Complaints against banks surge while settlements dwindle

The number of complaints from customers of banks and non-bank financial institutions (NBFIs) regarding various banking-related irregularities has been rising year-on-year while the rate of settling these complaints has been on the decline.

The Bangladesh Bank could not settle 18% of customer complaints in the past fiscal year, raising concerns about the effectiveness of consumer protection measures.

Pointing to a potential link with the ongoing election year, bankers noted a decrease in visits by the Central Bank's special inspection teams to banks, potentially weakening oversight and contributing to the backlog of unresolved complaints.

According to the central bank's yearly report, the Bangladesh Bank received 10,542 complaints in the fiscal 2022-23. Of these, 8,682 complaints were successfully settled, indicating a resolution rate of 82.36%.

The rate of complaint disposal was 91.42% in the preceding FY22, and 100% in the fiscal year before that.

The report also indicates a 50% reduction in the central bank's special inspections in FY23, with 94 special inspections carried out compared to 179 in FY22.

A central bank official, who did not want to be named, told TBS that banks regularly introduce new products or services to the market. The escalating number of banks, expanding service scope, and rigorous oversight are contributing factors to the rise in complaints.

The official said card transactions are on a continuous rise, and mobile banking has become a widely favoured means of conducting transactions. Consequently, as banking services expand, the overall service scope of banks is gradually broadening. The entire banking sector is expanding in parallel with the economy, leading to a natural increase in the number of complaints.

However, the official emphasised that for the sector's growth to be beneficial, it is crucial to ensure the effective resolution of these complaints.

As per the Bangladesh Bank report, individuals facing harassment while seeking banking and financial services or having any complaints can report to the Financial Integrity and Customer Services Department (FICSD) of the central bank. The Vigilance and Anti-Fraud Division of FICSD actively monitors the banking sector through specialised inspections, aiming to prevent and diminish irregularities, corruption, and fraud within the industry.

The FICSD carries out targeted inspection operations in banks, NBFIs, cooperative societies, or other entities based on the significance of the complaints received. These inspections are initiated independently, taking into account various sources, under the direction of higher authorities, or in response to requests from other departments.

When asked about the complaints and their disposal, Mazbaul Haque, executive director and spokesperson of the Bangladesh Bank, told TBS that the settlement of complaints depends on the nature of the matter. Those that can be settled immediately are settled quickly and those with legal complications take time.

He said the central bank often engages in discussions with the implicated bank to resolve the complaint. Once the actual cause is determined, the central bank proceeds to take legal action. These are the standard procedures for central banks which are carried out following established rules.

Amid the 2020 Covid-19 pandemic, several private banks terminated staff, with allegations of coercion being applied for resignations. In response, the Bangladesh Bank issued an order to halt the layoffs and reinstate those employees who were terminated or compelled to resign due to the coronavirus. 

However, the banks did not comply with this directive, compelling the affected individuals to seek legal recourse. Many of these unemployed bankers lodged complaints with the central bank, resulting in a surge in the number of complaints.

As per the FICSD, customers typically lodge complaints which fall into 13 categories, encompassing issues such as General Banking Interruptions, Bank Guarantee Problems, Concerns about Notes and Coins, Dissatisfaction with Customer Service, Legal Notices, Loans and Advances, Fees and Charges, Local Trade Bills, Foreign Trade Bills, Check Forgery, Remittances, Cards, and Mobile Banking.