A recent survey conducted by LocalCircles found that 63% of respondents faced difficulties accessing one or more of their bank accounts online due to issues related to Know Your Customer (KYC) verification, dormant account status, or login credential malfunctions.
According to the survey, 34% of families reported that at least one member encountered problems accessing their bank account online. These challenges have led to delays and disruptions in financial transactions, particularly for those who rely on timely access to their accounts.
The survey gathered over 54,000 responses from consumers across 334 districts in India. Among the respondents, 67% were men, and 33% were women. Additionally, 42% of responses came from tier-1 cities, 27% from tier-2 cities, and 31% from tier-3 and tier-4 districts.
Beyond technical and procedural challenges, 59% of families surveyed indicated that they found banking procedures to be bureaucratic and inefficient when attempting to regain access to their accounts. The findings align with recent directives from the Reserve Bank of India (RBI), which require banks to classify accounts as ‘inoperative’ if there are no customer-initiated transactions for over two years.
Sachin Taparia, founder of LocalCircles, emphasized the need for streamlined banking processes, stating, “Banks will need to improve process efficiency to ensure customers can easily validate and access their accounts.”
The survey results coincide with remarks from RBI Governor Sanjay Malhotra, who noted a significant increase in consumer complaints under the RBI’s Integrated Ombudsman Scheme. Over the past two years, complaints have risen by nearly 50% annually, highlighting the need for improved customer service and efficient banking operations.
To enhance service efficiency, the RBI has introduced new guidelines set to take effect on April 1. These rules will classify an account as ‘inoperative’ if there are no customer-initiated transactions, including KYC updates and non-financial activities such as balance inquiries, for over two years.
KYC requirements, designed to prevent fraud and ensure regulatory compliance, have posed challenges for certain customer groups, particularly those from economically disadvantaged backgrounds. A study published in the Economic and Political Weekly (EPW) in November 2024 indicated that some individuals, especially in rural areas, struggle to provide the necessary documentation, such as Aadhaar card linkage, leading to financial access barriers.
In districts such as Jharkhand, surveys found that up to 60% of households had at least one frozen bank account due to KYC-related issues. These accounts include those of pensioners, students receiving scholarships, and beneficiaries of government welfare programs, underlining the impact of account access challenges on financial inclusion.
The survey underscores the need for banks to enhance digital banking accessibility and customer support to address these ongoing challenges.
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