The Reserve Bank of India (RBI) has said that challenging targets set for employees, incentives to the staff, and lack of training are the reasons for mis-selling of third party investment products by banks, a statement said on Monday.
Drawing attention to a large number of complaints on mis-selling, Deputy Governor S.S. Mundra said: “The underlying reasons were the challenging targets set for employees, incentive linked quotas, lack of training and fast rotation of frontline staff.”
“These along with the lack of co-ordination between back and front office, impacted customer protection and made it inconvenient for the complainants to easily approach the appropriate authorities for redressal,” he said at the Annual Conference of Banking Ombudsmen held here on July 25.
He therefore urged that the commitment of the top managements of banks should also percolate down the line so that the customers received efficient services as well as due care at all touch points.
With regard to complaint management, Mundra said that the banks should seek to study the patterns and undertake root cause analysis of complaints, which would be possible by adopting end-to-end automation of the grievance redressal mechanism and deployment of latest analytical tools.
The Banking Ombudsman Scheme had been amended in July 2017 to include deficiencies in mobile and electronic banking as well as mis-selling of third party investment products by banks as eligible grounds for lodging complaint under the Banking Ombudsman (BO) Scheme.
In order to deepen and widen the reach of the BO Scheme, Mundra mentioned that the RBI had opened five new BO offices and if required, opening of few more offices could be considered over time.