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Bank staff’s first duty is to meet needs of customers, not targets: says RBI Deputy Governor


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Banks must prioritize serving customers’ financial needs over meeting targets, said RBI Deputy Governor Swaminathan J. He urged banks to adopt customer appropriateness and product suitability frameworks to reduce mis-selling.

“While being commercial entities, there’s nothing wrong in being target-driven, but regulated entities must ensure employees understand their primary responsibility is to serve customers’ financial needs,” he said in a speech to top bank executives on Monday.

Banks should have a clear and transparent incentive structure that rewards employees for delivering quality financial advice and services, rather than just making sales, he added.

“Towards this, every financial institution should have a policy for customer appropriateness and product suitability framework,” he said.

Swaminathan also stressed the need for adequate oversight when banks offer products or services in partnership with fintech companies. Banks must view fintech as an opportunity, not a threat, he added.

“I am glad that most of you have adopted such a collaborative approach, but please bear in mind the principal responsibility to your customers lies with you and not with partners. It is therefore essential to have adequate oversight when a product or service is being offered through such partnership channels,” he said.

Swaminathan said banks need to focus on five key areas:

  • A customer-centric approach
  • Addressing the root cause of complaints
  • Resolving complaints at the first point of contact
  • Responsible handling of complaints
  • Combating cybercrime

He said some banks had adopted an innovative way to classify certain complaints as queries, resulting in ignoring the problem. The RBI will take strong action against such banks, he warned. Bank employees must guard against misbehaviour, he added.

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