Shalini Sharma Final Thesis

AN ANALYSIS OF COMPLAINT MANAGEMENT
SYSTEM IN INDIAN PUBLIC AND PRIVATE

SECTOR BANKS
A THESIS
Submitted in partial fulfillment of the

requirements for the award of the degree
of
DOCTOR OF PHILOSOPHY
in
MANAGEMENT
by
Shalini Sharma
TAPMI SCHOOL OF BUSINESS

MANIPAL UNIVERSITY JAIPUR
JAIPUR-303007
RAJASTHAN, INDIA
September, 2015
MANIPAL UNIVERSITY JAIPUR
CERTIFICATE
I hereby certify that work which is being presented in the thesis entitled “An
Analysis of Complaint Management System in Indian Public and Private Sector
Banks” in partial fulfilment of the requirements for the award of the Degree of
Doctor of Philosophy and submitted in the Department of TAPMI School of
Business of the Manipal University Jaipur, Jaipur is an authentic record of my own
work carried out during a period from 21-12-2012 to 25-09-2015 under the
supervision of Dr Sonia Munjal, Department of TAPMI School of Business,
Manipal University Jaipur, Jaipur.
The matter presented in the thesis has not been submitted by me for the award of any
other degree of this or any other Institute.
Date:
Place: (Shalini Sharma)
CERTIFICATE
This is to certify that the above statement made by the candidate is correct to the
best of my knowledge and belief.
Date: 25-09-2015 (Dr Sonia Munjal)

Supervisor
i
ACKNOWLEDGEMENT
I would like to thank almighty god for everything I am and have today because he
has given the motivation and courage to attempt the research work. There are several
individuals who have contributed throughout the doctoral program and ultimately,
the completion of this thesis. My heartfelt thanks and appreciation goes to my guide
Dr. Sonia Munjal. She contributed her intellect to bring perfection in the attempt.
Despite of her busy schedule, she was always there to enrich my knowledge by
improving my research work with passion. I am very grateful to her for enduring
faith in me. She spent hours with me, guiding me throughout the process. She gave
valuable and timely suggestion not only for academic but for the personal growth too.
I would like to convey my gratitude to the student doctoral committee members

Dr. Teena Shivnani, Dr. C. Anirvinna and Dr. Rachna Gangwar, who gave their wise
counsel for the improvement of my research work. I am grateful to Dr. Pradeep
Siwach and Mr. Anurag Bhatnagar for giving me the opportunity to conduct my
research work. I have the utmost respect for the high standards of excellence that
they imparted. It would have been very difficult to complete the doctoral program
without the support of Mr. Peetha Ram Choudhary, who always supported me by
providing every necessary facility for my research. He inspired me to be consistent
in my research.
The research work could not have been completed without the encouragement and
support of family. I am fortunate to have the husband Dr. Anupam Krishna. He is
the mentor, partner and friend. He is the person who motivated me to do this
research. He always admired my efforts and supported me in all ways to reach at the
heights of success. His sacrifices, patience and wise counsel made my research
possible. His sense of progressiveness created a huge support for the entire PhD
journey. He even contributed academically by his strong ideas and beliefs. I consider
him as a role model in my life and his achievements shown me the path of success.
Special acknowledgement, however, goes to an individual who is such an important

part of my life. My mother has spent her entire life in building me emotionally and
academically. She provided so many lessons to me throughout my childhood and
adult life, which I follow. Her love, support, and encouragement are unwavering.
Until the years passed, I had not fully realized the extent of the efforts and sacrifices
that were made by her so that I could achieve some degree of happiness and success
ii
in life. I am unable to express to her directly how much she meant to me, and to
thank her for all of her many efforts on my behalf.
I am grateful to god that he have gifted me the best parents of the world. My Father,
Mr. Om Prakash Mishra motivated me to excel in life. I got the sense of perfection
and hard work from my father. The practical knowledge of banking regulations gave
me the in depth knowledge on the subject matter. He always let me dream and to
achieve them with hard work. He has scarified many things to make me better
human being. My father shows an early and essential path to follow in the field of
education and instilled the sense of personal discipline and professional behavior.
I do not think one can proceed through and complete a doctoral program at this stage
of life without the help and wisdom given by those who had direct and indirect
support and wishes. I am thankful to my Mother-in-law Mrs. Krishna Sharma and
father-in-law, Mr. K.K. Sharma for their love and affection. The legacy left by each
of them provided a guiding light for all family members who followed. I admire
their patience and support during my PhD journey. They always motivated me to
excel professionally by their precious advice.
Special thanks to my beloved sister-in-law, Mrs. Anukriti Sharma and brother-in-law,

Mr. Madhupam Krishna for their support. She made me able to complete the journey
by taking the responsibility of household and others. She always holds me up when
things went wrong. I will always be indebted to them for their love and support.
The PhD journey would not be complete without the support and efforts of my
companions, Sunishtha, Shruti, Harkanchan Singh, Richa Mishra, Evelyn, Shweta,
Sharad and Jamuna. We shared the moments of anxiety and laughter. Their unfailing
assistance and motivation over the course lead me to the completion of this journey.
I am indebted to Dr. Shilpi Gupta for her precious guidance in research Methodology.
She was always there to solve my queries and doubts about the tests and tools. I am
thankful to Dr. Pooja Sharma, Dr. Kalpana Sharma, Dr. Kriti, Dr. Charu, Dr. Babita
Jha and Ms. Deepti Sharma for their expert advice for the subject. I am thankful to
Mrs. Deepthi Rajeev, Miss Jyotsana and Mrs. Sonal Sharma who always helped me
during my research.
Shalini Sharma
iii
ABSTRACT
The increasing prominence of services in the India’s developmental statistics

indicates that services require the excellence in both public and private sector. A
huge share of national income is contributed by service sector industries. Service
industries include Automobile, Insurance, education, banking etc.
Banks have the significant impact on the economic development. Banks act as the
lubricant for the Indian economic and overall development. As the banks are
involved in money, it provides the working capital to the industries stabilises the
currency in domestic and international markets, assures the safety of households and
investors. The banking sector is divided in public sector and private sector banks.
Complaints are the result of customer’s dissatisfaction which may arise due to the
difference between the expected service encounter and actual service delivery. The
prominence of customer’s satisfaction has encouraged the service providers to
understand the importance of loyalty of customers through complaint management.
(Michel 2001) have defined the difference between service recovery and complaint
management. According to (Gronroos 19888), service recovery are the responses
taken by the service provider in response to complaints whereas complaint
management is done to handle the customer’s complaints. Banks are required to
take complaint management initiatives to ensure the effective complaint handling in
banks. Complaint management leads to customer satisfaction and loyalty. The
contended customer motivates friends and family to use the bank’s services.
Complaint management is advantageous for banks as it maintains the present

customers and builds the new customer base. The successful redressal of complaints
increases the profitability of firms. In India, RBI has laid down the guidelines to
ensure the moral suasion of customers. Despite of the efforts done by banking
committees and Reserve Bank of India, the customer’s satisfaction is low in Banks.
The research investigates the perception of customers regarding the effectiveness of
complaint management system between public sector banks and private sector banks.
The research focuses on the comparative analysis of complaint management system in

Indian public and private sector banks. The research emphasises on the complaint
iv
management on the basis of nature of complaints lodged, effect of demographic factors
on complaint behaviour of customers, Perception of customers regarding effectiveness
of complaint management system in public sector and private sector banks.
Employees are the conveyers of the services. They are face of an organisation.
Successful complaint redressal can be achieved through the contentment of employees.
It is necessary to understand the Employee’s perspective on the complaint management
system because employees are the implementers of the complaint management
policies and guidelines. The research investigates the attitude and problems faced by
the employees in implementation of complaint management system in banks.
The sample was drawn from the population of bank customers and banks. The
response is taken from 400 customers of State Bank of Bikaner & Jaipur, Union
Bank of India, Punjab National Bank, ICICI Bank, HDFC Bank and Axis Bank. The
sample is drawn using Quota Sampling. To know the problems faced by the
employees in implementation of complaint management, sample is drawn from bank
employees using quota sampling. The research is conducted on the respondents of
Ahemdabad, Jaipur and Lucknow.
Banks should consider complaint management as customer retention strategy. Focus

group interviews, attitudinal surveys and corrective measures should be initiated to
inculcate the positive outlook in employees for complaint redressal. Employees
should be motivated to actively participate in complaint management by linking the
performance management system with complaint redressal.
Awareness programs should be conducted to create understanding of complaint

management procedures and policies in customers. The complaint management
guidelines should be displayed in the welcome kit which is given to the customers
when they open their account in banks. Complaint modes should be upgraded with
advanced technology and it should be intimated to the customers.
Thus research is a composite work to investigate the complaint management system

and the enhancement of the efficacy of complaint management system in banks. The
research leads to further research on post complaint behavior, complaint management
as switching barrier in banks and development of complaint management models in
banks.
v
List of Content
1. INTRODUCTION ...........................................................................................1-23
1.1 Financial Sector of India ............................................................................. 2
1.2 Indian Banking Industry .............................................................................. 2
1.2.1 History of Banking Industry in India ............................................. 3
1.2.2 Nationalisation of Banks ................................................................. 3
1.2.3 Liberalisation and Globalisation of Banks..................................... 4
1.3 Structure of Banking Industry in India ....................................................... 4
1.3.1 Reserve Bank of India ..................................................................... 5
1.3.2 Scheduled Commercial Banks ........................................................ 6
1.4 Brief Profile of Public and Private Sector banks selected for research .... 8
1.4.1 State Bank of Bikaner & Jaipur ..................................................... 8
1.4.2 Union Bank of India ....................................................................... 9
1.4.3 Punjab National Bank .................................................................... 9
1.4.4 Industrial Credit and Investment Corporation of India (ICICI) ...........9
1.4.5 Axis Bank ..................................................................................... 10
1.4.6 Housing Development Finance Corporation (HDFC) ................ 10
1.5 Complaints.................................................................................................. 11
1.6 Complaint Management System ............................................................... 11
1.7 Complaint Management in Banks........................................................... 112
1.8 Complaint Management System in Indian Banks.................................. 112
1.8.1 Modes to lodge the complaints ..................................................... 13
1.8.2 Display Requirements ................................................................... 14
1.8.3 Time Frame .................................................................................... 14
1.8.4 Escalation Matrix of Banks........................................................... 16
2. LITERATURE REVIEW.............................................................................24-44
2.1 Complaints.................................................................................................. 25
2.2 Complaint Management ............................................................................ 26
2.3 Complaint Management Models ............................................................... 30
2.4 Complaint Management in Banks............................................................. 31
vi
2.5 Complaint management in Indian Banking Industry............................... 32
2.5.1 Banking Commission .................................................................... 33
2.5.2 Talwar Committee ......................................................................... 33
2.5.3 Goiporia Committee ...................................................................... 33
2.5.4 Tarapore Committee ..................................................................... 34
2.5.5 Banking Ombudsman.................................................................... 34
2.5.6 Banking Codes and Standards Board of India (BCSBI) ............. 38
2.5.7 Damodaran Committee ................................................................. 39
2.6 R.B.I. Guidelines of Complaint Management System ............................ 39
2.6.1 Complaints/suggestions box ......................................................... 40
2.6.2 Complaint book/Register .............................................................. 40
2.6.3 Complaint Form............................................................................. 41
2.6.4 Analysis and Disclosure of Complaints ....................................... 41
2.6.5 Display Requirement at Bank Offices.......................................... 42
2.6.6 Review of Grievances Redressal Machinery in
Public Sector Banks ...................................................................... 43
2.7 Research Gaps ............................................................................................ 44
3. RESEARCH METHODOLOGY ................................................................45-54

3.1 Problem Statement ..................................................................................... 45
3.2 Objectives of research ............................................................................... 45
3.3 Nature of research ...................................................................................... 47
3.4 Operational definition ................................................................................ 47
3.4.1 Complaint Management System................................................... 47
3.4.2 Nature of Complaints ................................................................... 47
3.4.3 Complaint Modes .......................................................................... 47
3.4.4 Complaint Behaviour .................................................................... 47
3.5 Population ................................................................................................... 48
3.6 Sampling type and sample size ................................................................. 48
3.6.1 Selection of Geographical Area.................................................... 48
3.6.2 Selection of banks ......................................................................... 48
3.6.3 Selection of respondents ............................................................... 48
vii
3.7 Data Collection .......................................................................................... 49
3.7.1 Secondary Data.............................................................................. 49
3.7.2 Primary Data .................................................................................. 49
3.7.3 Reliability of Questionnaires ........................................................ 50
3.7.4 Validity using Factor Analysis .................................................... 51
3.8 Analytical Methods.................................................................................... 54
3.9 Ethical Considerations ............................................................................... 54
4. ANALYSIS, INTERPRETATIONS AND FINDINGS ............................55-85

4.1 Hypothesis Statement ................................................................................ 55
4.1.1 ATM Related Complaint............................................................... 56
4.1.2 Infrastructure & Basic facilities Related ...................................... 57
4.1.3 Mechanical Services Related Complaint ..................................... 58
4.1.4 Operations & Procedure Related Complaint ............................... 59
4.1.5 Employee Behaviour Related Complaints ................................... 60
4.2 Preferred Complaint Modes ...................................................................... 62
4.3.1 Customer’s viewpoint regarding the effect of Age on
Complaint Behaviour...................................................................... 63
4.3.2 Employee’s Viewpoint regarding the effect of demographic
factors on Complaint Behaviour................................................... 65
4.7 Problems faced by employees in proper functioning of
Complaint Management System ............................................................... 82
4.7.1 Attitude of employees towards complaints.................................. 82
4.7.2 Problems in Implementation of complaint management
policies .......................................................................................... 83
4.8 Other Findings............................................................................................ 84
4.8.1 Post complaint behaviour.............................................................. 84
4.8.2 Problems in Complaint Modes ..................................................... 85
viii
5. CONCLUSION ..............................................................................................86-88
5.1 Conclusions ................................................................................................ 86
5.2 Recommendations...................................................................................... 87
5.3 Future Research Directions ....................................................................... 88
REFERENCES ........................................................................................................89-98
ANNEXURES ....................................................................................................... 99-110

Annexure I: Customer Questionnaire .......................................................... 99-106
Annexure II: Employee Questionnaire ...................................................... 107-110
ix
LIST OF TABLES
Table No. Title of the table Page No.
3.1 Values of reliability using Cronach’s Alpha 50
3.2 Value of Cronbach’s Alpha of employee’s questionnaire 50
3.3 Values of extraction using Factor Analysis 51
3.4 Value of Cronbach’s Alpha of Employee’s Questionnaire 52-53
4.1 Frequency of Complaints lodged related to ATMs 56
4.2 Complaints related to Infrastructure related complaints 57
4.3 Table showing frequency of complaints related to mechanical 58

services
4.4 Complaints related to Operations & Procedures related 59
4.5 Complaints lodged related to Employee Behaviour 60
4.6 Independent t-test on complaints lodged in public and private 61

sector banks
4.7 Frequency of customers as per occurrence of complaints 63
4.8 Values of Correlation between age of the respondents and 64

complaint behaviour
4.9 Frequency distribution of employees who believe young 65

customer complain more
4.10 Frequency of employees who believe that young customers use 66

modern modes while aged customers use traditional modes
4.11 Frequency distribution of gender and frequency of complaints 67
4.12 Values of correlation between gender and frequency of 68

complaints
4.13 Frequency distribution of gender wise frequency of complaints 68
4.14 Frequency Distribution of educational qualification and 70

frequency of complaints
x
Table No. Title of the table Page No.
4.15 Correlation Coefficient between Educational Qualification & 71

Frequency of Complaints
4.16 Frequencies of employees who believe that educated people 71

complain more
4.17 Frequency distribution of customer’s satisfaction of time taken 73

for redressal.
4.18 Frequency distribution of time taken by public sector and 74

private sector banks
4.19 Frequency distribution of customer’s response over policies and 75

procedures of CMS
4.20 Frequency Distribution showing satisfaction with compensation 76

given by bank
4.21 Frequency table of satisfaction regarding Attitude of 77

Management & employees for Complaint Management
4.22 Frequencies distribution of measures adopted to create 78

awareness of complaint management
4.23 Values of Independent t test of perception of complaint 79

management
4.24 Frequencies of perception of customers on Effectiveness of 80-81

Private sector Banks over Public Sector Banks
4.25 Frequency table showing attitude of employees towards 82-83

complaints
xi
LIST OF FIGURES
Figure No. Title of the table Page No.
1.1 Strucure of Indian Banking Industry 5
1.2 Escalation Matrix of Complaints in SBBJ Bank 16
1.3 Escalation Matrix of complaints in Union Bank of India 17
1.4 Complaint Escalation Matrix of Punjab National Bank 18
1.5 Escalation Matrix of complaints in ICICI Bank 19
1.6 Escalation Matrix of Axis Bank 20
1.7 Complaint Escalation Matrix of HDFC Bank 21
1.8 Status of complaints in three years 22
4.1 Frequency of complaints lodged related to ATM 56
4.2 Frequency of complaints lodged related to Infrastructure & 57

Basic facilities
4.3 Frequencies of complaints related to Mechanical Services 58
4.4 Complaints lodged related to Operations & Procedures 59
4.5 Percentage of complaints related to employee behaviour 60
4.6 Preference of complaint modes 62
4.7 Age wise distribution of Frequency of complaints 64
4.8 Frequency distribution of employees who believe young 65

4.9 Frequency distributions of employees who believe young 66

customer complain use modern complaint modes than
traditional
4.10 Frequency distribution of gender and frequency of complaint 67

lodged
4.11 Frequency distribution of employees who believe female 69

complain more than male customers
xii
Figure No. Title of the table Page No.
4.12 Frequency distribution of educational qualification and 70

4.13 Frequency distribution of Employees view regarding effect of 72

education on complaint behavior
4.14 Frequency Distribution of customer’s satisfaction of time 73

taken for Redressal
4.15 Frequency distribution of time taken by public sector and 74

private banks
4.16 Frequency Distribution of customer’s response over policies 75

and procedures of CMS
4.17 Frequency Distribution of satisfaction with compensation given 76

by bank
4.18 Frequencies showing Attitude of Management & employees 77

for Complaint Management
4.19 Frequency distribution of responses of customers for measures 78

adopted to create awareness of complaint management
xiii
Introduction 1
CHAPTER - 1
INTRODUCTION
This chapter provides the conceptual framework for the understanding of the
research work. It involves financial sector in India, Indian Banking Industry,
Complaint management and Complaint management in Indian Banks.
Service industry is increasing its prominence in the economy of the nation.

The conventional marketing philosophy was based on the flow of goods and services
from producer to customer (Parasuraman, Zeithaml, & Berry 1988). In current
scenario, the orientation of marketing is transformed from product centric to
customer centric (Burns and Bush 1999).
Ang & Buttle 2006 defined complaints as “An expression of dissatisfaction

made to an organisation, related to its products, or the complaints handling process
itself, where a response or resolution is explicitly or implicitly expected”.
The concept of complaint management came into the existence in 1987.

Fornell & Wernerfelt, 1987 considered complaint management as the tool of
defensive marketing. Complaint Management is a proactive measurement which is
taken while designing the service. Parasuraman 2006 stated that Complaint
Management assures the customer that complaint is valued, will be reviewed by
management and used for correcting and preventing future problems.
If the customer’s complaints remained unattended, it results in double

deviation (Diaz, Fransisco & Kasper 2007). Failed complaint redressal will lead to
decrease in profits, negative image of firm and customer switching. Today, IT
enabled customer spread the story of dissatisfaction to thousand prospective and
present users (Davidow & Dacin, 1997). To build the customer’s trust and loyalty, it
is required to manage the complaints of customers. Complaints are the opportunity
to mould the services as per the expectations of customers.
According to (Kotler 2009) “Marketing is expressed as a social and

managerial process by which individuals and groups obtain what they need and want
through creating and exchanging products and value with others”.
Introduction 2
Modern service management is much broader than classical marketing.

Marketing is more over customer centric (Fullerton 1988). The orientation is more
on building the relationship with the customers.
1.1 Financial Sector of India

Indian financial sector consists of Insurance Companies, Banks, Non-
banking financial companies, cooperative banks, pension funds and mutual funds.
Financial sector is regulated by various authorities like Reserve Bank of India,
Government of India, Securities & Exchange Board of India and Insurance
regulatory Board of India. Reserve bank was established under RBI Act, 1934. SEBI
was launched under the Securities and exchange board of India, 1992. The financial
sector of India is dominated by Banking Sector. According to the reference note
issued for the use of parliament, August 2013 “60% of total assets of financial sector
are dominated by commercial banks”. Nationalisation of banks has geared up the
economic development in India. The GDP per capita in India averaged 462.43 USD
from 1960 until 2013, reaching an all time high of 1165 USD in 2013(trading
economics). As on March 2015, the GDP of India was 7.5%. Indian Banking
Industry will become the 3rd largest banking industry by 2020 (RBI Report).
1.2 Indian Banking Industry

Indian Banks are the pole of economy. Bank is financial institution which
offers banking and other financial services to their customers. It facilitates the flow
of money from surplus areas (savings of households) by accepting deposits to the
deficit areas (corporate and agriculture) by granting loans. According to RBI Act
1934, Bank is the institution which is established under the RBI Act, 1934. The
increased competition and advancement of technology have augmented the service
areas of banks. They are not limited to money management, but provide fee based
services (locker facility, hire Purchase, lease, portfolio management, Factoring etc.)
and Fund based Services (credit card, loans, Mutual funds, housing finance etc.).
Banks are very important for the economic development of a nation. It provides the
security to the savings and valuables; motivate savings and avoid the concentration
of financial powers.
Introduction 3
1.2.1 History of Banking Industry in India

In India, the first bank was established in 1786. The bank was named as
General Bank of India. Then in 1809, East India Company established The Bank of
Bengal/Calcutta. In 1840, Bank of Bombay and Bank of Madras (1843) were
established. Bank of Calcutta, Bank of Bombay, and Bank of Madras were
amalgamated and named as Presidency Banks. In 1865, Allahabad Bank was
established the first bank was completely run by Indians. In 1894, Punjab National
Bank Ltd. was set up with head quarters at Lahore. Between 1906 and 1913, Bank of
India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank
of Mysore were set up. In 1921, Presidency banks were amalgamated and form the
Imperial Bank of India. In 1925, Hilton Young Commission was established and in
1934, the Reserve Bank of India was established. It started its functioning in April
1935(SBI Report). Banks are governed and regulated by Reserve Bank of India. RBI
was established under the RBI Act, 1934.
1.2.2 Nationalization of Banks

In 1949, Reserve Bank of India and Government of India passed the Banking
Regulation Act, 1949 (earlier known as Banking Companies Act, 1949) to regulate
the activities of commercial banks. Reserve Bank of India was recognized as a
central banking authority. In 1955, the Imperial Bank of India was nationalized and
was given the name "State Bank of India" to handle banking transactions all over the
country under the regulation of State Bank of India Act, 1955. Under this phase, the
nationalization of banks took place with the initiation taken by, then Prime Minister
Smt. Indira Gandhi. The stated reason for the nationalisation was to give the
government more control of credit delivery. Seven banks forming subsidiary of State
Bank of India was nationalized in 1960 (Muraleedharan 2014). On 19th July, 1969,
14 major Indian commercial banks were nationalized. In 1975, Regional Rural
Banks came into the existence. Further, in 1980 six more banks were nationalized
and the no. of nationalized banks was 20 with the capital of 200 crore. With the
second step of nationalisation, the Government of India controlled around 91% of
the business in country.
Introduction 4
1.2.3 Liberalization and Globalization of Banks

In 1990, the government headed by Dr P.V. Narsimha Rao, imposed policy
of liberalisation under which license were issued to private banks. Global Trust
Bank was the first bank which got the license (later amalgamated with Oriental
Bank of Commerce, Axis Bank (earlier as UTI Bank), ICICI Bank and HDFC Bank.
With privatization, the banking sector transformed in four major sectors i.e. Public
sector banks, Private sector banks, Regional rural banks and foreign banks. The
private banks are the banks in which the majority of stake lies with the private
individuals and companies.
In 1990, Dr. Manmohan Singh initiated the globalization policies in India. In

the continuation of the privatization, industrial credit and Investment Corporation of
India (ICICI) came into existence in the year 1955 as a wholly owned subsidiary. It
was the first private sector bank. The Axis Bank was the third largest private bank,
earlier known as UTI Bank, which was established in the year 1994. On 30th July
2007, UTI Bank Ltd. became Axis Bank. The entry of foreign banks changed the
scenario of Indian banking. Customers compared the services of Indian banks with
the foreign entrants who demanded prompt services, innovative financial products
and customer satisfaction which increased the pressure of performance on Indian
Public and Private sector banks.
1.3 Structure of Banking Industry in India

Banking Industry is controlled by the Reserve Bank of India. Reserve Bank
of India regulates scheduled and non scheduled banks. Scheduled banks are the
banks which are listed in the second schedule of RBI Act, 1934. The structure of
scheduled banks is as follows:
Introduction 5
Reserve Bank of India
Commercial Banks
Cooperative Banks
Scheduled Non Scheduled

Commercial Banks Urban
Commercial Banks
Cooperative
Banks
Public Sector Private Sector Rural Cooperative

Banks Banks Banks
SBI & Associates (5)

Indian Private Banks (27)
Nationalised Banks (19)

Foreign Banks (43)
Regional Rural Banks (82)
Source: RBI Bulletin, 2010

Figure 1.1 Strucure of Indian Banking Industry
1.3.1 Reserve Bank of India

The Reserve Bank of India is an autonomous body, with minimal pressure
from the government. It was established in the year 1935 under RBI Act, 1934.
Reserve bank controls the activities of all commercial banks. It acts as a Banker of
banks, Banker of Government, currency controller, Regulator of financial system,
Price stabilizer, Trainer of Banks, Protector of Public Interest and Manager of
Foreign Exchange (RBI Website). Reserve bank has power to regulate the working
of the all commercial and non-commercial banks. The complaint management
strategies are being framed and governed by the RBI. Reserve Bank of India has
appointed the Banking Ombudsman to regulate and review the complaint
management policies and procedures.
Introduction 6
1.3.2 Scheduled Commercial Banks

Scheduled Commercial banks are the banks which have been included in the
schedule II of RBI Act 1934. The major scheduled commercial banks are State Bank
of India and Associates, nationalised banks, foreign banks and regional rural banks
and other scheduled banks (RBI Website). Reserve Bank of India includes the bank
which fulfills the criteria mentioned in section 42 (6) (a) of RBI Act, 1934. The
criteria to become the scheduled bank is the paid up capital and reserves should be
amount of Rs. 25 Lakh. Schedule banks are required to submit their working reports
to the RBI every week.
1.3.2.1 Public Sector Banks
Public Sector Banks are the banks whose 60% ownership is held by the
Government of India. According to Indian Banker’s Association, There are 22 banks
which comes under public sector banks. It involves SBI and its associates and
Nationalized Banks (Shanmugam & Das 2004). Nationalized Banks include Punjab
National Bank, Canara Bank, Union Bank of India, Oriental Bank of Commerce,
Indian Overseas Bank, Bank of Maharashtra, Bank of Baroda, Bank of India etc.
1.3.2.2 State Bank of India and Associates

Untill 1951, banks were aimed to confine their services to urban sector. In
1955, All India rural credit survey committee proposed the take over of imperial
bank to ensure the flawless delivery of banking services to rural areas. The control
was held by the states. SBI were nationalised in the year 1955. In 1959, the
subsidiaries of SBI got nationalised. SBI have 5 associate banks. The banks are State
Bank of Bikaner & Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of
Mysore (SBM), State Bank of Patiala (SBP), State Bank of Travancore (SBT).
State Bank of Bikaner & Jaipur was established in 1963, with the
consolidation of State Bank of Bikaner (1944) and State Bank of Jaipur (1943).
SSBJ have 1037 bank branches.
State Bank of Hyderabad was established in 1941. In 1956, it became the
partner of State Bank of India. It has in execution at 1500 bank branches. State
Bank of Mysore (SBM) was formed in 1913 as the Bank of Mysore Ltd. In 1953,
Introduction 7
Mysore Bank was assigned as an executor of Reserve Bank of India to facilitate

government business and treasury operations and in March 1960, it turned into a
subsidiary of the State Bank of India under the State Bank of India (Subsidiary
Banks) Act 1959. According to India today, Sept. 2014, the no. of branches of SBM
is 976 (SBI regulations).
State Bank of Patiala (SBP) was established in 1917. On April 1960, it was
bestowed as the subsidiary of State Bank of India. There are 1010 branches of SBP
in India (in 2014). State Bank of Tranvancore was establised in 2945 and is a
subsidiary of SBI since 1950. It has 1117 branches in India. Thus, SBI and
associates are the state owned banks which work for the economic development.
1.3.2.3 Private Sector Banks

Private sector banks are the banks which are owned by the Private Companies.
Private banks came into the existence with the evolution of globalisation and
privatization. Private sector banks are again classified under Indian Private banks
and foreign Banks. Indian private banks are the banks which are established by the
Indian entities. According to Indian Banker’s Association, there are 23 Indian
private banks. ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra, ING Vyasya,
Yes Bank, IndusInd Bank, Karur Vysaya Bank etc.
1.3.2.4 Foreign Banks

Foreign banks are the banks whose stake of ownership lies with the foreign
entities. The foreign banks are important for the development of foreign trade and
relations with the world. The foreign banks are Citibank, HSBC Bank, Standard
Chartered Bank, Deutsche Bank, BNP Paribus etc.
1.3.2.5 Regional Rural Banks

Regional Rural Banks are the banks whose share capital is contributed by
Government of India, State Government and the Bank (which has sponsored RRB)
in proportion of 50%, 15% and 35% respectively. RRBs were established in 1975
under the provisions of Ordinance issued on 26th September, 1975 under Regional
Rural Banks Act, 1976 (RRB Regulations). The aim of esatblishing the RRBs were
Introduction 8
to develop the rural economy by providing money for all round progress of
agriculture, trade and industry in the rural areas, to credit and other facilities,
particularly to small and marginal farmers, agricultural labourers. RRBs were set up
under the recommendations of Narasimhan Committee. RRBs are controlled by the
Government of India, State Government and sponsor Bank. The sponsor bank can be
any nationalised bank. The examples of RRBs are Marwar Gramin Bank, Andra
Pradesh Gramin Bank, Uttar Pradesh Gramin Bank etc.
1.3.2.6 Cooperative Banks

According to International Cooperative Banking Asociation, Cooperative
bank is an autonomous association of persons who work voluntarily to meet their
economic, social, and cultural needs. is a financial entity which belongs to its
members, who are at the same time the owners and the customers of their bank. Co-
operative banks are created by persons who belongs to the same local or
professional community or sharing common interests. Co-operative banks generally
provide their members with a wide range of banking and financial services.
1.4 Brief Profile of Public and Private Sector banks selected for research
As discussed earlier, there are numerous players in public sector and private
sector banks,the research is based on 3 public sector banks and 3 private sector
Banks. State Bank of Bikaner & Jaipur, Punjab National Bank and Union Bank of
India are taken from public sector banks and ICICI Bank, HDFC Bank and Axis
Bank from private sector banks. The brief introduction of the banks are as follows:
1.4.1 State Bank of Bikaner & Jaipur ‘Bank with a vision’

The origin of State Bank of Bikaner and Jaipur dates back to the year 1943-
44, when the Bank of Jaipur Ltd. (SBBJ website) and the Bank of Bikaner Ltd. came
into existence. In 1960, both banks were incorporated as subsidiaries of State Bank
of India and named as State Bank of Bikaner and State Bank of Jaipur. On January
1, 1963, both banks were merged into one entity viz. State Bank of Bikaner and
Jaipur. The constitution, capital, management and other matters pertaining to the
Bank are governed by the provisions of SBI (Subsidiary Banks) Act, 1959. SBBJ
has 1037 branches all over the India with a profit of Rs. 730.24 crore (2013).
Introduction 9
1.4.2 Union Bank of India ‘good people to bank with’

Union Bank of India (UBI) was registered on 11th November 1919 as a
limited company in Mumbai and was inaugurated by Mahatma Gandhi in 1921. At
the time of India's Independence in 1947, UBI only had four branches. After
Independence UBI accelerated its growth and by the time the government
nationalized it in 1969, it had grown to 4000 branches in 28 states. The clientele
base of the bank is 49 million (Bank Report). The bank has net profit of Rs. 17.87
billion (2012).
1.4.3 Punjab National Bank ‘A bank you can name upon’

PNB is the third largest bank in India in terms of asset size. It was founded in
1894 at Lahore (Pakistan) as a private banking company by Lala Lajpat Rai. In
1947, at the time of partition the office shifted from Pakistan to Delhi. Later, bank
overtook Universal Bank of India, Bharat Hindustan Commercial Bank. On 19th July
1969, Bank was nationalized. Currently, Bank is the second largest state-owned
commercial bank in India which has 5,000 branches across the nation. It has the
profit of Rs. 50.24 billion (2012) and serves over 37 million customers.
1.4.4 Industrial Credit and Investment Corporation of India (ICICI) Hum hai na!!
ICICI Bank was promoted in 1994 by ICICI Limited which was an Indian
financial institution. Earlier, ICICI Bank was its subsidiary. In 1998, ICICI Limited
decreased its shareholding in ICICI Bank to 46%. ICICI Limited was established in
1955 at the initiative of the World Bank, the Government of India and representatives
of Indian industry to create a development financial institution (ICICI Regulations).
In 1999, ICICI become the first Indian company and the first bank or financial
institution from non-Japan Asia to be listed on the New York Stock Exchange. In
October 2001, Due to the emerging competitive scenario in Indian banking industry,
ICICI took a move towards universal banking. Boards of Directors approved the
merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI
Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI
Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January
Introduction 10
2002. Consequent to the merger, the ICICI group's financing and banking operations,
both wholesale and retail, have been integrated in a single entity.
The bank was initially known as the Industrial Credit and Investment
Corporation of India Bank, before it changed its name to the abbreviated ICICI
Bank. It has a network of 3,539 branches all over in India. ICICI Bank is an Indian
multinational bank and financial services company headquartered in Mumbai. Based
on 2013 information, it is the second largest bank in India by assets.
1.4.5 Axis Bank ‘Badhti ka nam zindagi!!

Axis Bank was promoted in 1994, which was formerly known as UTI Bank.
The bank changed its name from UTI Bank Ltd. to Axis Bank Ltd. With effect from
July 30th 2007. In 1993, the bank initiated its operations. In 2012, the operating
income of the bank is Rs. 94 billion and it has a network of 2225 branches all over
India. Axis Bank has maximum no. of ATMs in India. Axis bank has its branches in
Colombo, London and Shanghai.
1.4.6 Housing Development Finance Corporation (HDFC)‘We understand your

world’
HDFC Bank is the fifth largest bank in India by assets. The bank was
promoted by the Housing Development Finance Corporation, a premier housing
finance company (set up in 1977) of India. HDFC Bank Limited was incorporated in
August 1994 (Bank website). It was promoted by Housing Development Finance
Corporation Limited (HDFC). It was among the first companies to receive an 'in
principle' approval from the Reserve Bank of India (RBI) to set up a bank in the
private sector. The Bank started its operations as a scheduled commercial bank in
January 1995 under the RBI's liberalization policies. The bank has 3600 branches in
all over India. The net profit of HDFC Bank is Rs. 69 billion (2013).
Introduction 11
1.5 Complaints
Services are an integral part of a dynamic economy and play significant role
in its development. Presently, the organizations are facing competitive business
environment and to gain competitive edge, an effective tool may be ‘Services’. In
any service delivery process, the first stage is service encounter in which a customer
gets the first experience of the service. Service encounter results in satisfaction or
dissatisfaction. Dissatisfaction arises due to Complaints. Complaints is unwanted,
dissatisfying, unexpected situation for a customer in the service process (Hoffman
and Bateson 1997). In case of complaints, choice implies with customers that either
he may complain or may not complain. At this stage complaint management
comes into existence. Resolving the complaints is ultimately ends with service
recovery. After complaint is resolved, and customer is satisfied the service recovery
process gets completed. Complaint Management is a process to eliminate or reduce
the effects of failures by compensating or supporting for the loss of customer.
Complaints are the results of the difference between perception of the

customers regarding service and the actual experience they come across (Zeithaml,
Berry & Parasuraman, 1988). Dissatisfaction is the origin of complaints (McCole
2004). If dissatisfaction continues with every service encounter, then it becomes
complaint. This is a very crucial point of time when the customer approaches the
provider for testing the trust to claim assurance/loyalty (Dick and Basu 1994). At
this point, if the customer is left unattended or delayed, it can prove highly
disastrous for the provider. So better complaint management process is the initiation
point to show the customer that, why he should still trust the provider. Failure in this
process is termed as “double deviation failure or “failure on failure” (Johnston &
Fern, 1999)”.
1.6 Complaint Management System

Earlier the resolution of complaints was known as complaint handling.
(Fornell & Wernerfelt 1987) firstly used complaint management as a tool of
defensive marketing. (Gronroos 1988) proposed the term ‘Service Recovery’ and
define it as ‘The action which service provider take in response to complaints and to
convert the dissatisfaction into satisfaction and Complaint Management is a
Introduction 12
proactive measurement which is taken while designing the service. Complaint

Management System (CMS) is a set of integrated tools, optimized to meet efficient
handling of complaints, and automate processes like registering new complaints,
managing existing complaints, automatic escalation of unresolved complaints,
managing complaint statuses, performing number of customer inquiries, handling of
complaints by respective persons/departments. It allows all team members to work
in a collaborative manner. Complaint management is an integral and inherent part
of any service sector process.
1.7 Complaint Management in Banks

The technological advancement has increased the importance of complaint
management. In early 80’s there were less no. of banks and were no competition in
banking sector. In 1990, private banks have emerged to perform various financial
functions with innovative services and credit products.
Privatization of banks created an atmosphere of competition. Customers have

alternatives to switch if they are not satisfied with the services. Banks should be
structured in a manner to attract the potential customers and retain the prevailing
ones. Complaint Management is essential in banks as to sustain their existence in the
market (Levesque & McDougall, 1996). Banks are becoming attentive to the
customer’s complaints as complaints help the banks in identifying the service areas
where they lack in satisfying the customer’s needs and expectations (Zeithaml,
Parasuraman, & Berry 1990).
1.8 Complaint Management System in Indian Banks

In India, Banks are regulated by Reserve Bank of India. The regulatory role
of RBI has created the pressure of performance over the banks. Due to the
competition and regulated environment, banks are required to become vigilant in
their dealings with complaints and the satisfaction level of customers. RBI has
initiated various measures, guidelines and authorities to review the complaint
management guidelines laid by the banks to ensure the customer’s interest. It is
mandatory for the banks to formulate the complaint management guidelines at bank
level accommodating the RBI guidelines. There are some common features that are
Introduction 13
mandatory for the banks to set up the complaint management system. Banks may
vary in their modes, time of redressal (up to a stipulated limit) and internal
complaint management.
Common features of complaint management system in Indian Banks

RBI has issued various guidelines related to the complaint management
system which are mandatory to follow by the banks. The guidelines are mentioned
in the Para 16 of Master circular RBI/2011-12/56DBOD No.Leg.BC.18/09.07.006/
2011-12 on Customer Service in Banks under the heading of Dealing with
Complaints and Improving Customer Relations. The guidelines are mandatory for
public sector as well as private sector banks. The following features are same in all
six banks which are involved in the research. The features can be categorised under
following categories:
1.8.1 Modes to lodge the complaints:

Customers may lodge their complaints by filling the complaint forms. The
format of complaint forms should be as per the format proposed by Indian Banker’s
association. It is mandatory for banks to provide Complaints/suggestions box at
each Branch. Further, at every office of the bank a notice requesting the customers
to meet the branch manager may be displayed regarding grievances, if the
grievances remain dissatisfied.
It is mandatory for banks to record all the complaints in complaint register

for acknowledgement of customer’s complaints. Indian Banker’s Association has,
for the sake of uniformity, prepared a format of the complaint book which entails the
record of all the complaints. As online banking is emerging, banks have provided
the online portal or website to avail banking services and express their feedback.
Customers may fill the form available at homepage or website or may write the mail
to bank.
Toll free numbers may also be used to lodge the complaints by the
customers. Banks have provided the facility of call centres so that customers may
lodge their complaints.
Introduction 14
Point of Difference
Although the modes are same in all the banks, SBBJ and ICICI Bank have
provided the SMS service to its customers. In case of dissatisfaction, customers just
need to type UNHAPPY and send it to the toll free no. to register their complaints.
SBBJ has implemented web based complaint management system from 07.09.2012.
Punjab National Bank has established Customer service kiosk wherein

customers may lodge their complaints. ICICI bank has initiated a customer-employee
interactive programme named as Milap. It is a customer service committee which
tries to reduce the gap between customers and bank employees. HDFC bank has
software named CRMnext and VisionPlus. CRMnext registers the complaints of
1.8.2 Display Requirements:

All the banks are required to display the contact details of Branch Manager,
Zonal Officer, Nodal Officers and Banking Ombudsman of the area. Banks are
required to display the fair practice codes proposed by Banking Codes and standard
board of India (BCSBI).
Bank’s website should contain the name and details of officials at head
office, regional and zonal offices including name of nodal officers and Banking
Ombudsman.
1.8.3 Time frame

According to Banking Ombudsman, any complaint which is not redressed
within one month or bank has rejected the complaint; complainant may approach the
banking ombudsman. At bank level, banks may fix the time limit, but not exceeding
one month.
Point of difference
As banks are free to fix the time frame within limits, so the time frame is
different in banks. SBBJ has fixed the time frame at various levels. At Branch level,
10 days are required to redress the complaints, at regional or Zonal level, next 5
days for redessal and at Head Office level, complaint should be redessed within next
6 days. The maximum time period for complaint management is 3 weeks.
Introduction 15
Union Bank has specified the turnaround time as per the nature of
complaints. For ATM related complaints, 7-15 days are prescribed, Credit cards 7
days, For general banking 5-30 days, For internet and mobile banking 2-7 days are
fixed by the bank.
Punjab National Bank has fixed the time frame. The turnaround time for
general complaints, redressal time is 21 days, Complaints forwarded by RBI or
VVIPs is 21 days, Complaints from PM Office are 15 days and ATM & banking
transactions are of 7-45 days.
At ICICI Bank, TAT is decided as per the severity of complaints. For normal
banking cases time is 7 days, for fraud related complaints which needs retrieval of
documents TAT is 15 working days, Cases involving third party TAT is 30 working
days and for debit/credit cards TAT is 45-90 days.
Axis bank has the same categories of complaints, but the time frame is
different. TAT for normal banking cases time is 10 days, for fraud related complaints
which needs retrieval of documents TAT is 21 working days, Cases involving third
party TAT is 30 working days and for debit/credit cards TAT is 45 days.
HDFC Bank has the time frame on increasing basis. The complaint is to be
redressed within 10 days, after 10 days complaint will automatically escalate to the
complaint redressal officer, and after 10 days it will move to Principal Nodal officer.
1.8.4 Escalation Matrix

The escalation of complaints is different in banks. The escalation Matrix of
complaint is as follows:
1.8.4.1 State Bank of Bikaner & Jaipur

State Bank of Bikaner & Jaipur follows the following escalation matrix to
manage the complaints. The complainant receives an acknowledgement of receipt of
complaints. A system generated ticket no. (Complaint no.) is given. Customer may
track the status of his complaint.
Introduction 16
Banking
Ombudsman
Managing Director
Corporate
Principal Nodal
Centre
Officer (G.M.)
Within next
6 days
Central
Customer Service
Board
Commiittee
Within next 5
days
Local
Head
Nodal Officer Standing
Office Local Head
(resp. G.M.) Committee
Office
Within 10
days sent to
Web based CMS Network

Nodal Officer
Branch
Level
Complaint at branch and unique ticket no.

is given within 3 days
Source: https://www.sbbjbank.com/Policies/Grievances-Redressal1.htm
Figure 1.2 Escalation Matrix of Complaints in SBBJ Bank
As it is evident that Complaint is received at branch though various available

modes. The unique ticket number is given to the complainant. The complaint is
recorded in Complaint management system and Network nodal officer handles the
complaint, if the complaint is not redressed, then it escalates to the local head office
where complaint is handled by Nodal officer (chaired by General Manager), which
is assisted by standing committee which constitutes 2 representatives of Bank
executives, 2 representatives of general customer (one should be senior citizen). The
Standing Committee reviews the complaint and submits a report to Customer service
committee.
Introduction 17
1.8.4.2 Escalation Matrix of Union Bank
Banking Ombudsman
Level 3
Internal Ombudsman
Nodal Officer
Level 2 Regional Manager
Customer Care Unit Problem Solving Team
Level 1 Complaint at Branch

Monitoring Team
Source:http://www.unionbankofindia.co.in/pdf/GRIEVANCE_REDRESSAL_POLICY_2014.pdf
Figure 1.3 Escalation Matrix of complaints in Union Bank of India
As the complaints lodged at branch, it is reviewed by Customer care unit,

which consist Problem solving Team and Monitoring Team. CCUs have developed
standard operating procedures for handling complaints and queries. This will include
the registration process, routing, interaction and resolution of complaint. At level 2,
complaints are escalated to Regional Manager and are reviewed by Nodal Officer
and Internal Ombudsman. If the complainant is not satisfied with the redressal, then
he may appeal to Banking Ombudsman.
Introduction 18
1.8.4.3 Punjab National Bank
The escalation matrix in Punjab National Bank is as follows:
Banking Ombudsman
Internal Ombudsman
Level 3
Principal Nodal Officer
Customer Service Committee (M.D)
Standing Customer Committee

Level 2
Field General Manager
Level 1
Circle Office Nodal Officer (Circle Head)
Acknowledgement of Complaint (within 1 week)
Source: https://www.pnbindia.in/Upload/En/Grievance_redresaal_policy_english.pdf
Figure 1.4 Complaint Escalation Matrix of Punjab National Bank
Bank’s branch is required to give the acknowledgement of complaints within

1 week. If bank does not satisfy the complaint, it escalates to the Circle office at is
handled by Nodal Officer. Complaints are reviewed by the standing committee.
Standing Committee is headed by Managing Director. The committee have members
drawn from general public and senior executives of the bank. The committee would
submit report on its performance to the Customer Service Committee of the Board at
quarterly intervals. Principal Nodal Officer in the rank of General Manager at Head
Office level is responsible for the implementation and monitoring of grievances
redressal. In case of dissatisfaction, complainant may appeal to the Banking
Ombudsman.
Introduction 19
Complaint management process in ICICI Bank
Banking
Level 3 Ombudsman
Nodal Officer
Customer service Committee of

board
Level 2
Standing Committee on customer

service
Head (Customer Service)
Level 1 Branch Level Customer service committee

(MILAP)
Complaints received & complaint no. is

given
Source: http://www.icicibank.com/managed-assets/docs/personal/general-links/Grievance-Redressal-
Policy.pdf
Figure 1.5 Escalation Matrix of complaints in ICICI Bank
At ICICI Bank, Complaints are reviewed by the Branch Level Customer

service committee (MILAP). The Committee is headed by working Director. The
Business heads are the members of the committee. The review of MILAP is done by
the customer service committee of the Board. If the customer’s complaints are not
redressed by the above complaint channels, he may write to the nodal officer.
Introduction 20
Axis Bank
Banking Ombudsman
Level 3
Grievance Redressal Unit
Nodal Officer
Customer service Committee of

Level 2 board
Standing Committee on customer service
Head (Customer Service)
Level 1 Branch Level Customer service committee

(Let’s Talk)
Complaints registered in CMS & Complaint no. is given
Source: http/www.axisbank.com/download/Grievance_Redressal_Policy.pdf
Figure 1.6 Escalation Matrix of Axis Bank
At Axis Bank, All complaints will be registered in a central complaints

management system. Complaints will be assigned complaint reference number which
will be communicated to the complainant along with an appropriate turnaround time.
The complaints escalate to Branch Level Customer service committee named as
Let’s Talk. The head of customer service manages the complaint. The standing
committee on customer service and customer service committee of board reviews
the complaints. The complaints which are escalated to the nodal officer are
monitored by Grievance redressal unit.
Introduction 21
Complaint Management Process of Housing Development Finance Corporation

(HDFC)
Banking Ombudsman
Level 3
Customer service Committee
Standing Committee
Level 2
Nodal Officer
Compliance Departments
(GOI related) complaints)
Level 1
Relationship Manager
(Non Retail)
Complaint
Management Cell
Quality Initiative group
(Pending complaints)
Complaint registered in CRMnext &

Visionplus Retail Asset Central
CM unit
Source: http://www.hdfcbank.com/assets/pdf/grievanceredressalpolicy.pdf
Figure 1.7 Complaint Escalation Matrix of HDFC Bank
Motivation for the Research

The idea for research came up by the review of literature stating that customer’s
satisfaction is low in Indian Banks. The reports indicates that customers switching
rate is high. To understand the problem, the complaint management system of the
public sector and private sector banks are studied. Despite of the complaint
management initiatives taken by RBI and Government of India, the contentment for
complaint management is low in Indian Banks. According Annual report of Banking
Ombudsman Report 2013-14, the year wise status of complaints was as follows:
Introduction 22
Status of Complaints
76573
77000
76000
75000
Complaints
72889
74000
73000
72000 70541
71000
70000
69000
68000
67000
2011-12 2012-13 2013-14
Years
Source: Annual Report on Banking Ombudsman 2013-14

Figure 1.8 Status of complaints in three years
The report indicates that the no. of complaints has been substantially
accelerated in 2014 as compared to the previous years. This has created the need to
assess the effectiveness of complaint management system of Indian public and
private sector banks.
The gaps of literature review have motivated the researcher to study the
complaint management system in purview of perception of customers regarding the
effectiveness of complaint management system in Indian public and private sector
banks. In addition, the research aims at identifying the problems faced by the
employees in proper implementation of complaint management system.
Significance of the study

The research is significant for banks in following manner:
First, Banks would be able to know service areas on which the customers
have lodged the complaints more. It is essential to figure out the areas on which
most of the customers are not satisfied. Improvements can only be done if the
problem areas can be identified. Research emphasises on the types of complaints
lodged to know the perception of the customers regarding complaints.
Introduction 23
Second, The researcher investigates the perception of the customers for the
effectiveness of the complaint platforms to register their complaints. It is been
observed and clear by the opinion of with the expert’s that there is a variation in the
bank’s response. In State Bank of Bikaner and Jaipur, Customers may register their
response through SMS. Customer need to write UNHAPPY and sending it at the
given number. The facility is not in all banks. There should be the universal,
accessible and innovative modes which encourage the customers to register their
response to the services. The research focuses on the modifications of the prevailing
modes to increase their effectiveness.
Third, the research interrogates the problems faced by employees in the

implementation of complaint management system in Indian public and private sector
banks. Research will be helpful in understanding the reasons of low involvement of
employees in complaint management. Research would emphasise on the ways to
motivate employees in complaint management.
Literature Review 24
CHAPTER - 2
LITERATURE REVIEW
The chapter emphasises on the literature work done on the research area. The
literature review has helped the researcher in identifying the research gaps that
became the basis of the current study.
Services play a vital role in the markets of both developed and developing
nations. According to (Zeithaml, Berry & Parasuraman 1996), Rise in competition
have generated requirement of effective and efficient ways to increase the quality of
services. The authors had introduced the quality dimensions in service industry with
the help of four service businesses through a model. (Rust & Zahorik 1993) have
mentioned that businesses are being rational and to survive in the market they need
not only new customer base but to retention of existing ones. The authors have built
a mathematical framework to measure the value of customer satisfaction. The
framework proposed by the authors facilitated managers to determine the elements
which have the impact on customer satisfaction, and the budget to be determined to
improve customer satisfaction elements. This may increase the accountability of
customer satisfaction programs by forcing them to demonstrate their benefits with
respect to bottom-line profitability. Authors have used the individual-level model of
loyalty and retention to increase the market share. The model was tested with a pilot
study on retail banks. Leading business firms found that products and services had to
be specifically designed to meet customer needs as the customers have various
alternatives to choose from. Service delivery results into the satisfaction or
dissatisfaction. According to (Johnston 1995), if the services are as per the customer’s
expectations, the customers feel delighted and vice versa. Continuous dissatisfaction
leads to the complaints. To effectively handle the complaints, it is necessary to
understand the complaints.
2.1 Complaints
(Hirschman 1970) had first discussed the responses of customer to complaints.
He discussed that complaints is the originator of customer’s complaints. In case of
complaints, customers choose two reactions; He either exits the service or voice.
Exit is understood by boycott of service. Earlier, consideration had been drawn to

the complaint process by analysis of complaint letters (Resnik, Alan and Harmon
1983) and consumer interaction styles (Richins 1983). (Gronroos 1988) developed a
service quality model which was based on test of business executives. The model
described how the quality of services is perceived by customers. (Solomon,
Surprenant, Czepiel & Gutman 1985) have mentioned the complaint generation
process. The first interaction of customers with the service or product is termed as
service encounter. During the service encounter, either customer may become
satisfied or dissatisfied. In case of dissatisfaction, customers choose two responses.
They either exit without notifying the firm about dissatisfaction or voice their
dissatisfaction. Hirschman 1970 stated complaints are the voiced responses of
dissatisfaction. (Day & Landan 1977) defined complaints as an expression of
dissatisfaction on behalf of customers to a responsible party.
Reported complaints are termed as complaints (Parasuraman, Zeithaml &

Berry 1985) proposed the service quality imperatives to judge the quality of
services. (Singh 1990a) claimed that a complaint is the expression of emotions
regarding dissatisfaction. Further, (Buttle 1998) told that complaint may be termed
as request for evidences, revision or a reimbursement to consumers which arose due
to complaints and for which the organization is held responsible). The paper
investigated the effect of service quality on customer retention. The study was
conducted on customers of computer manufacture, retail chain and life insurer.
(Saleh & Ryan 1991) have narrated that complaints arise due to the gap between the
expected service delivery and the actual service delivery. The zone of tolerance
(Johnston 1995) differs on the basis of customers and types of services. (Andreassen
1999) have proposed a model which shows the failed complaint resolution will
generate the negative effect on corporate image which affects the customer’s loyalty
or the organization.
(Halstead & Page 1992) has admitted that complaints are required to be
solved and recovered soon because it may increase the severity of the problem and
negatively affect the customer’s loyalty. The authors have investigated the repurchase
behavior on the basis of purchase satisfaction, complaining behavior and satisfaction
with complaint response. The study was conducted on carpet customers. (Lewis &
Spyrakopoulos 2001) focused on complaints and service recovery in retail banking.
Authors identified the complaints and recovery strategies used by Greek banks using
critical incident technique. The paper measured customers’ perceptions about the
severity of complaints, effectiveness of service recovery strategies in accordance
their previous failures experiences, demographic variables, and relationships with
their banks. (Karatepe & Ekiz 2004) have agreed upon the importance of
organizational responses over complaints to enhance loyalty and customer satisfaction
(Harari 1992). (Magnini & Ford 2004) have considered the service recovery as the
parameter of satisfaction of customer. The study was conducted on hotel industry.
According to them, exceptional complaints recovery is an important determinant of
customer satisfaction and loyalty. (Michel & Meuter 2008) have identified the
service recovery as the tool which is important for survival of the firm. Complaints
are helpful for the organization as they provide the opportunity to improve. (Barlow
1996) has declared complaints as a gift for the business firms. He has stated that
firms who are good at performance rating have effective complaint handling. He
recommends that firms are required to be ‘thankful’ for customer’s feedback.
Complaints should be welcomed in the organizations to foster the firm’s bottom line
and performance.
As per (Casado, Mas & Kasper 2007), If the complaints are ended up with
poor recovery, they are considered as double deviation. The authors have termed the
failed redressal as double deviation. (Loo, Boo & Khoo 2013) have compared the
complaint motives in case of single-failure (case when the customer is not satisfied
with the service) and double-deviation (where the redressal of complaint is also not
satisfactory) situations. The study was conducted on two Malaysian food service
chains. The importance of complaints makes complaint management necessary for
organisations.
2.2 Complaint Management

To reduce the effect of complaints and failed recovery, it is important to
handle the complaints in an efficient manner. Many researchers have emphasized on
the importance of complaint management. Complaint management was first used by
(Fornell & Wernerfelt 1987). They considered complaint management as the tool of
defensive marketing may lower down the cost of offensive marketing (Andreasen
1988). Complaint management is related to the facilitating the voicing of complaints.
Warranties are applied to firm’s subsets while complaint management is applicable
to all customers. According to (Hauser 1984), Defensive marketing is a reaction of
the service provider to the launch of competitive brand. Defensive marketing can be
used to retain the existing customers whereas offensive marketing is done to attract
the new customers. (Fornell & Wernerfelt 1987) targeted to avoid the opportunity cost
which arises due to ignoring the customer’s complaints. In case of Dissatisfaction,
customers choose to exit or voice, so service providers should focus on retaining the
customers.
According to (Halstead, Morash & Ozment 1996), Complaint management

and service recovery both are used as customer retention strategies. According to
(Michel 2001), Service recovery is different from complaint management because
service recovery embraces proactive, often immediate, efforts to reduce negative
effects on service evaluation (Hess, Ganesan and Klein 2003). Service recovery
have wise span of activities than complaint management, which focuses on customer
complaints arose due to complaints. (Bendall-Lyon & Powers 2001) projected a
theoretical model of complaint management which integrates the complaint
management in service recovery process. The authors have suggested the complaint
management process for effective service recovery. (Zairi 2000) has quoted the
statement of the former chairman of British telecom. He stated in financial times that
‘The day we stop receiving customer complaints is the day, I will start to worry
about the future of BT. (Zairi 2000) has stated that ‘Complaints handling is not a
substitute for abdicating the responsibility for managing quality and achieving
customer satisfaction’. He treated the complaints management as essential for
achieving customer retention and loyalty.
(Coussement & Poel 2008) has introduced a methodology to improve

complaint-handling strategies through an automatic email-classification system that
distinguishes complaints from non-complaints. The study was done as complaint
handling becomes less time-consuming and more effective. The classification system
combines traditional text information with new information about the linguistic style
of an email. The empirical results show that adding linguistic style information into
a classification model with conventional text-classification variables results in a
significant increase in predictive performance. The study also talks about the
linguistic style differences between complaint emails and others. The study is helpful
in improving complaint management strategies. (Henneberg, Gruber, Reppel, Ashnai
& Naude 2009) has emphasized on the expectations of customer from complaint
management using hard laddering technique. This study explores complaint
management expectations in business relationships, and behaviours that affect
buying companies as part of the complaint handling encounter with a supplier.
Complaint management enhances the effectiveness of customer relationship

initiatives. (Gebert, Geib, Kolbe & Walter Brenner 2003) had linked the knowledge
management with customer relationship Management. (Stauss & Schoeler 2004) has
focused on the cost incurred on complaint management and the benefits associated
with it. They have affirmed that the service providers do not understand the value of
complaints in line to improve the services and enhance customer satisfaction.
(Ranaweera & Prabhu 2003) has investigated the role of customer satisfaction and
trust on customer retention. The study was done on telephone users of United
Kingdom. The authors affirmed that in case of loss of trust, the effective service
recovery also is not adequate. Results show that switching barriers have both a
significant positive effect on customer retention as well as a moderating effect on
the relationship between satisfaction and retention.
(Tax, Brown & Chandrashekaran 1998) have identified the factors on which
the customer evaluates the nature, interactions and outcomes of complaint
management and a tool to increase trust through complaint management. They
explained the role of justice theory on customer’s trust and commitment with the
help of theoretical model. (Richins 1983) have discussed that failed complaint
management results into negative word of mouth. He admitted that successful
complaint redressal motivates the repurchase activities. (Stokes & Lomax 2002)
have considered complaint management as a tool of word of mouth marketing.
Satisfactory redressal of complaint (Resnik and Harmon 1983) will generate the
positive WOM. (Buttle 1998) have identified the background of word of mouth and
the consequences of word of mouth. The research is conducted in customer to
customer perspective. The author had proposed the loyalty ladder to figure out the
significance of referral marketing on loyalty. (Booms and Tetreault & Bitner 1990)
have affirmed that complaint management can lead to customer’s satisfaction only by
mutual cooperation of customers and employees. They had considered the ‘mutual
understanding’ as the factor of customer’s satisfaction. (Jones & Farquhar 2003)
examined the influence of contact management on customer loyalty in the banking
industry. The findings of the survey suggest that contact management is important in
customers' purchase intentions. The study concluded that maintaining customer
contacts may help the service provider to serve ultimate customer satisfaction and
loyalty.
(Clark, Kaminski & Rink 1992) have emphasized on firm’s responses to

customer’s complaints and their effect on customer’s satisfaction. The authors have
concluded that defensive marketing (De ruyter and Brack 1993) strategies (complaint
management) may satisfy the customers who had complained. (Roos, Edvardsson, &
Gustafsson 2004) had compared the customer switching behavior. The authors
admitted that complaint handling can become switching barrier in service industry.
The authors said that in case of monopoly, there is a situation when customer may
not switch, but if the customer is dissatisfied with the service he may change his
perception about the frontline employees and towards service provider, it is called
internal switching. (Kaur, Sharma & Mahajan 2011) investigated the customer
switching and the reasons of customer-switching intentions. The paper focuses on
various factors which lead to customer switching through relationship marketing in
banks. According to (Harari 1992) complaints are the source to identify the common
service problems and finding the possible solutions about the organization.
Complaint management (Fornell & Wernerfelt 1987; Fornell & Wernerfelt 1988; De
Ruyter & Brack 1993) is wider than complaint handling.
According to (Cho, Im, Hiltz & Fjermestad 2002), Complaint handling is

limited to the redressal of complaints which the firm receives from customers
whereas complaint management is concerned with the strategies related to the
system of reception of complaints and effective redressal including the satisfaction

of customer over complaint. Complaint management is different from service
recovery. (Gronroos 1988) proposed the term ‘Service Recovery and define it as
‘The action which service provider take in response to complaints and to convert the
dissatisfaction into satisfaction whereas (Bosch & Enriquez 2005) have said
“Complaint Management is a systematic approach which includes the integrated
tools, optimized to meet efficient handling of complaints, and automate processes
like registering new complaints, managing existing complaints, automatic escalation
of unresolved complaints, managing complaint status, performing number of
consumer inquiries, handling of complaints by respective persons/departments”.
2.3 Complaint Management Models

Many researchers have proposed various complaint management system
models. Complaint researches were initiated by (Parasuraman 1985) and Hirschman.
(Hirschman 1970) has proposed the exit-voice theory. This theory depicts that there
are two ways of feedback in service industries i.e. Exit and voice. Exit is the direct
way of showing the dissatisfaction. Exit is stopping the purchase of products/services
from the service provider whereas voice is a tool by which customer spreads the
negative words to their relatives and potential customers. (Gilly, Stevenson & Yale
1991) proposed the information processing model of the flow of complaint
information in the firm to handle the complaints. Smith, Bolton & Wagner 1999
developed the model of customer satisfaction with services. (Zairi 2000) has reviewed
the complaint management models of two award winning firms of Australia and
United States. (Johnston 2001) proposed a model presenting the relationship
between complaint management processes and financial performance. This paper
contends that complaint management should result in customer satisfaction but more
importantly it should lead to operational improvement and improved financial
performance. It believes that the firms ignore the operational value of complaints
and as a result many complaint processes seem enhanced trying to calm angry
customers rather than ensuring that problems do not reoccur. The study was
empirical concerning the relationships between seven key variables, complaint
processes, satisfaction, retention, process improvement, employee attitude and
retention, and financial performance are calculated and a relationship model was
developed. The results suggested that financial improvements may be better
leveraged by bringing about organisational improvements and by ensuring complaint
processes are “staff‐friendly”, rather than simply trying to satisfy customers.
2.4 Complaint Management in Banks

Banks are the key ingredient of an economy. Banks are the money creators,
they mobilizes the funds (Jalan 2002) from the surplus areas (the savings of the
public) to the deficit areas (to the corporate houses for production activities). As
banks deal in money, complaints are considered more severe in banks (Hogarth &
English 2002). Numerous studies have been done on complaint management in
Banks. According to Banking Ombudsman Scheme 2006 (clause 8), “Complaint is a
representation which is registered in writing or containing a grievance alleging
deficiency in banking service”. Complaint management is more crucial in banks
because minor failure may affect customer satisfaction in a negative way. Many
researchers have worked on complaints in banking sector. (Fornell & Wernerfelt
1988) discussed that higher return on investment in complaint management in banks.
The study was conducted on (Cronin Jr. & Taylor 1992) had discussed the service
quality measures in banks.
(Stauss & Schoeler 2004) focused on the role of complaint manager in

making the complaint handling profitable for the organisation. They associated the
complaint handling with cost- benefit analysis on German banks. (Joseph, McClure
& Joseph 1999) has elaborated the importance of service quality in banks with the
help of Grid. The authors investigated the role of technology in Australian banking
and its impact on the delivery of service quality dimensions using the 440 customers
of the banks. The research was based on the Hemmasi’s Importance-Performance grid
(Hemmasi, Strong and Taylor 1994). (Johnston 2001) has developed a theoretical
model describing the relationship between complaint management and retention of
customers (Allred & Addams 2000), service improvement, employee motivation and
financial performance. He concludes that complaint management is assumed to
result in customer satisfaction and lead to operational improvement and improved
financial performance.
Complaint management is being recognised it as a powerful tool for

enhancing profit and goodwill. (Maxham III & Netemeyer 2002) have focused on
dynamic perceptions of the customers for justice in complaint redressal. They did a
longitudinal study of evaluations of complaining customers on service recovery
initiatives. (Ndubisi & Ling 2006) have discussed that the dissatisfaction is the
reason of complaint. He conducted the study on Malaysian bank customers.
(Padmavathy, Balaji & Sivakumar 2011) developed a multi item scale for measuring
the customer relationship management effectiveness in Indian banks and to observe
its relationship with customer response variables. Complaint management is essential
in banks as they deal in money. Banking services are highly used in economies.
Bank customers view complaint management as significant factor in satisfaction
(Bearden & Teel 1983).
(Ahmed, Hayat & Quasim 2001) have established a relationship between

service loyalty and complaint management in bank of Pakistan. (Ndubisi & Ling
2006) have discussed that customer’s complaints are resultant of dissatisfaction. The
study was done on Malaysian Banks. After understanding the importance of complaint
management in global banking industry, it is necessary to focus on the role of
complaint handling in Indian Banks. To understand the complaint management in
Indian context, it is necessary to know the genesis of complaint management.
2.5 Complaint management in Indian Banking Industry

Indian banks are the pole of the economy. As a service organization,
customer service and satisfaction should be the prime concern of any bank. The
bank believes that providing prompt and efficient service is essential not only to
attract new customers, but also to retain existing ones (Uppal 2010). Indian banks
were established under the “Banking Regulation Act”, 1949. Indian banks are
controlled by Reserve Bank of India and Government of India. The decline of service
quality make the controlling authorities realise the need of services marketing and
customer relationship management in banking sector. As an initiative, various
committees were formed to inculcate the marketing perspective in financial services.
RBI has formed 124 committees and 90 working groups till date to review the
mechanism of banking. Banking Commission 1972, Talwar Committee 1975,
Goiporia Committee 1991, Committee on Procedures and performance Audit on

Public Services 2003 and Banking Ombudsman 2006, PD Ojha Committee 1988, WS
Saraf committee 1994 are focused on the customer service and complaint handling.
The committees which focused on customer’s service are mentioned below:
2.5.1 Banking Commission

The Banking commission was formed in the chairmanship of Mr. RG
Saraiya in 1972. It undertook a complete research study of the entire banking system
of the country and came out with major policy level recommendations. It reviewed
the operating methods, procedures and proposed recommendations for the
improvements and to modernize the operating methods and procedures, particularly
related to customer service, credit procedures and internal systems. It recommended
the formation of a Credit Intelligence Bureau as a statutory body to provide reliable
information regarding credibility of customers.
2.5.2 Talwar Committee

The committee was established in the chairmanship of Mr. RK Talwar in
1975. The committee was intended to give the recommendations on customer services
in banks. The committee recommended that banks should work on increase in the
service quality of banks. The complaints related to loans and advances should be
resolved in an efficient manner. (Shekhar 2009) has discussed the recommendations
of various committees set up by Reserve Bank of India. The committee focused on
the attitude of employees towards services.
2.5.3 Goiporia Committee

In 1991, RBI appointed the Goiporia Committee on customer service in
banks. The committee was established under the chairmanship of Mr. M.N. Goiporia.
The committee recommended (vide para 27) related to the customer service. He
recommended that complaint book with perforated copies should be kept in the bank
offices in order to get the customer’s dissatisfaction recorded and reported to higher
levels. Goiporia committee further recommended the upgradation of infrastructure
related facilities in bank branches (recommendation 3.6). Goiporia Committee has
recommended that all the branches should have ‘May I help you’ and enquiry
counters. The Bank should promote the pamphlets describing the information
regarding the products in various languages. Infrastructure facilities at branches
should be upgraded with due attention to providing adequate space, proper furniture,
drinking water facilities, etc.
2.5.4 Tarapore Committee

In November 2003, the Tarapore Committee recommendations led to
formation of Board level committees for monitoring customer service in banks. In
2006, Reserve Bank of India appointed a Working Group to formulate a scheme to
ensure reasonableness of bank service charges under the chairmanship of Shri. S.S.
Tarapore. The Committee was also known as Committee of Procedures and
Performance Audit on Public Services (CPPAPS). The committee advocated the need
of safeguard the rights of the customers. The recommendations of the committee
were limited to capital account convertibility (Refer Annexure 2). The committee
felt the need of empowering persons to safeguard the rights of the customer. In the
implementation of the need, citizen’s charter was prepared and displayed at websites,
branches of the banks. Customers should be aware of their rights of banking.
2.5.5 Banking Ombudsman

The Banking Ombudsman was first setup in UK. The word ‘Ombudsman’
(‘ahm’ ‘bedz’ ‘man’) is a public official who is appointed to investigate the citizen’s
complaints against the bank’s administration. Banking Ombudsman is the autonomous
entity whose goal was to ensure redressal of grievances of users of banking services
in an inexpensive, expeditious and fair manner and to provide feedback/suggestions
to Reserve Bank of India towards framing appropriate and timely guidelines to
banks to improve the level of customer service and satisfaction (Annual Report
2009).
2.5.5.1 Establishment
The Banking Ombudsman Scheme was initiated on June 14, 1995 under
Section 35 A of the Banking Regulation Act, 1949 (10 of 1949) under the
notification Ref.RPCD.BOS.No.441/13.01.01/2005-06 dated December 26, 2005 by
RBI to provide an expeditious and inexpensive forum to bank customers for
resolution of their complaints relating to deficiency in banking services provided by

commercial banks, regional rural banks and scheduled primary co-operative banks.
There are 15 Offices of Banking Ombudsman (OBOs), spread across the country.
The Banking Ombudsman scheme is being modified in June 2002 and December
2005, 2006, 2007 and February 2009, to include customer complaints on new areas
such as credit card complaints, internet banking, deficiencies in providing the
promised services, non- adherence to the Fair Practices. In order to increase its
effectiveness and utility, BOS is fully staffed and funded by RBI. Various working
groups are being formed for revision and modification the Banking Ombudsman
scheme 2006.
2.5.5.2 Objectives
Banking Ombudsman was set up to ensure redressal of complaints of
customers in efficient and fair manner to motivate the improved customer services in
the banking sector. Banking Ombudsman provides feedback/suggestions to R.B.I. in
framing appropriate guidelines to improve the services and to strengthen the bank’s
internal complaint management systems. It also facilitates the banks and customers
with awareness and training initiatives. Banking Ombudsman administers the
complaint redessal procedures and publishes the status of complaints of all banks in
form of banking ombudsman report. Ombudsman submits the report on yearly basis
incorporating the year wise status of complaints on the basis of nature, complaints
disposed within the year, area wise complaints, mode of disposal, Bank group wise
distribution, Reasons for rejection of complaints, Cost of handling complaints and
no. of appeals received and disposed.
2.5.5.3 Process of Redressal of Complaints

The Banking Ombudsman handles the complaints which are not resolved by
the banks or the customers are not satisfied with the redressal. The stepwise process
of redressal is as follows:
1st. Any person, whose grievance against a bank is not resolved to his satisfaction
by that bank within a period of one month or the bank has rejected the
complaint, can approach the Banking Ombudsman (BO) on the grounds of
complaints on the specified 21 matters specified in the Scheme under clause

8 (Refer Appendix 5). The application should be in the proper format
prescribed by the R.B.I. The Complaint should have name of complaint,
Name and branch of the bank, fact gave rise to complaint, the loss caused
due to the complaint and the relief he is seeking of. The complaint can be
filed in writing, email or through Central Government and RBI.
2nd. The BO, on receipt of the complaint, sends a copy thereof to the bank branch
named in the complaint under advice to the Nodal Officer and endeavours to
promote a settlement of the complaint by agreement between the complainant
and the bank through conciliation or mediation.
3rd. BOs shall be guided by the evidence placed before him by the parties, BCSBI
Code, the principles of banking law and practice, directions, instructions and
guidelines issued by the RBI from time to time and such other factors which,
in his opinion, are necessary in the interest of resolving the complaint.
4th. The complaints are to be settled within the period of one month from the
receipt of complaints. If the redressal is not taking place in the stipulated
time, the BO will pass an Award (order) after providing the opportunity to the
complainant and the bank to present the case. The copy of award will be sent
to the complainant, bank and the nodal officer of the area. The complainant
is required to submit the letter of acceptance of the order and final settlement
of the claim. If the complainant fails to submit the letter, the order will lapse
within 30 days from the award passed. The bank has to obey the order after
receipt of the acceptance letter and intimate the BO about the claim.
5th. In case, the Bank is not satisfied with the award, they may file an appeal
within one month of receipt of letter of acceptance from the complainant. If
the bank does not comply with the award, BO should submit the report to
Customer Service Department for supervisory actions against the banks.
2.5.5.4 Scope of Banking Ombudsman

According to Banking Ombudsman Report 2009-10, Banking Ombudsman is
not an investigative authority because it does not have investigative powers.
Banking Ombudsman is responsible to redress the complaints on the basis of
documents presented before it. Banking Ombudsman may handle the complaints of
all matters. The limit of monetary compensation is been specified by RBI.
2.5.5.5 Grounds of complaints:

Banking Ombudsman categorizes the complaints under following categories:
a. First Resort Complaints: First resort complaints are the complaints which are
approached directly to the banking ombudsman office rather approaching to
the concerned bank branch. As stated before, BO is entitled to handle the
complaints which do not get satisfactory redressal within 1 month of the
complaint. So, such complaints are rejected by the Banking Ombudsman.
b. Frivolous Complaints: Frivolous complaints are the complaints which are

not properly evidenced and are not of serious in nature. We may name them
as illegitimate complaints.
c. Subject Matter Outside the BO Scheme: BO has specified the 21 grounds of

complaints, any complaint outside the mentioned grounds should be rejected
by the banking Ombudsman.
d. Not pursued by Complainant: The complaints which are not been pursued by
the complainant with due diligence.
e. Others: The other categories of complaints are Complaint without sufficient

cause, No loss to complainant, complicated which requires elaborative
evidence etc.
Banking Ombudsman publishes annual report which states the each and every
aspect of complaints and their redressal e.g. No. of complaints received at BOs,
Maintainable complaints & non-maintainable complaints, region wise complaints,
bank wise complaints, reasons of complaints. It is clear with Banking Ombudsman
report 2010-13, the no. of complaints are increasing day by day which shows that
the despite of the issue of RBI guidelines regarding complaint management, the
dissatisfaction of customers is still there. The Banking Ombudsman Report encloses
the status of complaints in every financial year. RBI releases the annual reports on
Banking Ombudsman report.
2.5.6 Banking Codes and Standards Board of India (BCSBI)

The Committee of Procedures and Performance Audit on Public Services
(CPPAPS) felt that there is a lack of standardization in the services offered by
banks. The committee was intended to identify the factors responsible for low
quality of services and recommend the measures to be taken. In order to standardize
the services, the CPPAPS recommended the establishment of Banking Codes and
Standards Board of India (BCSBI). The board was set up by Dr. Y.V. Reddy,
Governor, RBI under monetary policy (in April 2005). Initially, the board was
registered as society under the Societies Registration Act, 1860 (Act XXI) in
February 2006 as an independent and autonomous body. All commercial and
Regional rural banks take the membership of the BCSBI.
BCSBI works in collaboration with Indian Banker’s association. It has

developed two codes namely Code of Bank’s Commitment to Customers (Refer
appendix 4) and the Code of Bank’s Commitment to Micro and Small Enterprises.
The codes are reviewed and revised over the period. The codes ensures fair banking
practices, setting minimum standards, increasing transparency, enhancement of genial
customer-banker relationship to build the customer’s confidence in banking services.
The Codes act as Charter of Rights for banks and customers. The Codes are
accessible to the common man by which they may ensure that the banks are
performing as per the benchmark or not.
BCSBI is not directly related with the complaint management, but it closely
examines the complaints to figure out the systemic issue that may exist to bring into
the notice of the concerned bank to ensure that systems and procedures are suitably
amended and the complaint may not occur again. It discusses the procedure of filing
the complaint, the response to the complaint as per the mode opted to complain,
disclosure of status of complaint in banks and the stipulated time starting from the
first response to the final decision over the complaint.
Code of Bank’s Commitment to customer report, January 2014, have stated

that there should be the complaint management cell at bank branches and the display
requirements should be fulfilled by the banks. If the customer has any complaint
regarding the codes and standards of the bank, they may lodge their complaints. In
the event of receipt of any complaint regarding improper conduct or acted in
violation of this Code, appropriate steps will be taken to investigate and to handle
the complaint and to make good the loss as per the compensation policy.
2.5.7 Damodaran Committee

The committee was headed by Shri M. Damodaran, ex-chairman of SEBI in
2011. The Committee is of the view that 'There is a need for the banks in developing
their Internal Grievance Redressal Mechanism to ensure only the minimum number
of cases gets escalated to the BO. The Committee interacted with various stakeholders
across the country on all aspects of customer service viz. fair treatment, attitude of
the bank staff towards the customers, service charges and fees, loans, transparency
in operations, grievance redressal and promptness in service. The committee gave
the recommendations related to the improvement in customer services. From the
perspective of customers, services and complaints, the recommendations are quotable
for the research. Damodaran Committee emphasized on the need of every bank to
have a chief customer service officer for grievance redressal. The Boards of banks
should appoint a Chief Customer Service Officer (CCSO), not less than the rank of a
retired General Manager of a Scheduled Commercial bank preferably from outside
the bank (under advice to RBI). He would act as an “Internal Ombudsman for a
bank”. He should be reporting directly to the Chairman/CMD/CEO of the bank.
Person upset with a banking service as hitherto will first complain to the bank and if
within a month does not receive a reply or is unsatisfied with the reply, will appeal
to the CCSO of the bank. The decision of the BO shall be final and no further appeal
will be allowed.
2.6 R.B.I Guidelines on Complaint Management System

RBI has issued various guidelines related to the complaint management
system which are mandatory to follow by the banks. To understand the research it is
necessary to go through with the prevailing complaint management system guidelines
proposed by RBI to ensure the uniform redressal of complaints.
The research focuses on the gap between the policies laid by R.B.I and
implementation of the guidelines and circulars. To recognize the problem it is
necessary to understand the guidelines in the light of the circulars issued by Reserve
Bank of India. Following is the guidelines mentioned in the Master circular
RBI/2011-12/56DBOD No.Leg.BC.18/09.07.006/2011-12on Customer Service in
Banks under the heading of Dealing with Complaints and Improving Customer
Relations.
2.6.1 Complaints/suggestions box

Complaints/suggestions box should be provided at each office of the bank.
Further, at every office of the bank a notice requesting the customers to meet the
branch manager may be displayed regarding grievances, if the grievances remain
dissatisfied.
2.6.2 Complaint Book /Register

Complaint book with perforated copies in each set may be introduced, so
designed as to instantly provide an acknowledgement to the customers and
intimation to the Controlling Office. IBA has, for the sake of uniformity, prepared a
format of the complaint book with adequate number of perforated copies, which are
so designed that the complainant could be given an acknowledged copy instantly. A
copy of the complaint is required to be forwarded to the concerned controlling office
of the bank along with the remark of the Branch Manager within a time frame. Bank
should introduce the complaint book as per the above format for uniformity.
All bank's branches should maintain a separate complaints register in the

prescribed format given for entering all the complaints/grievances received by them
directly or through their Head Office/Govt. These registers should be maintained
irrespective of the fact whether a complaint is received or not in the past.
The complaints registers maintained by branches should be scrutinised by the

concerned Regional Manager during his periodical visit to the branches and his
observations/comments recorded in the relative visit reports. Banks having
computerized operations may adopt the afore-said format and generate copies
electronically.
2.6.3 Complaint Form

Further, a complaint form, along with the name of the nodal officer for
complaint redressal, may be provided in the homepage itself to facilitate complaint
submission by customers. The complaint form should also indicate that the first
point for redressal of complaints is the bank itself and that complainants may
approach the Banking Ombudsman only if the complaint is not resolved at the bank
level within a month. Similar information may be displayed in the boards put up in
all the bank branches to indicate the name and address of the Banking Ombudsman.
In addition, the name, address and telephone numbers of the Controlling Authority
of the bank to whom complaints can be addressed may also be given prominently.
2.6.4 Analysis and Disclosure of complaints

It is mandatory to disclose the complaints / unimplemented awards of
Banking Ombudsmen along with Financial Results. The Committee on Procedures
and Performance Audit on Public Services (CPPAPS) had recommended that banks
should place a statement before their Boards analyzing the complaints received.
CPPAPS had further recommended that the Statement of complaints and its analysis
should also be disclosed by banks along with their financial results. Further, a
suggestion has been received that unimplemented awards of the Banking Ombudsman
should also be disclosed along with financial results. Banks should place a statement
of complaints before their Boards / Customer Service Committees along with an
analysis of the complaints received. The complaints should be analyzed (i) to
identify customer service areas in which the complaints are frequently received; (ii)
to identify frequent sources of complaint; (iii) to identify systemic deficiencies; and
(v) for initiating appropriate action to make the grievance redressal mechanism more
effective. Further, banks are also advised to disclose all the details regarding status
of complaints viz. No. of complaints pending at the beginning of the year, complaints
received during the year, complaints redressed during the year, complaints pending
at the end of the year, No. of unimplemented Awards at the beginning of the year,
No. of Awards passed by the Banking Ombudsmen during the year, Awards
implemented during the year, unimplemented Awards at the end of the year. Further,
banks are also advised to place the detailed settlement of complaints and its analysis
on their web-site for information of the general public at the end of each financial year.
2.6.5 Display Requirement at Bank Offices

It is required for banks to display the names, direct telephone number, fax
number, complete address and e-mail address of the bank officials who can be
contacted in branch, Nodal Officers appointed under Banking Ombudsman Scheme
2006, Line Functioning heads, CMD / CEO for proper and timely redressal the
complaints of customers.
Further, banks should also display the details of above mentioned personnel
on their web-sites to enable their customers to approach them in case of need, if
necessary. Banks are required to disclose the brief details regarding the number of
complaints along with their financial results. This statement should include all the
complaints received at the Head Office / Controlling Office level as also the
complaints received at the branch level. However, where the complaints are
redressed within the next working day, banks need not include the same in the
statement of complaints.
Where the complaints are not redressed within one month, the concerned
branch /controlling office should forward a copy of the same to the concerned Nodal
Office under the Banking Ombudsman Scheme and keep him updated regarding the
status of the complaint. This would enable the Nodal Officer to deal with any
reference received from the Banking Ombudsman regarding the complaint more
effectively. Further, it is also necessary that the customer is made aware of his rights
to approach the concerned Banking Ombudsman in case he is not satisfied with the
bank’s response.
As such, in the final letter sent to the customer regarding redressal of the
complaint, banks should indicate that the complainant can also approach the
concerned Banking Ombudsman. The details of the concerned Banking Ombudsman
should also be included in the letter. Banks should give wide publicity to the
grievance redressal machinery through advertisements and also by placing them on
their web sites.
The latest Annual report was released on 12-02-15. The findings of annual
report on Banking Ombudsman report 2013-14 (Website of RBI) are as follows:
2.6.6 Review of grievances redressal machinery in Public Sector Banks

Banks should critically examine on an on-going basis as to how Grievances
Redressal Machinery is working and whether the same has been found to be
effective in achieving improvement in customer service in different areas. Banks
should identify areas in which the number of complaints is large or on the increase
and consider constituting special squads to look into complaints on the spot in
branches against which there are frequent complaints. Banks may consider shifting
the managers/officers of branches having large number of complaints to other
branches/regional offices/departments at Head Offices where contacts with public
may be relatively infrequent.
At larger branches and at such of the branches where there are a large
number of complaints, the banks may consider appointing Public Relations Officers
/Liasion Officers for looking into/mitigating the complaints/grievances of customers
expeditiously. The banks may arrange to include one or two sessions on customer
service, public relations etc., in training programmes conducted in their training
establishments. In cases where the contention of the complainant has not been
accepted, a complete reply should be given to him to the extent possible. Grievances/
complaints relating to congestions in the banking premises should be examined by
the bank’s internal inspectors/auditors on a continuing basis and action taken for
augmentation of space, whenever necessary, keeping in view the availability of
larger accommodation in the same locality at a reasonable rent and other commercial
considerations.
Mr. SS Mundra, Deputy Governor, Reserve Bank of India in lecture

delivered at Bangalore has affirmed that maintaining the customer service is one of
the challenges for banks. (RBI lectures) According to him, ‘Protection of customer’s
right is the thrust areas of RBI’. Customers have right to be treated in a fair manner.
RBI has released a customer rights charter based on international practices. It is the
right of customers to get fair and transparent dealing of their complaints.
2.7 Research Gaps

The following research gaps are identified from review of available literature:
2.7.1 Research has been done on service quality and customer satisfaction
in banks, but the study of complaint management system is not
carried out in structured way.
2.7.2 The Comparative study of Complaint Management System in Indian

public and private sector banks has not been carried out.
2.7.3 The perception of customers regarding the effectiveness of complaint

management system in not investigated in public sector and private
sector banks.
2.7.4 The relationship between demographic factors and complaint

behaviour is not studied.
2.7.5 No research is being carried out on preferred complaint modes.
2.7.6 The study of problems faced by the employees in functioning of

complaint management system appears to be non existence.
Research Methodology 45
CHAPTER - 3
RESEARCH METHODOLOGY
The chapter emphasizes on the Problem definition, Objectives of the research,

scope, limitations, research design, description of the instrument used for analysis of
data and measures taken to check their reliability and validity. It deals with the
methodology adopted to select the sample and the procedure to collect and analyse
the data for research.
3.1 Problem Definition

The comparative analysis of Complaint Management System in Indian
Public and Private sector Banks.
3.2 Objectives of research

The objectives of the research are as follows:
3.2.1 To compare the nature of complaints lodged by customers in public and

3.2.2 To identify the preferred mode used for registering the complaints by the
customers.
3.2.3 To ascertain the relationship between demographic characteristics of

customers and their complaint behaviour.
3.2.4 To identify the customer’s perception about the effectiveness of complaint

management system in public sector and private sector banks.
3.2.5 To identify the problems faced by the frontline employees in the proper
functioning of complaint management system.
3.2.6 To recommend the strategies to strengthen the complaint management

system in public and private sector banks.
3.2.7 To identify the difference between nature of complaints in public and private
sector banks.
H0 = There is no significant difference in the nature of complaints lodged by

customers in public and private sector banks.
Ha = There is a significant difference in the nature of complaints lodged by

3.2.8 Complaint Behaviour varies according to the age of the customers.
H0 = There is no significant relationship between age of the customers and

their complaint behaviour.
Ha = There is a significant relationship between age of the customers and

3.2.9 Complaint Behaviour varies as per the gender of the customers.
H0 = There is no significant relationship between gender of the customers

and their complaint behaviour.
Ha = There is a significant relationship between gender of the customers and

3.2.10 Complaint Behaviour varies according to the educational qualification of the

customers.
H0 = There is no significant relationship between educational qualification

of the customers and their complaint behaviour.
Ha = There is a significant relationship between educational qualification of

the customers and their complaint behaviour.
3.2.11 The perception of customers about the effectiveness of Complaint Management

System is different for public and private sector banks.
H0 = There is no significant difference of customer’s perception about the

effectiveness of complaint management system for public and private
sector banks.
Ha = There is a significant difference of customer’s perception about the

effectiveness of complaint management system for public and private
sector banks.
3.3 Nature of Research

The research is empirical by nature, as the researcher is concerned to
develop principles by arriving at generalizations and an aid to solve problems by
improving knowledge, understanding skill and ability to make decisions.
3.4 Operational Definition

3.4.1 Complaint Management System:
Bosch & Enriquez 2005 stated “Complaint Management is a systematic
approach which includes the integrated tools optimized to meet efficient handling of
complaints and automate processes like registering new complaints, managing
existing complaints, automatic escalation of unresolved complaints, managing
complaint status and handling of complaints by respective persons/departments”.
3.4.2 Nature of Complaints:

The research categorizes the complaints under five broad categories. The
categories are ATM, Infrastructure and basic amenities, Mechanical services and
Operations and Employee behavior.
3.4.3 Complaint Modes:

The medium by which customers register their complaints to the service
provider are termed as complaint modes (Wirtz & Mattila 2003). Banks offer
numerous modes to lodge the customer’s complaints. The research focuses on the
following modes of complaints:
Verbal complaint to frontline employees, written application to branch

manager, Complaint forms, SMS Service, online complaint on bank’s website,
social networking sites, Call at customer care and banking ombudsman.
3.4.4 Complaint Behaviour

Complaint behavior consists of many factors. The research work has taken
into consideration the frequency of complaints as factor to assess complaint
behavior. The categories are once, twice, many times and never.
3.5 Population
The target population for the research is Indian banks, bank customers and
the employees of banks. There are 27 public sector banks and 22 private sector
banks are operating in India (IBA report, 2010). The public and private sector banks
are selected for the study. According to Usha Thorat, Former Governor, RBI, there
are 300 million saving account holders of commercial banks.
3.6 Sampling Type and Sample Size

The sampling units of the research are cities, banks, bank customers and bank
employees. The sampling types and sample size for the research are as follows:
3.6.1 Selection of Geographical Area

The research is conducted on in the three cities of India. The cities are
Ahmedabad, Jaipur and Lucknow. All the three cities are comes under the category
of tier II cities (Maps of India, 2010). The availability of banking Ombudsman
offices is taken into consideration.
3.6.2 Selection of banks

The sample is drawn using Convenience Sampling method. 10% of the total
banks are selected as sample for the research work. Six banks are selected from each
sector. State Bank of Bikaner & Jaipur, Union Bank of India and Punjab National
Bank are selected from public sector banks and ICICI Bank, Axis Bank and HDFC
Bank are selected from private sector banks.
3.6.3 Selection of respondents

The population of bank customers and employees is heterogeneous in nature
on the basis of their age, gender, educational qualification and income status. The
sample is drawn using Quota Sampling. Quota sampling is a non-probability sampling
technique wherein the sample has the same proportions of units as the entire
population with respect to characteristics and phenomenon (Moser 1952). The
sample size for bank customers is 400 and for frontline employees are 300.
3.7 Data Collection

To collect the primary data, focus group interviews were carried out with the
high officials of bank. Two sets of structured questionnaires were made to know the
responses of customers and frontline employees. The data was collected by visiting
the bank branches of all the three cities.
3.7.1 Secondary Data

To get in depth knowledge of complaint management in banks, it was
necessary to get insight of Reports of various year were studied. Annual Reports and
customer service reports of Reserve Bank of India, Indian Banker’s Association and
Banking Codes and Standards Board of India (BCSBI) were referred. Banking
industry. Newspaper articles, Research Papers were studied. To know the status of
complaints in Indian Banks, Master circular of Customer services, Banking
Ombudsman.
3.7.2 Primary Data

To achieve the research objectives, Structured Questionnaires and in depth
Interviews were conducted. Two structured questionnaires (Refer Annexure 1 and
2). were made to know the responses of customers and frontline employees. One
questionnaire was framed to collect the information from bank customers and
another for the bank employees. Apart from this, to get the knowledge of the present
scenario of complaint management, a primary study was conducted on Ahmedabad
city.
Data Collection was done in three phases. The period of data collection was
completed in the month of June 2014.The questionnaires were filled by 400
customers (134 from each city) and 300 employees (100 from each city) from
Ahmedabad, Jaipur and Lucknow. Researcher has conducted the pilot study on bank
customers of Ahmedabad city and they were not part of the main study. As the
research is comparative study of complaint management system in Indian public and
private sector banks, t-test (Zaghini 2001) is applied to see the difference between
public and private sector banks.
3.7.3 Reliability of Questionnaires

The Reliability of a measure states that the measure would generate the same
result from the same respondent when the measuring instrument is administered
under same circumstances (Burns & Bush 1999). The reliability of the questionnaire
was calculated using coefficient of Cronbach’s alpha. Cronbach’s Alpha is actually
a mean reliability coefficient for all different ways of splitting the items included in
the measuring instruments. As the cronbach’s alpha is the reliability measure used
for the multi item scale, the acceptable measure is 0.55 and above (Gliem & Gliem
2003). The value of cronbach’s alpha of the whole questionnaire was 0.786.
The value of Cronbach’s Alpha of the scale is as follows:
Variable Multi Item Scale Alpha Value

V1 Complaints Lodged 0.748
V2 Barriers of complaint 0.708
V3 Selection Criteria of modes 0.756
V4 Problems in modes 0.767
V5 Satisfaction with complaint management system 0.821
V6 Comparison between public and private sector 0.764
Table 3.1 Values of reliability using Cronach’s Alpha
The Reliability values of employee’s questionnaire are consistent because the

values are between 0.55 and above.
Variables Statements Alpha Value

V1 Attitude for complaints 0.754
V2 Reasons of improper functioning of CMS 0.786
V3 Problems in Complaint Modes 0.767
V4 Customer complaint behaviour 0.670
V5 Satisfaction for CMS 0.834
V6 Reasons of less Motivation for participation in CMS 0.790
Table 3.2 Value of Cronbach’s Alpha of employee’s questionnaire

3.7.4 Validity using Factor Analysis

Content Validity is related with the examining the content of the instrument
in the light of research objectives and other dimensions. Factor analysis is a tool
which is used for data reduction. Factors are the underlying constructs that describe
set of variables.
To conduct factor analysis, it is required to test whether the data, so collected

is appropriate for factor analysis. The suitability of Factor analysis depends upon the
sample size. (MacClum, Widaman, Zhang & Hong 1999) have advocated that as
communalities are above 0.60, it denotes that the sample is perfectly adequate. The
communalities were as follows:
Communalities
Initial Extraction
ATM related 1.000 .878
Mechanical Services Related 1.000 .685
Operations Related 1.000 .645
Employee Behaviour Related 1.000 .660
Extraction Method: Principal Component Analysis.
Table 3.3 Values of extraction using Factor Analysis
Kaiser- Meyer- Olkin Measure of Sampling Adequacy is a tool to measure

the adequacy of the sample. (Kaiser 1974) have recommended that the values higher
than 0.50 are acceptable (values below 0.05 shows that the sample size should be
increased or variable), values between 0.5 - 0.7 are medium and 0.7 and above are
excellent.
3.7.4.1 Questionnaire for Employees

A separate questionnaire was prepared to achieve the objective of identify
the problems faced by the frontline employees in implementation of complaint
management system. The questionnaire involved the questions related to employee’s
view about complaints, service areas on which complaints are more, factors
responsible for the improper functioning of complaint management system, problems
with the modes available to the customers, suggestions to increase the efficacy of
modes and complaint management system. The Cronbach’s Alpha for the questionnaire
was as follows:

V1 Attitude for complaints
Complaints creates Pressure
Complaints Reveal the looopholes in service.
Complaints decrease the efficiency of employees.
Complaint is an opportunity to improve baking services.
0.654
Satisfactory Redressal builds customer loyalty.
Successful redressal diminishes the risk of losing the
customer.
Complaint Management motivates customer retention.
Complaints are a tool to vent customer’s anger and
frustration.
V2 Critical Service Areas
ATM Related
Mechanical related Complaint
Infrastructure and basic facilities related
0.660
Operations and procedures related
Employee behavior related
V3 Reasons of improper functioning of CMS
Customers do not follow the procedure.
Customers are unsupportive.
Customers are rude to the employees.
Failure of employee in proper service delivery.
0.756
Employee’s attitude towards top management.
Employees do not get fair financial emoluments.
There is a scarcity of skilled workforce.
Lack of training related to complaint management process.
The service processes are becoming complex.

V4 Problems in Complaint Modes
SMS Service
Online system. 0.767

Written Complaint Modes
Verbal Complaint Modes
V5 Customer complaint behavior

Young customers tend to complaint more
Female customers complain more than the male customers

0.670
Highly educated people tend to complain more because
they are more aware for their rights.
Young customers use website, email, SMS, while aged

customers use verbal and complaint forms to complain
V6 Satisfaction for CMS
Time taken for the redressal is satisfactory.
The procedures and policies of complaint management.
The compensation given by bank. 0.834

The attitude of management and employees towards
redressal.
The measures adopted by bank in order to prevent the

problem.
V7 Reasons of less Motivation for participation in CMS
Long & difficult CMS.
Multilayered Escalation
Lack of Training 0.660
Lack of Workforce
Multiple responsibility
Employee is considered as culprit, if complaint occurs.
Table 3.4 Value of Cronbach’s Alpha of Employee’s Questionnaire

Focus Group Interviews

Focus group interviews were conducted to gather the information related to
complaint management system of banks. A seminar was prepared on the study of
complaint management system.
3.8 Analytical Methods

The data was analysis with the help of Statistical Package for Social Sciences
(SPSS 16.0). Independent t-test and correlation were used to infer the data. The
descriptive and inferential statistics can be seen in chapter 4.
3.9 Ethical Considerations

Researcher has followed the ethical considerations while conducting the
research work. Integrity and honesty is to be followed for the research. Verbal
Permissions were taken from the banks to get the information from the bank
employees. Customers were informed about the objectives of the research and with
the assurance that the information will not be used for any illegal practice. The cover
page of the questionnaire consisted of the objectives and information regarding the
research. Confidentiality was maintained during the research. Researcher has tried to
escape any manipulation in the data while data entry. The open ended questions
were checked by the supervisor to confirm credibility.
Analysis, Interpretations and Findings 55
CHAPTER - 4
ANALYSIS, INTERPRETATIONS AND FINDINGS
The chapter emphasizes on the quantitative and qualitative analysis of the empirical
data. The chapter draws the interpretations and findings of the data in the purview
of the objectives and hypotheses.
The objective of the research is to conduct the comparative analysis of

complaint management system in Indian Public and Private sector Banks. The
chapter involves the inferences drawn from the analysis of primary data.
4.1 Hypothesis Statement

To identify the difference between nature of complaints in public and private
sector banks.
H0 = There is no significant difference in the nature of complaints lodged by
Ha = There is a significant difference in the nature of complaints lodged by
Banks offer various services to its customers. The service areas are classified
under 5 categories A.T.M. related complaint, Infrastructure & basic amenities related
complaint, Mechanical services related complaints, Operations and procedural
related complaints and Employee behavior related complaints. The frequency table
for various service areas on which customers lodged the complaints are as follows:
4.1.1 ATM Related Complaint
Sector
Total
Public Private
N % N %
Strongly Agree 114 28.5% 94 23.5% 208
Agree 42 11% 49 12.2% 91

ATM
Neutral 5 1.2% 2 0.5% 7
Related
Disagree 21 5.2% 34 8.5% 55
Strongly Disagree 18 4.5% 21 5.2% 39
Table 4.1 Frequency of Complaints lodged related to ATMs
ATM Related Complaint

Public
28.50%
30.00% Private
23.50%
25.00%
% of Respondents
20.00%
15.00% 12.20%
11%
8.50%
10.00%
5.20% 5.20%
4.50%
5.00%
1.20% 0.50%
0.00%
Strongly Agree Neutral Disagree Strongly
Agree Disagree
Respondents
Figure 4.1 Frequency of complaints lodged related to ATM

4.1.2 Infrastructure & Basic facilities Related
Sector
Public Private Total
N % N %
Strongly Agree 67 17% 52 13% 119
Agree 42 11% 29 7.2% 71

Infrastructure &
Basic facilities Neutral 14 3.5% 14 4% 28
Related
Disagree 60 15% 80 20% 140
Table 4.2 Complaints related to Infrastructure related complaints
Infrastructure & basic facilities related

20% Public
20% Private
17%
18%
15%
16%
13%
% of Respondents
14%
11%
12%
10%
7.20%
8% 6.20%
6% 4% 4.20%
3.50%
4%
2%
0%
Agree Disagree
Respondents
Figure 4.2 Frequency of complaints lodged related to Infrastructure & Basic facilities
4.1.3 Mechanical Services Related Complaint
Sector
N % N %
Strongly Agree 49 12.2% 51 12.8% 100
Agree 82 21% 71 18% 153

Mechanical
Services Related Neutral 24 6% 6 2% 30
Disagree 40 10% 51 12.8% 91
Table 4.3 Table showing frequency of complaints related to mechanical services
Mechanical Services Related

Public
25% Private
21%
20% 18%
% of Respondents
15% 12.20% 12.80% 12.80%
10%
10%
6% 5.20%
5% 2%
1.20%
0%
Agree Disagree
Respondents
Figure 4.3 Frequencies of complaints related to Mechanical Services

4.1.4 Operations & Procedure Related Complaint
Sector
N % N %
Strongly Agree 131 32.8% 114 29% 245
Agree 35 8.8% 46 12% 81

Operations &
Procedure Neutral 13 4% 13 3.2% 26
related
Disagree 20 5% 14 3.5% 34
Table 4.4 Complaints related to Operations & Procedures related
Operations & Procedure Related complaint

Public
35% 32.80%
Private
29%
30%
% of Respondents
25%
20%
15% 12%
8.80%
10%
5%
4% 3.20% 3.50% 3.20%
5% 0.20%
0%
Agree Disagree
Respondents
Figure 4.4 Complaints lodged related to Operations & Procedures

4.1.5 Employee Behaviour Related Complaints
Sector
N % N %
Strongly Agree 132 33% 107 26.8% 239
Agree 56 14% 52 13% 107

Employee
behavior related Neutral 1 0.3% 9 2.3% 10
Complaint
Disagree 8 2% 20 5% 26
Table 4.5 Complaints lodged related to Employee Behaviour
Operations & Procedure Related complaint

Public
33%
35% Private
30% 26.80%
% of Respondents
25%
20%
14%
13%
15%
10%
5%
3.30%
5% 2.30% 2%
0.80%
0.30%
0%
Agree Disagree
Respondents
Figure 4.5 Percentage of complaints related to employee behaviour

Difference between Public and Private Sector Banks
The significance level for the research was taken at 95% confidence level. t-
test was applied to check whether the difference exists between public and private
sector banks. The result of t-test is as follows:
Result ttab 1.96

Types of
Sector Analysis
complaints
Mean Std. Dev. tcal Sig.
Public 2.21 1.441 Significantly

ATM related 2.01 .044 Different
Private 1.98 1.353 H0 = rejected

Infrastructure & Different
2.7 .06
basic facilities

Mechanical Different
1.99 .04
Services

Operations Related 1.98 .037 Different

Employee Different
2.1 .045
Behaviour Related
Private 1.47 .826 H0 = rejected
Table 4.6 Independent t-test on complaints lodged in public and private sector banks
Interpretation:
Hence, the Null Hypothesis is not accepted and alternative hypothesis is
accepted which proves that there is a significant difference in the nature of
complaints lodged by customers in public and private sector banks.
4.2 Preferred Complaint Modes

To recognize the preferred mode used for registering the complaints by the
customers of public and private sector banks.
Complaint modes are the channels by which customers express their

complaints to the service provider. Various modes can be used to express the
complaints. Written modes viz. email, letters, Complaint forms and verbal complaint
modes viz. verbal complaint to the branch manager, frontline officer, call at
customer care, negative publicity etc. Banks offer a variety of complaint modes to
make customer free to express their satisfaction and dissatisfaction. Complaints can
be registered through email, SMS service, complaint forms, complaint box etc. The
research findings are as follows:
Descriptive statistics viz. frequency distribution is used to infer the data.

Figure 2 represents the preference of customers for complaint modes:
Preference of Complaint Modes
10% 5%
10%
6%
45%
12%
5%
7%
Networking Cites Verbal Complaint to Frontline Employee

Filled Complaint Ombudsman
Written Complaint to Branch Manager SMS Service
Call at Customer Care Online Complaint on Bank's Website
Figure 4.6 Preference of complaint modes
It is evident that customers prefer to complaint verbally in banks. For further

understanding, the preference is investigated in public sector and private sector
banks. In public sector banks, customers prefer verbal complaints whereas customers
of private sector banks are more inclined towards online complaints.
The researcher aimed to understand the relationship between customer’s age,

gender and educational qualification on complaint behavior. The opinion of customers
and employees was taken to understand the effect of demographic factors on
complaint behavior. The hypothesis for the objectives is as follows:

Complaint Behaviour varies according to the age of the customers.
H0 = There is no significant relationship between age of the customers and their
complaint behaviour.
Ha = There is a significant relationship between age of the customers and their
4.3.1 Customer’s viewpoint regarding the effect of Age on Complaint Behaviour

The data was analysed in a manner to know the effect of demographic
factors. The age was correlated with the occurrence of complaint lodged.
Effect of Age on Complaint Behaviour

To know the effect of age on complaint behavior of customers, Correlation
was applied. complaint behavior is studied on the basis of frequency of complaints
lodged. Frequency of complaints shows that how many times the customers have
lodged the complaint. The frequencies are once, twice, many times and never. The
Frequencies of respondents are as follows:
Age of the Respondent

Total
20-40 years 40 years and above
Once 65 77 142
Frequency of Twice 72 44 116
complaint
Lodged Many Times 53 28 81
Never 39 22 61
Total 229 171 400
Table 4.7 Frequency of customers as per occurrence of complaints

77
80 72 20-40 years
65 40 years and above
70
53
60
44
50 39
Count
40
28
30 22
20
10
0
Once Twice Many Times Never
Frequency of Complaint Lodged
Figure 4.7 Age wise distribution of Frequency of complaints
Correlation between Age and Frequency of complaints lodged

The Karl Pearson’ correlation was used to see the relationship between two
variables. The results of correlation are as follows:
Correlations
Age Frequency of complaint Lodged
Pearson Correlation 1 -.678**
Age of the
Sig. (2-tailed) .035
Respondent
N 400 400
**Correlation is significant at the 0.05 level
Table 4.8 Values of Correlation between age of the respondents

and complaint behaviour
Interpretation:
The coefficient of correlation shows is r (400) = -0.678 at a significance
value of 0.035 which shows that the data is significantly correlated not due to the
chance. The r value denotes that there is a negative correlation between age and
frequency of complaints. So, the H0 is not accepted that there is no significant
relationship between age of respondents and complaint behavior.
4.3.2 Employee’s Viewpoint regarding the effect of demographic factors on

Complaint Behaviour
Employees are the best source to know the effect of demographic factors on
Complaint Behavior because they actually deal with the complaints. Through
questionnaire, employees are asked about the effect of age on complaint behaviour.
The findings of the survey are as follows:
Sector
Total
Public Private
Strongly Agree 93 96 189
Agree 33 22 55
Young customer
Neutral 7 2 9
complaint more
Disagree 12 14 26
Strongly Disagree 5 16 21
Total 150 150 300
Table 4.9 Frequency distribution of employees who believe young

96
100 93
90 Public
80 Private
70
60
50
Count
33
40
22
30
14 16
12
20 7 5
10 2
0
Agree Disagree
Young customers tend to complaint more
Figure 4.8 Frequency distribution of employees who believe young

Employee’s Viewpoint on Age and selection of modes
Sector
Total
Public Private
Young customers use Agree 52 50 102

website, email, SMS,
while aged customers use Neutral 6 6 12
verbal and complaint
forms to complain. Disagree 2 11 13
Total 150 150 300
Table 4.10 Frequency of employees who believe that young customers use
modern modes while aged customers use traditional modes
90 83
75 Public
80
70 Private
60 52 50
50
Count
40
30
20 11 8
6 6 7
10 2
0
Agree Disagree
Young customers use website, email, SMS, while aged
customers use verbal and complaint forms to complain
Figure 4.9 Frequency distributions of employees who believe young customer

complain use modern complaint modes than traditional

Complaint Behaviour varies as per the gender of the customers.
H0 = There is no significant relationship between gender of the customers and
Ha = There is a significant relationship between gender of the customers and their
Gender and Frequency of complaints lodged
Gender
Total
Male Female
Once 74 67 141
Twice 62 53 115
Frequency of complaint
Lodged
Many Times 49 23 72
Never 32 40 72
Total 217 183 400
Table 4.11 Frequency distribution of gender and frequency of complaints
80 74
67 Male
70 62
Female
60 53
49
50 40
Count
40 32
30 23
20
10
0
Frequency of complaint Lodged
Figure 4.10 Frequency distribution of gender and frequency of complaint lodged

Correlation between Gender and Frequency of complaints
The Karl Pearson’s correlation coefficient shows the correlation between

gender and frequency of complaints. The result is as follows:
Gender Frequency of complaint Lodged
Pearson Correlation 1 .517
Gender Sig. (2-tailed) .030
N 400 400
Table 4.12 Values of correlation between gender and frequency of complaints
Interpretation: The result shows that the correlation coefficient is 0.517 at a

significance level of 0.030 (> 0.05). It means the correlation is significant. The
hypothesis is true that there is significant correlation between gender of the
respondents and Frequency of complaints.
Employee’s Viewpoint regarding effect of gender and complaint behavior

The perception of employees regarding complaint behavior is as follows:
Sector
Total
Public Private
Agree 21 30 51
Female customers
complain more than the Neutral 13 8 21
male customers
Disagree 20 31 51
Total 150 150 300
Table 4.13 Frequency distribution of gender wise frequency of complaints

66
70
55
Public
60
Private
50
40
30 31 30
Count
26
30 21 20
20 13
8
10
0
Agree Disagree
Female customers complain more than the male customers
Figure 4.11 Frequency distribution of employees who believe female

complain more than male customers
As the result shows that the customers and employees both affirm that there
is a relationship between gender and complaint behavior.
Complaint Behaviour varies according to the educational qualification of the

customers.
H0 = There is no significant relationship between educational qualification of the

Ha = There is a significant relationship between educational qualification of the

Effect of Educational Qualification on Frequency of complaints
Educational Qualification
Total
PhD Post Graduate Under
Graduate Graduate
Once 7 59 62 14 142
Frequency of Twice 10 50 44 11 115

complaint
Lodged Many Times 8 27 28 9 72
Never 10 29 27 5 71
Total 35 165 161 39 400
Table 4.14 Frequency Distribution of educational qualification and

PhD
70
62 Post Graduate
59
60 Graduate
50
Under Graduate
No. of Respondents
50 44
40
29
27 28 27
30
20 14
10 11 10
7 8 9
10 5
0
Frequency of complaint Lodged
Figure 4.12 Frequency distribution of educational qualification and

The frequency distribution shows that majority of respondents who are PhD
complained twice whereas the respondents with lower education complained once.
Correlation between Educational Qualification and Frequency of Complaints
To understand the relation between Educational Qualification and Frequency

of Complaints, Pearson’s correlation coefficient was measured. The result was as
follows:
Educational Frequency of
Qualification complaint Lodged
Pearson Correlation 1 .603

Educational
Sig. (2-tailed) .021
Qualification
N 400 400
Table 4.15 Correlation Coefficient between Educational Qualification &

Frequency of Complaints
Interpretation:
The result shows that Pearson’s Correlation Coefficient is 0.603 at significance
level of 0.021 < 0.05. It shows that the null hypothesis is rejected and there is a
relationship between Educational Qualification and Frequency of Complaints.
Employee’s perspective about the relationship of educational qualification and

complaint behavior
The employee’s perspective regarding the relationship of educational
qualification and complaint behaviour is as follows:
Sector
Total
Public Private
Highly educated people Agree 44 29 73

tend to complain more
Neutral 4 3 7
because they are more
aware for their rights Disagree 2 6 8
Total 150 150 300
Table 4.16 Frequencies of employees who believe that educated people complain more
120 108 Public

92 Private
100
No. of Respondents
80
60
44
40 29
20 6 8
4 3 4
2
0
Agree Disagree
Highly educated people tend to complain more
because they are more aware for their rights
Figure 4.13 Frequency distribution of Employees view regarding effect

of education on complaint behavior
Interpretation:
The result shows that there is a significant relationship between the
demographic factors on Complaint Behaviour. The fact is confirmed by both the
customers and employees. So, the hypothesis that there is a relationship between
demographic factors of customers and their complaint behavior is accepted.
4.6 Hypotheses Statement

The perception of customers about the effectiveness of Complaint Management
System is different for public and private sector banks.
H0 = There is no significant difference of customer’s perception about the effectiveness

of complaint management system for public and private sector banks.
Ha = There is a significant difference of customer’s perception about the effectiveness

of complaint management system for public and private sector banks.
Customers are the true evaluators of the services. As the research is a

comparative analysis of complaint management system of public and private sector
bank, it emphasises on the customer’s perception about the effectiveness of
complaint management system in both the sectors.
The perception of customers is measured on the basis of rating the complaint

management system on various characteristics of complaint management system.
The characteristics are Time taken for redressal, policies and procedures of complaint
management, compensation given by bank, attitude of management towards
redressal and measures adopted by bank.
4.6.1 Time Taken for Redressal

Promptness is the basic characteristic of complaint management system. If the
complaint remains unattended, it creates the arrogance in customers. The frequency
distribution of customer’s satisfaction for complaint management system is as follows:
Sector
Total
Public Private
Agree 31 30 61
Time taken
Neutral 13 5 18
for the redressal
Disagree 47 44 91
Total 200 200 400
Table 4.17 Frequency distribution of customer’s satisfaction of
time taken for redressal.
100 91 Public
Private
80
54 55
60
Count
47 44
40 31 30 30
13
20
5
0
Agree Disagree
Time taken for the redressal
Figure 4.14 Frequency Distribution of customer’s satisfaction of

time taken for Redressal
The result shows that the customers of private sector banks are more satisfied
with time frame of redressal. The table shown below depicts the response of the
customers on time the bank took for complaint redressal.
Sector
Total
Public Private
0-10 Days 43 65 108
10-20 Days 54 60 114
Time frame
20-30 Days 37 16 53
of Redressal
More than 30 Days 23 26 49
Not Yet 43 33 76
Total 200 200 400
Table 4.18 Frequency distribution of time taken by public sector and

private sector banks
70 65
60 Public
60 54 Private
No. of Respondents
50 43 43
37
40 33
26
30 23
16
20
10
0
0-10 Days 10-20 Days 20-30 Days More than Not Yet
30 Days
Time frame of Redressal
Figure 4.15 Frequency distribution of time taken by public sector and

private banks
The result shows that complaints (not yet redressed) are more in Public sector
banks. The complaints which are redressed within minimum time are in private
banks. It proves that the complaint management is prompt in Private sector Banks.
4.6.1.1 Policies & Procedures of Complaint Management

As discussed in introduction, the complaint Management policies and
procedures are same in public and private sector Banks, but the implementation
creates a huge difference between two. Customers are asked to rate the policies and
procedures. The responses are as follows:
Sector
Total
Public Private
Procedures and policies Agree 46 62 108

of Complaint Neutral 17 4 21
Management
Disagree 46 45 91
Total 200 200 400
Table 4.19 Frequency distribution of customer’s response over

policies and procedures of CMS
70 62 62 Public
60 Private
45 46 46 45 46
No. of Respondents
50
40
27
30
17
20
10 4
0
Agree Disagree
Procedures and policies of Complaint Management
Figure 4.16 Frequency Distribution of customer’s response over

policies and procedures of CMS
The result shows that the customers of private banks are more satisfied with
policies & procedures of complaint management system.
4.6.1.2 Compensation given by Bank

In case of severe failure, the complainant gets monetary and non-monetary
(Written apology, return or compensation in kind). The customers are asked to rate
the compensation which they received from the bank. The responses are as follows:
Sector
Total
Public Private
Agree 30 38 68
Compensation
Neutral 17 12 29
given by Bank
Disagree 66 46 112
Total 200 200 400
Table 4.20 Frequency Distribution showing satisfaction with compensation

given by bank
Public 66
70
Private 59
56
60
46
No. of Respondents
50 45
38
40 31 30
30
17
20 12
10
0
Agree Disagree
Actual Compensation given by Bank is satisfactory
Figure 4.17 Frequency Distribution of satisfaction with compensation given by bank
The result shows that customers of both the sectors are dissatisfied with the
compensation given by Bank. The dissatisfaction is more in public sector banks than
4.6.1.3 Attitude of Management & Employees towards Complaint Management

Attitude of Management plays an important role in increasing the effectiveness
of complaint management system. If the management and employees consider the
complaints as a threat for the business and tackle the complaints with negative
attitude, complainant will get dissatisfied. Following table shows the satisfaction
level of customers regarding the attitude of management and employees towards
complaint management:
Sector
Total
Public Private
Attitude of Agree 44 53 97
Management &
Neutral 4 13 17
employees towards
complaint Management Disagree 61 27 88
Total 200 200 400
Table 4.21 Frequency table of satisfaction regarding Attitude of Management
& employees for Complaint Management
76 Public
80
Private
70 61
53
60 51
No. of Respondents
50 44
40
40 31
27
30
20 13
4
10
0
Agree Disagree
Attitude of Management & employees towards
complaint Management is satisfactory
Figure 4.18 Frequencies showing Attitude of Management & employees

for Complaint Management
The result shows that the customers of private banks agree that the attitude of
management and employees are satisfactory towards complaint management whereas
customers of public sector banks are not satisfied with the attitude of management
and employees towards complaint management.
4.6.1.4 Measures adopted by bank to manage complaints

It involves the initiatives taken to generate awareness related to complaint
management policies. It is mandatory for banks to display the information regarding
complaint management at bank branches to create awareness in customers. The following
table shows the responses regarding the measures adopted by banks to create awareness.
Sector
Total
Public Private
Measures adopted to Agree 44 63 107
create awareness of Neutral 9 19 28
complaint management Disagree 56 42 98
Total 200 200 400
Table 4.22 Frequencies distribution of measures adopted to create
awareness of complaint management
63 Public
70
56 Private
60 54
50
No. of Respondents
50 44 42
41
40
30 22
19
20
9
10
0
Agree Disagree
Measures adopted to create awareness of complaint
management are satisfactory
Figure 4.19 Frequency distribution of responses of customers for measures adopted

to create awareness of complaint management
The above frequency shows the responses over the perception of customers
on efficacy of complaint management system. To figure out the difference between
the perception of efficacy of complaint management system between public and
private sector banks, t test is applied. The results of t-test are as follows:
Result ttab 1.96

Types of
Sector Analysis
complaints Std.
Mean tcal Sig.
Dev.

Time taken for Different
2.05 .034
redressal

Policies & Different
2.98 0.042
Procedures

Compensation 2.17 .030 Different
Attitude of Public 2.42 1.488 Significantly

Management for 5.14 0.023 Different
CMS Private 3.20 1.523 H0 = rejected
Measures Public 2.58 1.369 Significantly

adopted to create 3.97 0.032 Different
awareness Private 3.15 1.520 H0 = rejected
Table 4.23 Values of Independent t test of perception of complaint management
The result shows that the means are different in both sectors. The p values
are less than 0.05, which states that the difference is significant. The analysis revels
that there is a significant difference in the perception of effectiveness in complaint
management system in Indian public and private sector banks. The customers
perceive that private sector banks are more efficient in complaint management than
public sector banks.
Meta Analysis
Perception regarding effectiveness of Complaint Management System Public and
Private sector Banks
To know the perception of customers for overall services of public and
private sector banks, further investigation is done. The responses are collected on
service delivery, complaint modes, satisfaction level of customers, knowledge level
of employees regarding complaint management guidelines, responsiveness of
frontline employees for complaints, fairness of complaint management system and
implementation of complaint management policies.
The frequency distribution of customer’s responses on statements showing

the comparison is as follows:
Sector
Statements Responses Total
Public Private
Agree 21 17 38
Private Banks are more
effective than public sector Neutral 5 4 9
banks in Service Delivery
Disagree 23 30 53
Total 200 200 400
Private Banks are more Agree 36 18 54
effective than public sector
Neutral 5 7 12
banks in Customer’s
Satisfaction Level Disagree 31 41 72
Total 200 200 400
Agree 59 60 119
Private Banks are more Neutral 5 3 8
banks in Modes of Complaint Disagree 34 26 60
Total 200 200 400

Agree 40 40 78
banks in Responsiveness of Neutral 5 7 14
frontline employees to
Disagree 19 19 38
complaints
Total 200 200 400
effective than Public sector
Neutral 7 4 11
Banks in Knowledge of
employees about CMS Disagree 45 50 95
Total 200 200 400

effective in Implementation Neutral 9 0 9
of CMS Policies
Disagree 50 47 97
Total 200 200
Agree 55 78 133
Neutral 10 17 27
effective in Fairness of CMS
Disagree 36 26 62
Total 200 200 400
Agree 60 64 124
effective in recovery of Neutral 12 8 20
complaints
Disagree 35 36 71
Total 200 200 400
Table 4.24 Frequencies of perception of customers on Effectiveness of

Private sector Banks over Public Sector Banks
The result shows that the respondents who believe that private sector banks
are more effective than Public Sector Banks are more.
4.7 Problems faced by employees in proper functioning of

Complaint Management System
Employees play a significant role in complaint management. They are the
representatives of the Bank for customers. They are the face of top management.
Employees face various problems in the implementation of the guidelines to ensure
the effectiveness of complaint management system.
Research aims to identify the attitude of the employees towards complaint

management, Problems encountered in complaint modes and problems faced by the
employees in proper implementation of complaint management system in banks. To
know the problems separate questionnaire are prepared for bank employees (Refer
Annexure). Questionnaire was filled by 300 employees of SBBJ Bank, ICICI Bank,
UBI Bank, PNB Bank, Axis Bank and HDFC Bank. The questionnaire was intended
to get the insights of the attitude of the employees for complaint management and
the problems encountered by them in execution of policies and guidelines of
4.7.1 Attitude of employees towards complaints

The complaint management would be effective and prompt if the employees
feel motivated to redress the complaints. The research aims at understanding the
attitude of employees regarding complaints. The responses were as follows:
Statements Total
Yes 223
Complaints creates Pressure
No 77
Total 300
Yes 186
Complaints decreases the efficiency of employees
No 114
Total 300
Yes 158
Complaints reveal the loopholes in services
No 142
Total 300
Yes 225
Complaints are opportunity to improve banking services.
No 75
Total 300
Satisfactory Redressal builds customer loyalty and prevents Yes 236

customer retention. No 64
Total 300
Complaints are just a tool to vent customer’s anger and Yes 184
frustration. No 116
Total 300
Table 4.25 Frequency table showing attitude of employees towards complaints
The result shows that the employees of public sector banks have negative
attitude towards complaints because frequency of employees who think that
complaints decreases the efficiency and complaints creates pressure are more in
Public sector banks.
4.7.2 Problems in Implementation of complaint management policies

To ensure the efficacy of complaint management of the bank, it is important
to identify the problems in implementation. Employees are the service providers for
the customers who deal with the customers. They actually face the anger, frustration,
praise and encouragement of the customers. To know the ground realities of
problems in implementing the CMS, employees are the best source to investigate.
The findings shows that lack of awareness, Scarcity of skilled workforce,

complexity of complaint management policies & procedures, lack of coordination
between various functional areas and lack of decision power are the problems faced
by the employees in functioning of CMS. The statistics are as follows:
• 65% of respondents affirmed that awareness for the complaint management

policies and procedures are responsible for dissatisfactory redressal of
complaints.
• 76% respondents stated that scarcity of workforce is responsible for

improper functioning of CMS. One person is responsible for selling banking
products and services, operations of accounts and handling the complaints.
• 82% of respondents affirmed that the complaint management is long & full
of formalities. Long & difficult complaint management procedures are the
main problem in implementation of complaint management. Customers do
not fulfill the formalities required for complaint management. The lengthy
process demotivates the customer to complaint.
• 20% of respondents accepted that the employees do not have the authority to
take decision regarding complaint management. Centralisation of CMS is a
problem in functioning of complaint management.
4.8 Other Findings

4.8.1 Post Complaint Behaviour
Customer’s perception can be known by understanding their actions taken
after the bank has redressed the complaints. The result of complaint management
could be the satisfaction (which may result in loyalty and positive word of mouth) or
dissatisfaction (switch to other bank). Research investigates the post complaint
behavior in following actions:
• Switching Behaviour
Inefficient complaint handling leads to customer’s switching. 70% respondents
affirm that due to the dissatisfactory complaint management, they switched to
• Satisfaction Level of Customers

The customers who were satisfied with the complaint management system
were of private sector banks. The respondents who belong to private sector banks
were more satisfied than public sector banks and chose to continue with their bank.
They were satisfied up to the extent that they motivated others to avail the services
of their bank.
4.8.2 Problems in Complaint Modes

• Lack of Awareness
65% respondents affirm that they are not aware of the SMS system and
automated machines to lodge the complaints. Customers do not have the knowledge
related of procedures of complaint modes.
• Technical failure
54% respondents assert that non responsiveness of modes is also responsible
for inefficacy of complaint modes. The website of banks does not work properly.
The Employees affirm that the failure of server is the reason of delayed response to
complaints.
• Lack of workforce
Scarcity of workforce also hampers the functioning of complaint modes.
Complaints received at Customer care units and help desks are remain unattended
because bank do not have workforce to handle the complaints.
Conclusion 86
CHAPTER - 5
CONCLUSION
The chapter presents the conclusion and implication of the research. The
conclusions have been drawn from the analysis of data. The chapter includes the
recommendations and future implications of the research.
5.1 Conclusions
5.1.1 The study reveals that as compared to private sector banks, public sector
banks have more complaints related to ATMs, Operations and Employee
behavior. Infrastructure related and mechanical services related complaints
are less in public sector banks.
5.1.2 Customers prefer traditional modes rather than modern modes which
includes SMS, social networking sites and online bank portal. The reasons
are lack of awareness for use of modern complaint modes, accessibility and
poor performance of online complaint modes are also one of the reason like
in public sector banks pop-ups do not work in proper manner.
5.1.3 There is a significant relationship between age of the respondents and

complaint behavior. Result shows that the age of customers and frequency of
complaints has strong negative correlation. As the age increases, customers
tend to complain less.
5.1.4 The result shows that male customers lodge the complaints more than female
customers. There is a significant relationship between gender of the customers
and their complaint behavior.
5.1.5 The education status of customers and their complaint behavior are positively
correlated. Result shows that educated customers are more aware of their
rights of complain.
5.1.6 Customers perceive that the complaint management system of private sector
banks is more efficient than public sector banks.
Conclusion 87
5.1.7 The result shows that lack of training, scarcity of skilled workforce, low
motivation of employees, Centralisation of decision power and lengthy
processes and complicated policies are the problems faced by employees in
proper functioning of CMS.
5.2 Recommendations
The research proposes the following recommendations to increase the
effectiveness of complaint management:
5.2.1 Banks should see complaint management system as one of the customer
retention strategy. Major emphasis should be given to customer relationship
management. If the complaints are redressed properly, customer patronage
the bank’s image.
5.2.2 The focus group interviews with high officials of banks reveal that the
complaint management system is designed in an apt manner. Study reveals
that the problem area, specifically in public sector banks is in implementation
of complaint management system, employee’s attitude as one of the major
reason for the same. It is strongly recommended that a separate attitudinal
survey should be carried out at branch level on bank employees to map their
attitude. Corrective measures should be taken to inculcate the positive
attitude among employees. Employee orientation programs should be
organized at regular intervals.
5.2.3 Special training Programs should be conducted to understand the procedures

and guidelines of complaint management. The awareness programs should
be carried out regularly specifically for new employees.
5.2.4 Complaint modes require to be upgraded with the technology. Voice call
system should be included in modes. The voice call system should be in
manner to provide the necessary actions required for the customers to lodge
their complaints.
5.2.5 To ensure the record of complaints received verbally and not in writing, it
should be mandatory to assign the complaint number to verbal complaints.
Conclusion 88
5.2.6 Dedicated personnel should be appointed to handle the complaints at branch

level. Study reveals that complaints are handled by the bank employees
along with their routine work.
5.2.7 To create awareness of complaint management, it is recommended to display

the step wise complaint management system in branch offices and ATMs.
5.2.8 The complaint management guidelines should be displayed in the welcome

kit which is given to the customers when they open their account in banks.
5.2.9 Performance Management System and rewards must be linked to number of

complaints redressed. Employees whose complaint handling has converted
into customer’s loyalty should be awarded.
5.3 Future Research Directions

5.3.1 Future research can be done on post complaint behavior of customers in
banks.
5.3.2 The comparison between complaint management system of foreign banks

and Indian banks can be studied.
5.3.3 Matrix can be developed to assess the firm’s complaint redressal initiatives
and employee’s motivation.
5.3.4 The model can be developed to use complaint management strategies as

switching barrier in banks.
5.3.5 Strategies to scrutinize the legitimacy or genuineness of complaints can be

the issue for future research.
5.3.6 Cost benefit analysis of training programs related to complaint management

and change in employee’s attitude for complaints can be studied.
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Annexures 99
Annexure-I
CUSTOMER QUESTIONNAIRE
Sub: Survey on comparison between the complaint management system in Public

sector and private sector Banks.
Dear Sir/Madam,
With the rise of globalization, Banking services are playing a prominent role
in GDP of India. Banks act as the fund mobiliser of the nation. With the advent of
technology, banks have increased their services to compete with the global services
and to create error free, high quality and cost effective services.
Today to satisfy the customers, banks need to understand the customer’s

perception and act accordingly. Service Providers are required to realize that
complaints should be managed in a way so that can convert complaining customers
into loyal customers. Service failure is a gap between the expected service delivery
and actual service delivery. Complaint management should be given importance
because failed complaint redressal create double deviation which means failure on
failure. The study is related to the complaint management system in banks. The
objective of the questionnaire is to know your opinion on the complaint management
system and its efficacy. The study is intended to cover the following aspects:
• To compare the types of complaints lodged by customers in public and
• To recognize the preferred mode used for registering the complaints by the
customers of public and private sector banks.
• To ascertain the effect of demographic characteristics of customers on
• To identify the customer’s perception about the effectiveness of complaint
management system in public sector and private sector banks.
• To identify the problems faced by the frontline employees in the proper
functioning of complaint management system.
Annexures 100
• To recommend the strategies to strengthen the complaint management

system in public and private sector banks
The First five questions are related to your profile to understand the effect of
profile on complaints. The questions are framed according to the objectives.
The response would be kept confidential and will be used for academic
purpose only. We will be happy to send you the findings of this survey.
I appreciate your Support.
Thanking You,
Ms. Shalini Sharma Dr. Sonia Munjal

Research Scholar Associate Professor,
TAPMI School of Business, TAPMI School of Business,
Manipal University, Jaipur Manipal University, Jaipur
Email: shaliniwise04@gmail.com
Annexures 101
Name ...................................................................................................................................
Age 20-40 years 40 years and above
Gender Male Female
Occupation ........................................................................................................................
Educational Qualification ...............................................................................................
Q.1 In which bank you have your account?

Public Sector Bank
SBBJ
Punjab National Bank
Union Bank of India
Any other (………………………………………)
Private sector Bank
Axis Bank
ICICI Bank
HDFC Bank
Any Other (……………………………………)
Q.2 Please tick the services for which you have lodged the complaint?
Yes No
A) A.T.M. SERVICES
1 Deposit forms are not available at ATMs.
2 Maintenance of ATM machines.
3 Non dispensation of money at ATM.
4 The Quality of notes is bad.
5 The information related to next nearest ATM was not there.
6 The security of ATMs is not satisfactory.
7 ATM cards were not issued timely
8 Processing of cards is not convenient.
9 The no. of ATM machines are not sufficient.
10 The amount wrongly debited to account.
11 No Complaint book is kept at ATM.
Annexures 102
B) INFRASTRUCTURE & BASIC FACILITIES RELATED

1 Cash deposit and withdrawal forms are not there.
2 Drinking water facility is poor.
3 Unorganized and insufficient parking capacity.
4 Damaged Furniture and Insufficient no. of service counters.
5 Hygiene and cleanliness is not satisfactory.
6 display of Information regarding new schemes & circulars at
branches.
7 Help desk is not there.
C) MECHANICAL SERVICES RELATED
1 Printer is not working.
2 No backup in case of power cut.
3 Inoperative money counting Machine.
D) OPERATIONS & PROCEDURES RELATED
1 Related to Fixed Deposit Account
2 Related to Pension Payments
3 Opening and operations of bank accounts.
4 Delay in pass book entries and wrong entry
5 Credit card related complaint
6 Internet banking related complaint
7 Mobile banking related complaint
8 Related to loans and advances
9 Transfer of funds (NEFT/RTGS) is not Prompt.
10 Fee based services related complaint (Insurance, Demat A/c)
E) EMPLOYEE BEHAVIOR RELATED
1 Employees are not courteous and responsive.
2 Knowledge about the processes and new schemes.
3 Indifferent to the customer’s problems and queries.
4 Lack of coordination.
5 Employees are not punctual and tend to procrastinate.
6 Employees are corrupt.
Annexures 103
Q.3 I generally complaint to the bank, if the failure is related to:
1 Strongly Agree 2 Agree 3 Neutral 4 Disagree 5 Strongly disagree
1 2 3 4 5
1 A.T.M. services related
2 Mechanical services related
3 Infrastructure and basic facilities related
3 Operations and procedure related
4 Employee behavior related
5 Any Other………………………………………
Q.4 How often have you registered complaint with the bank?
Once Twice Many times Never
Q.5 Please tick the reasons of not registering the complaint to the bank?
1 Strongly Agree 2 Agree 3 Neutral 4 Disagree 5 Strongly disagree
1 2 3 4 5
1 I switched to other bank.
2 The failure was not severe.
3 My previous complaining experience was not good.
4 Complaining is a wastage of time and money.
5 I was not familiar with the process of complaint
management.
6 I do not have faith on complaint management
system of bank.
7 I asked frontline employee, but he did not respond.
8 It may result in embarrassment.
9 Any Other……………………………………………………………
Annexures 104
Q.6 What are the modes used by you to complaint?
1 Strongly Disagree 2 Disagree 3 Neutral 4 Agree 5 Strongly Agree
Yes No
1 Verbal complaint to the frontline manager
2 Verbal Complaint to Branch Manager
3 Filled complaint forms
4 Written Application to branch manager
5 SMS at toll free no.
6 Online complaint on bank’s Website
7 Facebook, twitter etc.
8 Call at Customer care
10 Complained at the displayed No. of high officials
11 Fax at Branch
12 Ombudsman of the territory
13 Any Other……………………………………………………………
Q.7 Do you think your selection of mode to complaint depends on the

following factors?
1 2 3 4 5
1 Your personal profile.
2 Attitude and beliefs about modes
3 Severity of complaint
4 Reliability of complaint modes
5 Accessibility of complaint mode
6 Affordability of complaint mode
7 Effectiveness of complaint mode
8 Your motive to complain
9 Any Other ……………………………………………………………
Annexures 105
Q.8 What was the reason of not using the other available modes?
1 2 3 4 5
1 I do not know how to send a SMS.
2 I am not aware of the online system.
3 There was no person sitting at help desk
to register the complaint.
4 Complaint box was not there.
5 The no. displayed at branch was not
answerable.
6 Toll free No. was unattended.
7 Any Other……………………………………………………………
Q.9 What was the time frame within which the bank redressed your
complaint?
0-10 days 10-20 days 20-30 days 30-40 days
Q.10 Are you satisfied with the redressal of your complaint on the following
parameters?
1 2 3 4 5
1 Time taken for the redressal was
satisfactory.
2 The procedures and policies of complaint
management.
3 The actual compensation given by bank.
4 The attitude of management and employees
towards redressal.
5 The measures adopted by bank in order to
prevent the problem.
Annexures 106
Q.11 What was your post complaint behavior?

1 2 3 4 5
1 I would switch to private/ public bank.
2 I am highly satisfied and would continue
with the bank.
3 I would motivate my relatives to avail the
services of the bank.
4 The redressal has increased my loyalty for
the bank.
Q.12 Do you think the private sector banks are more effective than public
sector banks on following parameters?
1 2 3 4 5
1 Services and delivery.
2 Generation of customer complaints or
satisfaction level.
3 Available modes to complaint.
4 The responsiveness of frontline employees
to complaints.
5 The knowledge of employees to Complaint
Management policies and regulations.
6 Complaint Redressal time.
7 Accessibility of Complaint Management
policies and regulations to customers.
8 Implementation of complaint management
system
9 Fairness of Complaint management system.
10 Recovery of service failures (apology,
compensation etc.).
Recommendations .......................................................................................................
Annexures 107
Annexure-II
EMPLOYEE QUESTIONNAIRE
Designation: …………………………………………………………………………
Branch: ………………………………………………………………………………
Work Experience: …………………………………………………………………
Q.1 Please tick your opinion for the following points:
Yes No
1 Complaints create pressure on the employees.

2 Complaints reveal the loopholes in service.
3 Complaint decreases the efficiency of employees.
4 Complaint is an opportunity to improve the banking

services.
5 Satisfactory redressal builds customer loyalty.
6 Successful redressal diminishes the risk of losing the

customer.
7 Complaint Management motivates customer retention.
8 Complaints are just a tool to vent customer’s anger and

frustration.
Q.2 Please tick the service areas on which the complaints are more?
1 2 3 4 5
1 A.T.M Services related
2 Mechanical services related
3 Infrastructure and basic facilities related

(Parking Facility, water etc.)
4 Operations and procedures related
5 Employee behavior related
6 Any Other………………………………………………………………
Annexures 108
Q.3 Do you think the following reasons are responsible for improper
functioning of complaint management system?
1 Strongly Agree 2 Agree 3 Neutral 4 Disagree 5 Strongly Disagree
1 2 3 4 5
1 Customers do not follow the procedure.
2 Customers are unsupportive.
3 Customers are rude to the employees.
4 Failure of employee in proper service delivery.
5 Employee’s attitude towards top management.
6 Employees do not get fair financial emoluments.
7 There is a scarcity of skilled workforce.
8 Lack of training related to complaint management
process.
9 The service processes are becoming complex.
10 Any other ………………………………………………………………
Q.4 What are the problems you face with the complaint modes available to
customers?
1. SMS Service: .................................................................................................
.................................................................................................................................
.................................................................................................................................
2. Online/Website: ............................................................................................
.................................................................................................................................
.................................................................................................................................
3. Written Modes: ..............................................................................................

.................................................................................................................................
.................................................................................................................................
4. Verbal Complaint ...........................................................................................

.................................................................................................................................
.................................................................................................................................
Annexures 109
Q.5 What do you suggest to increase the efficacy of modes of complaint?

.................................................................................................................................
.................................................................................................................................
.................................................................................................................................
Q.6 Do you agree with the following statements related to the customer
complaint behavior?
1 2 3 4 5
1 Young customers tend to complaint more.
2 Female customers complain more than the male
customers.
3 Highly educated people tend to complain more
because they are more aware for their rights.
4 Young customers use website, email, SMS,
while aged customers use verbal and complaint
forms to complain.
Q.7 Do you think the complaint redressal time is satisfactory?

Q.8 Do you think the escalation process is satisfactory?

Q.9 Are you satisfied with the complaint management system of your bank
on the following parameters?
1 2 3 4 5
1 Time taken for the redressal is satisfactory.
2 The procedures and policies of complaint
management.
3 The compensation given by bank.
4 The attitude of management and employees
towards redressal.
5 The measures adopted by bank in order to
prevent the problem.
Annexures 110
Q.10 Do you think the employees feel less motivated for the implementation of
Complaint management system?
Q.11 What are the reasons of less motivation for the implementation of
Complaint management system?
1 2 3 4 5
1 Long and difficult complaint management system.
2 The escalation of complaint is multilayered.
3 Lack of training is there.
4 Lack of work force.
5 The complaints are considered as threat by the top
management, If a complaint comes against an
employee, he is considered as the culprit.
Q.12 What are the problems you face in implementation of complaint

management system?
.................................................................................................................................
.................................................................................................................................
.................................................................................................................................
Q.13 What are the suggestions you would like to give to increase the efficacy
of complaint management system?
.................................................................................................................................
.................................................................................................................................
.................................................................................................................................

Shalini Sharma Final Thesis

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AN ANALYSIS OF COMPLAINT MANAGEMENT

SYSTEM IN INDIAN PUBLIC AND PRIVATE

Submitted in partial fulfillment of the

TAPMI SCHOOL OF BUSINESS

Date: 25-09-2015 (Dr Sonia Munjal)

I would like to convey my gratitude to the student doctoral committee members

Special acknowledgement, however, goes to an individual who is such an important

Special thanks to my beloved sister-in-law, Mrs. Anukriti Sharma and brother-in-law,

The increasing prominence of services in the India’s developmental statistics

Complaint management is advantageous for banks as it maintains the present

The research focuses on the comparative analysis of complaint management system in

Banks should consider complaint management as customer retention strategy. Focus

Awareness programs should be conducted to create understanding of complaint

Thus research is a composite work to investigate the complaint management system

3. RESEARCH METHODOLOGY ................................................................45-54

4. ANALYSIS, INTERPRETATIONS AND FINDINGS ............................55-85

ANNEXURES ....................................................................................................... 99-110

Table No. Title of the table Page No.

3.1 Values of reliability using Cronach’s Alpha 50

3.2 Value of Cronbach’s Alpha of employee’s questionnaire 50

3.3 Values of extraction using Factor Analysis 51

3.4 Value of Cronbach’s Alpha of Employee’s Questionnaire 52-53

4.1 Frequency of Complaints lodged related to ATMs 56

4.2 Complaints related to Infrastructure related complaints 57

4.3 Table showing frequency of complaints related to mechanical 58

4.4 Complaints related to Operations & Procedures related 59

4.5 Complaints lodged related to Employee Behaviour 60

4.6 Independent t-test on complaints lodged in public and private 61

4.7 Frequency of customers as per occurrence of complaints 63

4.8 Values of Correlation between age of the respondents and 64

4.9 Frequency distribution of employees who believe young 65

4.10 Frequency of employees who believe that young customers use 66

4.11 Frequency distribution of gender and frequency of complaints 67

4.12 Values of correlation between gender and frequency of 68

4.13 Frequency distribution of gender wise frequency of complaints 68

4.14 Frequency Distribution of educational qualification and 70

4.15 Correlation Coefficient between Educational Qualification & 71

4.16 Frequencies of employees who believe that educated people 71

4.17 Frequency distribution of customer’s satisfaction of time taken 73

4.18 Frequency distribution of time taken by public sector and 74

4.19 Frequency distribution of customer’s response over policies and 75

4.20 Frequency Distribution showing satisfaction with compensation 76

4.21 Frequency table of satisfaction regarding Attitude of 77

4.22 Frequencies distribution of measures adopted to create 78

4.23 Values of Independent t test of perception of complaint 79

4.24 Frequencies of perception of customers on Effectiveness of 80-81

4.25 Frequency table showing attitude of employees towards 82-83

Figure No. Title of the table Page No.

1.1 Strucure of Indian Banking Industry 5

1.2 Escalation Matrix of Complaints in SBBJ Bank 16

1.3 Escalation Matrix of complaints in Union Bank of India 17

1.4 Complaint Escalation Matrix of Punjab National Bank 18

1.5 Escalation Matrix of complaints in ICICI Bank 19

1.6 Escalation Matrix of Axis Bank 20

1.7 Complaint Escalation Matrix of HDFC Bank 21

1.8 Status of complaints in three years 22

4.1 Frequency of complaints lodged related to ATM 56

4.2 Frequency of complaints lodged related to Infrastructure & 57

4.3 Frequencies of complaints related to Mechanical Services 58