MUMBAI: Reserve Bank of India (RBI) governor Sanjay Malhotra has pulled up banks and financial institutions for masking customer complaints by terming them as ‘requests, queries and disputes’. Malhotra said this is a ‘gross violation’ of RBI norms, and called upon banks to improve in the area of KYC, digital frauds, mis-selling and aggressive recovery practices.
The governor asked banks to prioritise customer service to maintain consumer trust and address growing grievances. He was delivering a speech on transforming grievance redressal at the annual conference of the banking Ombudsmen on Monday.
In his speech, the governor said that the misclassification of customer comp laints has left many grievances unaddressed. “This is not just a service issue — it is a gross regulatory violation,” he said, emphasising the need for banks to correctly categorise complaints and resolve them efficiently to avoid escalation to the RBI Ombudsmen.

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Stressing the importan ce of seamless customer experience, he noted, “Every complaint is a test of trust.”
Malhotra said over one crore complaints were recorded in the past year across 95 scheduled commercial banks, a figure that may rise as financial services expand. “Handling complaints well can define success. Each unresolved grievance is a missed opportunity to reaffirm customer trust and loyalty,” he said, urging banks to treat grievances as indicators of deeper systemic issues.
Advancements in digital banking, including UPI transactions, mobile banking, and video KYC, have improved accessibility. However, the governor acknowledged that the persistence of issues such as digital fraud, mis-selling, and aggressive recovery practices continues to undermine consumer confidence.