According to the survey, conducted by LocalCircles with over 54,000 responses across 334 districts, 63% of families reported being unable to access at least one account online due to various technical and regulatory hurdles.
The primary reasons cited for restricted access included:
– 23% of respondents said they were unable to access accounts due to KYC-related issues.
– 22% reported login credential failures.
– 11% found their bank had placed their account in dormant status.
– 7% said their account had been classified as DEAF (Dormant and transferred to the Depositor Education and Awareness Fund) and needed reactivation.
The survey also noted a lack of uniformity in online banking rules across banks, contributing to access difficulties.
RBI highlights rising complaints
RBI Governor Sanjay Malhotra, addressing the annual conference of RBI Ombudsmen, highlighted the sharp increase in customer complaints. The total number of grievances under the Integrated Ombudsman Scheme rose from 235,000 in 2022-23 to 294,000 in 2023-24, marking a 25% increase.
“In this age of competition, we will not survive long if we do not provide quality service to our consumers,” Malhotra said, urging banks and non-banking financial companies (NBFCs) to resolve complaints more efficiently.
He further noted that 57% of maintainable complaints in the last year required RBI Ombudsman intervention, indicating the severity of customer service issues.
KYC and financial exclusion challenges
The report referenced a study published by the Economic and Political Weekly (EPW) in November 2024, which detailed the impact of KYC regulations on vulnerable communities. According to the study, many individuals, including pensioners, students, and beneficiaries of government welfare schemes, were unable to access funds due to frozen accounts requiring KYC updates.
Surveys conducted in Jharkhand’s Latehar and Lohardaga districts found that in seven villages, 60% of 244 households had at least one frozen account. A similar survey across 72 households in Latehar showed that 40% faced account access restrictions due to KYC-related issues.
The LocalCircles survey further revealed that 59% of families found banks to be bureaucratic and inefficient when they sought to restore account access.
Revised RBI directives on dormant accounts
The survey findings come ahead of RBI’s revised guidelines on inoperative accounts, set to take effect from April 1, 2025. Under the new rules, banks must classify an account as ‘inoperative’ if there are no customer-initiated transactions—including balance checks or cheque book requests—for more than two years.
While aimed at preventing fraudulent activities, the directive may further affect customers struggling with KYC and account access issues.