Customer service of commercial banks wanting: Subbarao

"Customer service in the banking industry is increasingly becoming important as banks are privileged institutions and banking is a special public utility service," Reserve Bank of India Governor D. Subbarao said.

"But the Reserve Bank and the banking ombudsman's offices have been receiving several complaints regarding levying of excessive interest rates and charges on certain loans and advances," he said, unveiling the the apex bank's monetary policy for this fiscal.

"Though there exists a tiered mechanism for customer grievance redressal in the banks, its efficacy in terms of attending to customer complaints is far from satisfactory."

Accordingly, he proposed the following steps to ensure fair treatment to customers:

-A committee on banking services rendered to retail, small customers and pensioners

-A study on the system of grievance redressal in banks and its efficacy

-Draw from international experiences on expeditious resolution of complaints

-On-site and off-site inspections of commercial banks on customer satisfaction

-Require bank boards to devote one entire sitting every six months to this issue

"The Reserve Bank has, over the years, undertaken a number of initiatives for ensuring fair treatment to customers. This has taken the form of both regulatory fiats as also moral suasion and class action," Subbarao said. "However, within the domain of necessary freedom to banks to choose the types of service to be offered to the customers and related costs, concerted efforts need to be made to further develop a credible and effective system of attending to customer complaints."

Accordingly, the apex bank governor said, the internal structure of banks needed to be made functionally effective and scaled up not just to attend to basic customer wants, but also the special needs of disadvantaged groups.