Pranab Mukherjee asks private banks to redress customer complaints

Worried over a large number of customer complaints, Finance Minister Pranab Mukherjee today asked private sector and foreign banks to redress the grievances "vigorously" and said financial inclusion and consumer trust are interlinked.

"It is heartening to note that, as per the latest Annual Report of the Banking Ombudsman Scheme, the total number of customer complaints received by the Ombudsman in 2010-11 are 11% less than those received in the previous year," Mukherjee said.

"However, the private sector and foreign banks which account for only 12% of the loan and deposits, contribute for 35% of the total complaints. This requires vigorous efforts to redress complaints," he said at a function here to mark the opening of 100 branches of Kerala-based Federal Bank simultaneously all over the country.

During 2010-11, 71,274 complaints were received under Banking Ombudsman Scheme against 79,266 in the previous fiscal.

As per the report, 6,895 complaints were against ICICI Bank and 5,590 against HDFC Bank. There were 2,144 complaints against Standard Chartered Bank, 1,865 against HSBC, 629 against Barclays Bank and 967 against Citibank N.A.

Mukherjee further said, effective and efficient banking system is the backbone of a growing economy.

"As we move ahead on the path of development, a major challenge is to strike a balance between the twin objectives of increasing banking access and improving the quality of customer service and customer protection," he said.

Financial inclusion and consumer trust and protection are interlinked, he added.

"As you all know, the public sector banks have been directed to provide banking access to habitations having population in excess of 2000 persons by March 2012 using various models and technologies including branchless banking through Business Correspondents (BCs)," Mukherjee said.

Banks have covered 63,000 villages by the end of January of the targetted 74000 villages.

"In the next few years, we propose to cover all habitations having population of over 1,000 persons," he said.

Highlighting the need for extending cost effective banking to the poor people of this country, the Finance Minister said they have the potential to spur growth and enhance bank savings.

"Promotion of Financial Inclusion is the key priority of the Government and is critical to our objective of inclusive growth. Through this financial inclusion strategy, we are exploring new delivery channels and models to extend the outreach and penetration of financial services by using technology to give an identity to the poor," he said.

Banks need to develop products to meet the broader spectrum of requirements of the common man like consumption, production, risk mitigation etc., he said.

"Availability of appropriate banking technology now enables much higher penetration of the banking system, increasing its cost effectiveness and making small value transactions viable. Certainly growth and development are spurred by this effective use of technology," he added.

On the issue of subsidy transfer, Mukherjee said the government is in the process of implementing e-payment system for the direct credit of dues from the central government to the beneficiaries of various subsidies.