In the present scenario of competitive world, excellence in customer service is the most important tool for sustained business growth. Customer grievances are part of business life and the notion of vigorous customer grievance redressal is a novel concept. The task is more challenging in the banking field as banks are required to extend speedy, efficient, fair, improved and courteous customer service while working towards financial inclusion. To uphold the customer satisfaction, there is a basic need of redressing the customer grievances in timely, proper, effective and efficient manner. A 'Bank Customer' is defined as a user or a potential user of banking services like accepting, safeguarding and lending money etc.
1.1 Evolution of Banking in India: Before the establishment of banks, the financial activities were handled by money lenders whose unjustified practices and high interest rates led to un-satisfied customers. So the organized banking sector fully regulated by the government was started with the creation of the first bank in India, called The General Bank of India (1786). Subsequently Presidency Banks including the Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) and later, Allahabad Bank (1865), Bank of Hindustan (1870), and Punjab National Bank (1894), Bank of India (1906), Bank of Baroda (1908), Central Bank of India (1911), etc. were set up. Presidency banks were amalgamated to form the Imperial Bank of India (1921). Then the Reserve Bank of India-RBI (1935) was established as a Central Banking Authority. The Imperial Bank of India was nationalized and called "State Bank of India'' (1955). After liberalization in 1990s, new generation tech-savvy banks including Global Trust Bank (1993), UTI Bank-1994 (now Axis Bank), ICICI Bank (1994) and HDFC Bank (1994) etc. were established. In the recent past Indian banking has seen a rapid growth and currently, India has 96 scheduled commercial banks including 27 public banks, 31 private banks and 38 foreign banks.
1.2 Concept of 'Customer Grievances/Complaints' in Banking: 'Complaint' means a representation in writing or through electronic means containing a grievance alleging deficiency in banking services; and a customer can lodge a complaint on any one of the grounds concerned with deposit accounts, ATM/debit/credit cards, remittances, loans and advances etc., or any other matter relating to the violation of the directives issued by the RBI in relation to banking/other services (Banking Ombudsman Scheme-BOS, 2006).
1.3 Customer Grievance Redressal System (CGRS) in Banks in India: RBI set up the Banking Companies Act, 1949 (Now Banking Regulation Act, 1949) to improve banking in India. RBI had also issued several circulars and setup many high level Working Groups and Committees to improve customer service. Banks are required to have a well-documented customer grievance redressal policy duly approved by their Boards. The present CGRS framework in India can be better understood as a two level system, the grievance redressal sub-system run by bank's internal machinery under the BOS guidelines (Internal CGRS) and grievance redressal sub-system run directly by the Banking Ombudsman-BO (External CGRS).
1.3.1External CGRS- Evolution: There was no separate system of grievance redressal for banking customers till 1995 and a customer availing banking services could prefer complaints under Consumer Protection Act (1986) through the provision of three-tier 'Consumer Disputes Redressal Agencies' namely; the District Forum, the State Commission and the National Commission for Grievance Redressal. 'Narasimhan Committee' (1991) recommendations led to the formation of BOS, 1995 under the provision of Banking Regulation Act, 1949 and covered all scheduled commercial and primary co-operative banks having business in India. The Scheme has been revised from time to time to cover Regional Rural Banks and to permit review of the BO's awards against banks by RBI in 2002, to include customer complaints on certain new areas, such as, credit card complaints in 2006, to enable customers to appeal against the BO's decision in 2007; and to enable BO to award compensation to complainants in 2009.
In order to have an effective CGRS some other supportive structures were setup like 'Board Level Committees' by recommendations of Tarapore Committee (2004) for monitoring customer service in banks. 'Customer Service Department' (2006) was also established by RBI for focus on the entire range of customer service related activities, overseeing the grievance redressal mechanism; and administering and enhancing awareness of the BOS. Later 'Banking Codes and Standards Board of India' (2006) was created as an autonomous body, to monitor and assess the compliance with codes and minimum standards of service to individual customers to which the banks agree to.
1.3.2 Internal CGRS - Evolution: In the light of Talwar Committee (1975) and Goiporia Committee (1990) banks were required to set up customer service committees at the branch level. But this did not lead to desired improvement in customer service. After setting up of the BOS (1995) the banks have been required to set up internal machinery as per BOS guidelines. Therefore a 'Standing Committee on Customer Service' (SCCS) chaired by the Executive Director of the bank and including senior executives and eminent public representatives has to be set up. The formation of 'Customer Service Committee of the Board' is also required for the rendering of customer service to the individual, and reviewing the functioning of SCCS. Moreover, a Nodal Officer and other designated officials to handle complaints/grievances at head office level are required to be appointed. A time limit of sixty days is set for preferring complaints/grievances and on unsatisfactory response from the bank within thirty days of lodging the complaint; the complainant has the option to approach the BO. Later, Damodaran Committee (2010) looked into the existing CGRS prevalent in banks, examined the functioning of BOS and recommended the appointment of a 'Chief Customer Service Officer' as an 'Internal Ombudsman' for a bank so that routine complaints can easily be handled by banks without any cost and time overruns.
1.4 Social Relevance of research work: An effective CGRS in banks will lead to a sound banking system which will strengthen the financial system and escalate economic growth of the country. This study will be extremely constructive for the bank managers and other officials for effective implementation of CGRS in banks and deliver quality services to their customers. This will lead to customer delight and successful retention of valuable customers by banks. This research will also enrich the current understanding of the impact of grievance redressal on customer satisfaction in public and private sector banks. Moreover the study will also highlight the level of customer awareness for CGRS in Indian banks which would be utilized by banks for customer awareness improvement. This will enable the customers to utilize the banking services to the maximum and help the banks to increase their customer base in future.
2. Literature Review:
Researchers and practitioners have witnessed a gradual paradigm shift in the area of improving customer service and retaining customer satisfaction. In this context, the critical role of complaint management had been emphasized by many researchers in the past. Bartling (1982) found that an organisation can compete through its complaint department by solving customer problems. Fornell and Wernerfelt (1987) gave a model for complaint management which can be used as a defensive marketing strategy in terms of reducing customer turnover. Kolodinsky and Aleong (1990) brought an integrated model of 'Consumer Complaint Action' which can improve customer service. Goodwin and Ross (1990) pointed that firms should pay particular attention to their complaint handling procedure.
The introduction of 'Ombudsman Scheme' for grievance redressal in customer service has been supported by various researchers. Halstead (1993) accentuated that 'Customer Service Representatives' should gather more and more information regarding customer satisfaction and dissatisfaction in addition to solving their complaints. Rawlings and Willett (1994) concluded that the scheme in United Kingdom had developed standards of fairness which had step-outside the established law and practice. Morris and Little (1994) concluded that the BOS had established itself as a significant form of extra-judicial redress for consumers in dispute with a bank. Tollemache (1996) was of the view that the scheme had developed well in public sector of New Zealand and should move towards private sector also.
Yavas, Bilgin and Shemwell (1997) concluded that the ultimate success of any service quality programme of bank could only be gauged by its satisfied customers. Metz (1999) pointed that the policy and practice of BOS in Germany was subject to some criticisms by consumer organizations. Many times customers give complaints but their complaints are not being taken into consideration, assessed by Pahwa (2000). Strauss and Hill (2001) studied that effective consumer complaint handling resulted in increase in customer satisfaction and building long term relationships. Jarrar, Verlinden, and Meersman (2003) proposed the construction of an ontology capturing the core knowledge of the customer complaint domain.
Yokoi-Arai (2004) analysed that the financial ombudsman and customer protection systems of Japan are stronger than that of UK. George and Hegde (2004) studied that employees' attitude is prerequisite for customer satisfaction, in the context of customer complaints. HYPERLINK "http://emeraldinsight.com/search.htm?ct=all&st1=Babu+P.+George&fd1=aut"Ndubisi and Ling (2006) studied the complaint behaviour of Malaysian consumers and concluded that both public and private complaints are associated with defection. The BOS still needs to bring some modifications for capturing the bank customers' trust to approach the BO instead of seeking remedy from 'Consumer Redressal Authorities' (Meduri, 2006). Joshi (2006) found the scheme as simple, quick and cost free as compared to costly and time consuming process in the courts of law. According to Sheikh (2009) 'Banking Mohtasib (ombudsman) Pakistan' has been successfully established to address the issues of complainants.
Aarti (2009) pointed that online mode of complaint is more common in foreign banks as compared to public sector and private sector banks. Debasish (2009) analysed that public sector banks have failed to adequately satisfy their customers. According to Jing Wei (2010) bank management can increase customer satisfaction by delivering a high level of service quality. Patil-Dake and Mathur (2010) analysed the role and efforts of BOS as a part of consumer protection in banking services in India. Sharma (2010) examined the company executives' perception of their company's own redress system and the public (external) redress system for consumer grievances. Uppal (2010) ascertained that complaints in public sector banks are continuously increasing, and adversely affecting customers' satisfaction.
According to Singh (2011) decline in duration of pending complaints narrates the efficiency of BO in disposal of complaints. Matta (2011) in his study found that the front line staff can play a key role in enabling consumers to complaint and providing solutions to the same in an effective manner. Selvi (2011) recommended that the scheduled commercial banks should improve the customer services in order to avoid customer complaints. According to Uppal (2011) bank groups should put in place the right kind of systems for instantaneous customer services. Malyadri and Sirisha (2012) concluded that there is a need of giving powers of an ordinary court to the 'Ombudsman Scheme' in India to facilitate its working. Pierre and Russo (2012) explained that there is significant influence of online opinion of customers on their complaints. According to Murugan (2012) customers of public sector banks are more satisfied with the service quality, than those of private sector banks. Jain and Jain (2012) assessed that quality of banking services are important for customer satisfaction. Chepkwony, Korir, Lagat and Mumbo (2012) suggested that customer complaints should be treated as an important opportunity for service providers to improve their service offerings.
From the above literature review it can be inferred that customers' complaint redressal has been widely accepted as one of the key factor of customer satisfaction and service quality. It has become critical that banks deliver prompt and effective complaint / grievance redressal services which in turn result in customer satisfaction in today's competitive banking environment. Also there has been limited research on CGRS in banks in India. Thus, the need arises to undertake an empirical study on analyzing the implementation and effectiveness of CGRS in Indian Banks.
3. Research Problem:
Despite a number of steps taken by the RBI towards improving customer services and grievance redressal of the bank customers, it seems that the current CGRS in banks in India is still ineffective in handling complaints and unsuccessful in satisfying all the customers. Every year the BO receives a number of complaints not redressed by the internal CGRS of the banks. The total number of complaints received by offices of BO for the year 2011-12 is 72,889 which has increased from the previous year which was 71274 (Annual Banking Ombudsman Report 2011-12). It demonstrates incompetency of internal CGRS machinery of the banks to redress all the customer complaints; and incapability, lack of awareness and dissatisfaction of customers for CGRS of banks.
3.1 Need and Significance: The objective of setting up of BO was to simply provide dispute resolution option to the bank customers after internal CGRS of banks but the customers consider it as a better and first option and show distrust in the banking internal CGRS. Thus it becomes imperative to study the nature, implementation and effectiveness of CGRS and to identify the limiting factors for a successful and satisfactory CGRS in banks in India. Further, many of the customers' grievances arise on account of lack of awareness among customers about CGRS of banks and complaint procedures. Thus, the need arises to check the level of customer awareness and satisfaction regarding CGRS of banks so that the alternate strategies can be suggested for timely and effective redressal of customers' grievances.
In past different studies have been done by many researchers viz., linking customer satisfaction with profitability of the banks (Halstead, 1993; George and Hegde, 2004), studying complaint behavior of customers (Ndubisi and Ling, 2006; Matta, 2011), analyzing role of BO in customer service (Joshi,2006; Malyadri and Sirisha, 2012), but to date there has been limited research in the area of studying implementation and effectiveness of banking CGRS in India. Also there is dearth of publications focusing on recommendations and suggestions related to improving the effectiveness of CGRS in banks in India.
4. Objectives of the study:
The following will be the main objectives of the research study:-
To study the mechanism of CGRS in Banks in India.
To assess the level and magnitude of customer awareness regarding CGRS in banks in India.
To assess the implementation and effectiveness of CGRS in Banks in India.
To assess the impact of CGRS on customer satisfaction.
To identify the limiting factors and suggest alternate strategies for timely and effective redressal of customer grievances.
4.1 Scope of the Research: The purpose of this research is to do the comparative analysis of implementation and effectiveness of CGRS of Public Sector and Private Sector Banks of India towards redressing customer grievances. The banks selected are; State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank and Union Bank of India from Public Sector Banks and ICICI Bank, HDFC Bank, Allahabad Bank, Syndicate Bank and Axis Bank from Private Sector Banks. The foreign banks will be kept out of preview of the study since they are not having a widespread reach in terms of branch locations and their main focus is not on mass banking in India. The scope of the study will be limited to bank officials and bank customers of Public Sector and Private Sector Banks from five selected cities of Punjab. The bank officials as respondents will be picked up from the banking organisations where the redress system for consumer grievances is operational and the bank customers as respondents will be the account holders of each selected branch of banks.
4.2 Future scope: The scope of the study will be limited to selected Indian banks operating in the selected cities of the state of Punjab. A future study can be made by taking into consideration other banks and other states also.
5. Research Methodology:
5.1 Research Design: Descriptive form of research design will be used to provide solutions to the research problem. In order to achieve the objectives, research will be conducted both from the bankers' perspective and the customers' perspective.
5.2 Data Collection: Data collection will comprise of both primary and secondary data. The primary data will be collected through a pretested structured questionnaire for bankers' perspective by collecting responses of selected bank officials. It will cover their opinion regarding grounds of complaints, modes of complaining, internal machinery implementation, effectiveness; and impact on customers' awareness and satisfaction by posing various statements on a five-point likert scale. For customers' perspective a second questionnaire will be prepared covering different grievance redressal facets such as; customer guidance, customer support, complaint form, attitude of employees, prompt redressal etc.; to solicit the response of bank customers to various statements on five point likert scale. Secondary data will also be extracted from RBI Bulletins/Circulars, BO publications, reports of various govt. constituted working groups/committees, websites of several public and private sector banks and RBI, previous studies, research papers etc.; to better understand the research problem.
5.3 Sampling Technique and Sample Selection:
5.3.1 Selection of Sample of Banks: All public and the private sector banks operating in Punjab will form the universe of the study. Multi-stage sampling will be used for the selection of the sample of banks. Firstly five most populated cities Amritsar, Jalandhar, Ludhiana, Patiala and Bathinda will be selected being the M.Corp. cities having population one lakh and above (Census of India, 2011). Then a common list of banks operating in all of these cities will be made and after this top five public sector banks and top five private sector banks will be selected from the above list on the basis of having more deposits, greater customer base and wide geographical coverage in the selected districts. Thereafter two branches of each bank from every district will be selected.
5.3.2 Selection of sample of bank officials: Non-probability purposive sampling will be used in the selection of bank officials as respondents from the banking organisations.
5.3.3 Selection of sample of bank customers: Thirty account holders of each selected bank branch will be selected as the respondents using convenience sampling technique.
5.4 Tools of Data Analysis: The collected data will be analysed using descriptive statistics such as; simple percentage, standard deviation, mean, correlation etc.; that will allow for the reduction and summary of data as well as analysis of items or variables so as to provide greater insight as to the characteristics of sample. In order to be specific the data will be subjected to factor analysis and correlation matrix analysis to identify and examines the factors influencing bank customers' awareness and satisfaction.
6. Tentative Plan of Work:
The tentative plan of work will consist of the following sequential activities:
During the first three months in-depth literature review of the secondary data collected from various published sources, will be done to better understand the nature and concept of CGRS in banks in India. In the next four months structured questionnaires will be drafted and pre-tested to collect primary data. Field survey for primary data collection will be done in the next eight months. The collected data will be edited, coded and analysed in the next six months. Results Interpretation to reach the conclusions will be done in next three months. The research papers on the study work will be published in some journals of repute. In the last six months thesis writing and report submission will be done.
6.1 Chapter Scheme for the Thesis:
The study will be organized into the following six chapters:
Chapter One: Introduction, Research Problem, Research Objectives, Scope of the Study,
Research Methodology, Significance and Organisation of the Study.
Chapter Two: Literature Review
Chapter Three: The mechanism of CGRS in Indian banks.
Chapter Four: Data Collection
Chapter Five: Data Analysis and Interpretations.
Chapter Six: Conclusions of the research findings, Limitations, and Recommendations.
7. Facilities required for proposed work: SPSS (Statistical Package for the Social Sciences) package and Computer system with Internet facility.
8. Proposed Place of work: Patiala (Punjab)
Signature of Candidate Signature of Supervisor
