The Annual Report of the Ombudsman Scheme 2023-24 was released recently. Data indicates that banking-related complaints to the ombudsman about loans & advances, deposits, and electronic banking increased significantly while those related to debit cards & ATMs reduced.
The Annual Report of the Ombudsman Scheme 2023-24 was released recently. It provides valuable insights and information to all stakeholders involved, showcasing the progress and effectiveness of the ombudsman scheme in protecting customer interests in the banking sector. This report is the second one after the Reserve Bank – Integrated Ombudsman Scheme (RB-IOS) was launched in 2021. It is also the first standalone report released under RB-IOS. To know more about the integrated scheme RB-IOS, check out this explainer by Factly.
Prior to the integrated scheme, there were separate Ombudsman schemes for banks, NBFCs and digital transactions. The erstwhile Banking Ombudsman Scheme (BOS) introduced by the RBI in 1995 covered Scheduled Commercial Banks (SCBs), Scheduled Primary Urban Co-operative Banks, Regional Rural Banks (RRBs), Small Finance Banks (SFBs), and Payment Banks (PBs). In this story, we examine the trends in complaints received by the Ombudsman for banking-related issues, as given in the annual reports.
It should be noted that the 2020-21 report covers the period from 01 July 2020 to 31 March 2021, aligning with RBI’s shift in the financial year from “July-June” to “April-March.” The earlier reports covered the period from July to June. Subsequent reports from 2021-22 cover the period from April to March.
Complaints received at ORBIOs has increased by 33%
According to the latest report, under the RB-IOS (2021), a total of 9.34 lakh complaints were received at the Office of the Reserve Bank of India Ombudsman (ORBIO) and Centralised Receipt and Processing Centre in 2023-24. This was 32.8% more than the previous year. Out of these, nearly 2.94 lakh complaints (31.5%) were received at ORBIOs, while 6.4 lakh complaints (68.5%) were received at the Centralised Receipt and Processing Centre. In 2022-23, the total complaints registered was 7.03 lakhs out of which about one-third were handled by ORBIOs and the rest by CRPC.
Of all the complaints dealt with by ORBIOs, around 82% were those against banks. Between 2011-12 and 2023-24, the number of complaints against banks received by the Banking Ombudsman or the ORBIOs increased from nearly 73,000 in 2011-12 to over 3.41 lakh in 2020-21, a 4.7-fold increase. However, this number reduced in 2021-22 and 2022-23. In 2021-22, the number decreased by 21.5% and dropped further by 26.6% in 2022-23. However, there has been an increase of 23% in 2023-24.
This increase in complaints may be due to greater awareness, easier access to grievance redressal, the growth of digital banking leading to more issues, and increased customer expectations.
The categorization of complaints against banks has been modified slightly over the years. But there are 9 categories that are consistently present across all reports covering issues like credit cards, CDMs, debit cards & ATMs, loans & advances, among others. To ensure consistency in analysis over the years, we have grouped the remaining categories along with the “others” category.
Complaints related to mobile/electronic banking, deposit accounts and loans & services, accounted for 64% in 2023-24
Complaints related to mobile and electronic banking accounted for more than 20% of total complaints in both 2022-23 and 2023-24, compared to 13% in 2018-19. Over the past seven years, the number of complaints in this category has increased 6.4 times.
Similarly, complaints regarding loans and advances also made up about 20% of total complaints in the last two years, up from less than 4% in 2017-18. In absolute numbers, this category has seen a ninefold increase over the past seven years.
Complaints related to deposit accounts have also risen significantly, growing from less than 3% to nearly 20% in the past five years. The number of cases has increased notably since 2021-22.
The above three categories alone accounted for 64% of the cases in 2023-24, up from 57% in 2022-23, and less than 20% in 2017-18.
Complaints concerning credit cards have increased while that related to ATMs and debit cards decreased
Issues concerning credit cards have also increased over time. The share of complaints remained around 7% in 2017-18 and 2018-19 but rose to 12% in 2022-23 and 2023-24. This trend can be linked to the sharp rise in credit card users in the country, especially over the last decade.
In contrast, complaints related to ATMs, debit cards, and CDMs, which made up nearly 22% of total complaints in 2019-20, declined to 10% of the total in 2023-24. This drop may be attributed to the growing preference for online payment methods over cards and cash. The total number of complaints in this category has fallen by more than half since 2019-20.
The number of complaints regarding remittances, which had been declining for the past three years, crossed 4,000 cases in 2023-24. Meanwhile, complaints related to pensions have continued to decrease. On the other hand, complaints concerning para-banking have tripled over the past three years.
Until 2022-23, the report provided figures on the number of complaints received against different banks like SBI, HDFC, ICICI, etc. However, in the latest 2023-24 report, no data has been provided in this aspect. However, a table on the state-wise number of complaints received in ORBIOs per lakh population has been provided. Even though previous reports, mentioned this figure and had a small heatmap of the same, the values were not explicitly provided.
9 complaints per lakh accounts were recorded at the national level in 2023-24, up from 6.7
As per the latest report, the States/UTs of Chandigarh, Delhi, Rajasthan, Gujarat, and Uttarakhand had the highest number of complaints received per lakh accounts (deposit and credit) while Mizoram, Nagaland, Ladakh, Manipur, and Lakshadweep recorded the lowest. At the national level, the complaints received per lakh accounts was 8.9 in 2023-24, up from 6.7 complaints in 2022-23.
Across all types of complaints dealt with, ORBIOs have a healthy disposal rate. It was almost 98% in 2021-22 and 2022-23. In 2023-24, the disposal rate was 95.1%.
CEPD has outlined key goals to enhance consumer protection in 2024-25
The Consumer Education and Protection Department has outlined key goals for the current financial year, to enhance consumer protection and improve grievance redress mechanisms. These goals, aligned with the Reserve Bank’s Utkarsh 2.0 framework, include further improving the complaint management system to ensure consistency in decisions, developing a consumer protection assessment matrix for regulated entities, and strengthening the internal grievance redress framework to encourage proactive measures from banks in improving customer service. Additionally, it has suggested conducting surveys to explore the reasons behind low complaint levels in rural and semi-urban areas, as well as in states with fewer complaints. Following this, the department will review and roll out a reoriented Nationwide Intensive Awareness Programme based on feedback from regulated entities and ORBIOs. However, with only 2 months left for 2024-25 to conclude, the state of the implementation of this remains to be seen.
