Understanding the Rights of Banking Consumers and Effective Ways to Raise Concerns

Customers encounter numerous challenges:

Personal experiences, like my father’s struggle to close his personal loan with a leading private bank, exemplify the ordeal. Endless waits on customer care calls and futile attempts at correspondence with loan department heads via email are common frustrations. Banks’ motivations for such actions stem from financial gains through prolonged loan tenures accruing interest income and commissions from force-selling insurance products to meet sales targets.

Regulations exist to curb such malpractices; however, many customers remain unaware of the available grievance redressal mechanisms. Despite 2.91 crore life insurance policies sold in FY 2021-22, only 25,716 complaints were registered for unfair business practices (source: IRDAI Annual Report, FY22).
Understanding the Process of Lodging Complaints:

Mrs. Aparna Ramachandra, founder of RectifyCredit, advises customers to first contact the bank’s customer care. If unsatisfactory, reaching out to the Grievance Redressal Officer (GRO) is the next step. Contact details for both are typically available on the bank’s or NBFC’s website. Failure to receive a response within 30 days or receiving an unsatisfactory response warrants lodging a complaint with the RBI Ombudsman via the CMS portal.
Real-Life Resolution:

Mr. Kanishk Harbhajanka, a Delhi-based Chartered Accountant, faced delays in receiving property documents post-loan closure. Prompt action ensued upon complaint, with the bank delivering documents to the nearest branch to his residence.
RBI’s Directives on “Responsible Lending Conduct”:

Effective December 1, 2023, banks must release original documents within 30 days of loan repayment. Failure to do so prompts the bank/NBFC to compensate the borrower ₹5,000 per day of delay. In cases of loss or damage to documents, banks/NBFCs must assist in obtaining duplicates and bear associated costs. An additional 30-day grace period is granted for this, with penalties incurred thereafter.

In Conclusion:

It is imperative for consumers to comprehend their rights and know the appropriate channels for escalating concerns against banks/NBFCs. By leveraging knowledge and available mechanisms, consumers can ensure accountability and timely resolution of grievances.