda with 9,385 complaints. Among the private sector banks, HDFC Bank received the highest complaints (15,105), followed by ICICI bank (11,257) and Axis bank (10,010)

However, experts suggest that the number of complaints received by public sector banks is due to their larger base. “The number of complaints received by banks would obviously be higher for the public sector banks because of their spread but the figure corresponding to complaints per branch projects the real picture as it put every bank in the same position. And that figure is highly negative against the private sector banks,” said Hazari.

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The complaints received from the rural areas also registered an increase of 10.98% from the previous year.

As per the report, complaints relating to digital transactions witnessed an increase of 41% with 64,607 complaints being registered in 2018-19 which accounted for 32.9% of the total complaints.

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