Stop Repeatedly Calling Customers for KYC, Instead Focus on Customer Convenience: RBI Governor Tells Banks
Reserve Bank of India (RBI) Governor Sanjay Malhotra has directed banks to avoid repeatedly calling customers for “know your customer” (KYC) documents. Speaking at the annual conference of RBI Ombudsmen, Malhotra emphasized that once a customer submits KYC documents to any financial institution, the information should be accessible to all regulated entities through a central database.
Malhotra termed the repeated requests for KYC documents as an “avoidable inconvenience” and urged banks to expedite the process of enabling their branches to access the central database. “This will be in the interest of all,” he said, highlighting the need for a seamless and customer-friendly approach.
The RBI Governor’s remarks come amid growing complaints from banking customers about the hassle of resubmitting KYC documents, particularly on social media platforms. Malhotra also expressed concern over the misclassification of customer complaints by banks, calling it a “gross regulatory violation.” In FY24, banks received 1 crore complaints, with 57% requiring mediation by RBI ombudsmen.
Malhotra stressed that improving consumer services is not just a duty but also in the “selfish interest” of banks, given the competitive landscape. He advised bank leaders, from managing directors to branch managers, to dedicate time weekly to address complaints. “Left unresolved, every such issue can corrode consumer confidence and tarnish the entire ecosystem,” he warned.
The RBI Governor also advocated for the use of artificial intelligence in complaint resolution while emphasizing the importance of privacy. Additionally, he called for greater focus on addressing issues like misselling, digital frauds, and aggressive recovery practices to build trust and maintain industry standards.
