Vinay Kumar
Bank business, customer base, and the expansion of both physical and digital networks are growing, with a focus on electronic banking streams. Over the past five fiscal years (FY2020–FY2025), India’s banking sector has seen significant growth driven by strong financial inclusion.
The FI-Index was introduced in 2021 with a baseline score of 53.9 for March 2021, which increased to 64.2 by March 2024. Most recently, the index rose to 67.0 in March 2025, marking a 4.3% increase from the previous year and a total increase of over 24% since 2021.
The average annual deposits increased by 9-10 percent, and the total deposit volume grew from Rs. 146 crores in March 2020 to Rs. 234.5 crores in March 2025. The number of deposit accounts increased from an estimated 200 crore in FY2020 to over 270 crores by FY2025, driven by significant growth in PMJDY accounts from rural and semi-urban areas and higher small savings mobilization. Female and senior citizen deposit ownership also grew steadily; women now hold about 20% of total deposits as of March 2025.
Similarly, the total bank loan growth averaged 12–14% annually over five years, with a deceleration to around 11% in FY25, down from about 15% in FY24 as credit demand normalized after pandemic-induced surges. The number of outstanding loan accounts crossed 32 crores in FY2025, up from about 23 crore accounts in FY2020, supported by growth in retail and SME credit segments.Retail loans, especially personal loans and housing, drove growth — the share of retail loans increased from 24.1% in 2020 to 31% in 2025.
The individual borrowers now account for 47.8% of total bank credit, up from 41.5% five years earlier, reflecting democratized access to credit through digital underwriting and simplified KYC. Within retail loans, women borrowers’ share rose modestly from 22% to 23.8% in the past five years.
- Coping with a rising customer base:
Banks welcome a strong customer base to grow their business. However, there are challenges. Customer grievances are likely to increase as the customer base and business expand. Banks now face the significant task of managing 300 crore customer accounts with various needs. They must handle a diverse range of customers in terms of digital and financial literacy, overcome language barriers, regional differences, and many other obstacles.
To achieve this, banks have established a strong presence both physically and digitally. The number of bank branches grew from about 155,000 in March 2020 to approximately 160,500 by September 2024. Rural branches surpassed 100,000 as of September 2024. The total number of ATMs was 211,332 in FY21 and slightly increased to 211,654 in FY25 as customers shifted towards digital wallets and cashless transactions.
This explains why the number of POS terminals increased from 3.72 million in March 2020 to 8.96 million by June 2024. All banks offer mobile and internet banking, digital wallets, and nearly 100 crore debit cards. Routine banking services can now be performed remotely, removing the need for customers to visit bank branches.
In a growing digital banking system, customer service should strategically focus on redesigning and balancing the grievance resolution process to ensure equal attention to responses for customer complaints received through digital and physical channels.
- Trends of customer grievances:
Apart from the number of customer complaints with individual banks’ internal ombudsmen, those flagged to the RBI Ombudsman (RBO) are increasing as the customer base rapidly grows. The number of grievances filed with the RBO has surged over the past five years, driven by greater awareness and more challenges in digital and loan-related services. Complaints reaching the RBO rose from 3.03 lakhs in 2020-21 to 9.36 lakhs in 2024-25. As digital literacy improves, two-thirds of all complaints are now submitted online; increased digital access and regulatory outreach have made filing complaints easier.
Of the total grievances received by the RBO in FY2023–24, digital banking (including mobile and internet banking) made up approximately 19.8%–22.5% of all complaints, making it the second largest category after loans and advances. Most complaints are against banks (82%) and NBFCs (15%), with loans/advances (29% of complaints in 2023–24), digital banking, and credit cards leading the grievance categories.
The significant increase in complaints partly reflects greater consumer empowerment and access, but also highlights ongoing service quality issues, especially amid rapid digital transformation. Overall, customer complaints to the RBO have more than tripled in five years, emphasizing both the surge in digital financial activity and the need for a stronger focus on consumer protection in India’s evolving banking sector.
- Initiatives to improve customer service:
RBI launched the unified Integrated Ombudsman Scheme (RB-IOS, 2021) for banks, NBFCs, and digital payment systems under a single framework, offering a free, one-stop resolution platform with standardized procedures and timelines for handling complaints. RBI expanded the scope of RBO to include rural cooperative banks in 2025, thereby significantly enhancing customer protection.
RBI has instructed all banks to enhance their internal ombudsman offices to ensure efficient, fair, and quicker resolution of complaints at the bank level before customers escalate issues to the RBI or courts. Banks must implement integrated CRM systems for centralized recording, tracking, and prompt resolution or escalation of all customer complaints. Clear timeframes for recognizing, acknowledging, and resolving complaints, along with escalation procedures and automated reminders through CRM systems, have been established. Communication in Hindi, English, and the local language is used for all customer-facing documents and resolutions, making customer support more accessible and transparent. Banks are undertaking training and empowering frontline staff for immediate, appropriate resolution of customer grievances at the first point of contact.
The collective initiatives of banks and regulators focus on robust redressal architecture, technology integration, expanded coverage, defined resolution timelines, and continuous process improvement to significantly enhance customer service quality and reduce grievances across India’s banking sector.
RBI Governor Mr. Sanjay Malhotra has emphasized customer service in banks as a critical priority for the banking sector, highlighting the urgent need for improved grievance redressal, transparency, and customer trust.
In its recent monetary policy, RBI emphasized the importance of customer service. It urged banks to expand the range of services offered to Basic Savings Bank Deposit (BSBD) account holders, without charging minimum balance fees, to include digital banking (mobile/internet banking) services.
RBI, in its master direction on customer services, brought down the timeline for the resolution of customer complaints from 12 working days to 7 working days, ensuring faster grievance redressal. Banks must have board-approved customer service policies emphasizing transparency, including deposit policies, service charges disclosure, and confidentiality. Each bank is required to designate nodal officers at the head office and controlling offices as points of contact for customer grievances and liaison with the RBI and Banking Ombudsman.
Customer centricity is now evolving as a competitive and strategic business differentiator, and all financial intermediaries must work together to improve customer service while complying with regulations.
Disclaimer
Views expressed above are the author’s own.
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