Monday, November 26, 2007

Credit card customer’s complaints increase in number- RBI gives indication

There has been increase in the number of complaints regarding banking services specially credit card. The maximum number of complaints relate to public sector banks (PSBs) even though they have a very small credit card base compared with their counterparts in private and foreign banks. One-fifth of the banking services-related complaints come from credit card customers.

Reserve Bank of India deputy governor Usha Thorat speaking at Bancon seminar gave this indication. The grievances on home loans related lacked the transparency in fixing and reset of interest rates. She said, “Customers of floating rate loans have complained about the spread that banks charge over the benchmark rate. Other issues include the process regarding resets of interest rates and changes in the interest rates.”

If we look at the figures PSBs, complaint per every 1,000 customers is 0.79. For foreign banks, the same stands at 0.26 and for private banks, it’s 0.20. Currently there are over 40 million credit card customers in the country and the industry is growing at 35-40% on a compounded annual growth rate for the past few years, of this from the private sector banks like ICICI Bank, HDFC Bank are among the biggest players. Other big players include SBI Cards — a joint venture between SBI and GE — and Citi.

With regards to the overall complaints, excluding credit cards, Ms Thorat said for every 1000 accounts, the maximum complaints are from customers of foreign banks at 0.61, 0.33 for new private banks, 0.07 for PSBs and 0.05 for old private banks. And the other complaints received by RBI include time taken for collection of outstation cheques, charges levied by the bank and entries not properly recorded.

Speaking at the seminar, Ms Thorat said till recently, in India customers were loyal to their banks, but slowly the change can be seen and the study by Mckinsey shows that the affluent are becoming shrewd. She added that the consumer market is growing like never before and because of financial inclusion, the growth in numbers would be such that which was never seen before.

“New generation private banks, which have got enhanced market share of the mass affluent and affluent customers, what is also being observed is that they have high negative moments of truth,” she said, indicating that customers may shift loyalties if they find the services not up to the mark.

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