Announcements

TrustBridge is an organisation working in the area of rule of law in the economy. We engage in academic and policy oriented research and advocacy in the areas of Energy Transition, Financial Markets, Governance in Private Capital, and Government Contracting and Litigation.

TrustBridge is looking for full time researchers to work on projects in the area of regulation of financial markets, governance and energy transition.

Financial markets

The financial markets project involves studying the working of regulators in securities markets, banking and payments, insolvency, and insurance. This includes a study of how regulations are drafted, the impact they have on regulated entities, comparative analysis of regulatory interventions, the design of regulators, and responding to public consultations. Our recent work in the field includes:

• Sane, Shah, and Zaveri-Shah (2023), Should Consumers Be Prohibited From Storing Card Data on the Internet?, Indian Law Review (forthcoming).
• Sane and Vivek (2022), Reconsidering SEBI Disgorgement, Working paper.

Energy transition

The energy transition project involves working on the regulatory landscape for the sector at the Union and State level, understanding renewable energy policy and issues connected with India's energy transition, electricity sector reform, particularly distribution, governance, ease of doing business, tariffs and markets, political economy, systems operation, grid structure and management.

• Jaitly (2022), A fork in the road for state electricity reforms, Seminar.
• Jaitly and Shah (2022), Threats to legal certainty in government contracting by electricity distribution companies, The Leap Blog.
• Jaitly and Shah (2021), The lowest hanging fruit on the coconut tree: India's climate transition through the price system in the power sector, Working Paper.

Requirements for the position

As a research fellow you will work on project deliverables under the supervision of a senior researcher. The requirements for the role are:

• A Master's degree or a professional qualification in economics/management/law/public policy, strong written and oral communication skills.
• Prior work experience in the energy transition or the financial markets regulations domain.
• A quantitative/computational orientation will be a plus.
• The candidates must be curious and passionate about research and be comfortable working in an interdisciplinary environment. They must be ready to work on independent outputs as well as function in teams.

The remuneration offered will be commensurate with your skill and experience.

Please send an email with your CV to careers@trustbridge.in if you are interested.

Announcements

The Indian Institute for Human Settlements (IIHS) invites applications for the eighth iteration of the Urban Fellows Programme (UFP) 2023-24. The nine-month UFP is scholarship-based, nine-month, full-time, residential, interdisciplinary and based at the IIHS Bengaluru City Campus.

The UFP is a unique space that combines classroom teaching, site-based applied learning, work in live projects and external internships to introduce learners to diverse forms of urban practice. Its interdisciplinary framework encourages learners from different disciplines, and practices diversity across multiple facets.

The UFP will run from August 2023 to May 2024 and recent graduates and young professionals from varied educational backgrounds or practice domains who were born on or after 1 August 1993 are eligible to apply. The UFP is committed to providing scholarships to admitted candidates who are unable to pay the programme tuition, after a review of their financial needs.

Watch this video for a quick glimpse into what life as a Fellow looks like.

Admissions close on 24 April 2023. For queries, write to us at ufp.info@iihs.ac.in or contact us at +91 99012 55788, 96064 84336.

For more information, please visit the website.

Announcements

Call for Papers: 14^th Emerging Markets Conference

12^th - 15^th December, 2023

XKDR Forum in collaboration with Vanderbilt law School is inviting papers to be submitted for the 14^th Emerging Markets Conference, 2023. In the past, the audience for these events has comprised of academics, participants from the legal and financial industry, policy makers from government and regulators. Details of the previous conferences can be viewed at https://emergingmarketsconference.org/. The conference aims to cover presentations and discussions across the following set of research topics:

• Economics in EMs.
• Finance in EMs (households, financial markets, financial intermediaries, firms and finance, finance and growth).
• Political economy, law, public administration, regulation in EMs.
• Insights into large EMs that matter in and of themselves.
• Insights from narrow research projects that illuminate EMs in general.
• Features of a society that enable or disable convergence into the “normal” package of high levels of freedom and prosperity.
• The puzzles faced by all kinds of decision makers: individuals, civil society actors, firms, all levels of government.
• Grand challenges such as climate change: implications for EMs and ramifications of choices made in EMs.

Conference design

For EMC 2023, we intend to bring on board a wider research papers, panels on contemporary policy and keynotes by experts in the area of finance, economics and law. The conference this year will be completely in person mode.

Best Discussant Award

Each year, we award the Springer Emerging Markets Conference discussant award for the best discussant and the first runner up discussant of the papers presented on each day of the EMC. The discussants are selected by an audience poll.

Important dates

• Paper submission deadline: 31^st August 2023.
• Expected date for notification of acceptance: 29^th September 2023.
• Dates of the conference: 12^th - 15^th December 2023.

Support

Financial support for academic authors whose papers have been accepted at the conference includes travel support of up to USD 750 as well as accommodation at the conference venue for 3 nights of the conference (12^th to 14^th December).

Registration and contact details

Submissions of the papers must be sent as PDF files only, to Jyoti Manke at outreach@xkdr.org
For any clarifications, please contact Jyoti at +91-98205-20180 (cellphone).

Examining grievances and redress for pension products

by Vimal Balasubramaniam, Aishwarya Gawali, Nancy Gupta, Renuka Sane and Srishti Sharma.

In a previous article, Examining grievances and redress for banking products, we studied the nature and extent of grievances for banking and payment products in India. We also evaluated whether grievance redress mechanisms worked, and what impact grievances had on the usage of products. In this article we study similar questions for contributory pension products. The analysis is based on a survey of 21,355 respondents that we conducted in five states including Maharashtra, Bihar, Haryana, Madhya Pradesh and Andhra Pradesh.

Measuring grievances

In the survey, we first ask if the respondent is using or has ever used contributory pension products. These would typically include the General Provident Fund (GPF), the Public Provident Fund (PPF), Employee Provident Fund (EPF) and the New Pension System (NPS). The study explicitly excluded various defined benefit pension plans, such as old age pensions, widow pensions, and disability pensions. We then ask the following questions:

1. If the respondent had faced an issue with any of the contributory pension products in the last 12 months?
2. If yes, what was the latest/most recent issue with the pension product?
3. Did the respondent complain after encountering the grievance?
4. Was the issue resolved after the first complaint?
5. If no, was the complaint escalated further?
6. If the complaint was escalated, was the issue resolved upon escalation?
7. If the respondent did not complain, what was the reason for not complaining?
8. Finally, what was the impact of the grievance on their usage of pension products?

We only consider complaints registered with the financial service provider or pension regulators. We do not include complaints filed in the police station or consumer courts as this is not in the ambit of the regulatory grievance redress system. Our questions do not pertain to any specific pension product. The results, therefore, are a reflection of the overall system of grievance redress, and not of any particular scheme.

Before we describe our results, it is useful to present the existing grievance redress mechanisms in the pension ecosystem. It is also important to note that while certain pension regulatory bodies report the incidence and resolution of grievance, there is no official consolidated statistic on the number of grievances for contributory pension schemes in India. Table 1 provides a snapshot of the governing regulatory bodies and grievance redress mechanisms (GRMs) of some of the major pension products that are relevant to our study.

Table 1: Pension products, regulatory body and GRMs

Pension Product	Regulatory Body	Grievance Redress Mechanisms (GRMs)
General Provident Fund (GPF)	Department of Pension and Pensioner's Welfare under the Ministry of Personnel, Public Grievances and Pensions	Online Grievance Lodging and Monitoring System at the Office of the Comptroller and Auditor General of India
Public Provident Fund (PPF)	Department of Post of India	Centralised Public Grievance Redress and Monitoring System (CPGRAMS) along with a dedicated Grievance Handling Cell accessible via call and email
Employee Provident Fund (EPF)	Employees' Provident Fund Organisation (EPFO)	EPF i-Grievance Management System (EPFiGMS)
New Pension System (NPS) and annuity schemes	Pension Fund Regulatory and Development Authority (PFRDA)	A multi-leveled Grievance Redressal System

Our analysis thus pertains to the use of contributory plans, which include, but are not limited to the schemes mentioned above.

Results

Our sample comprises of 21,355 respondents. 622 (2.92%)individuals reported having used a pension product. This is not surprising given that coverage through mandatory occupational pensions is low. However, there appears to be growing demand for micropension among poor families. This is reflected in our sample as well. Respondents with annual family income of less than one lakh rupees formed the largest share of pension users. 50% (314 out of 622) of pension users had an annual family income of less than one lakh rupees. 30% (187 out of 622) of the pension users had an annual family income between 1 to 3 lakh rupees. The remainder 20% had an annual family income of more than 3 lakh rupees.

Extent and nature of grievances

Of the pension users, about 11.4% (71 out of 622) reported having faced grievances related to pensions in the last 12 months. 61% (43 out of 71) of the grievances pertained to irregular or delayed pension payments, while 34% (24) of individuals claimed having not received their monthly pension during the last 12 months. About 6% (4) respondents faced grievance related to paper work issues.

From grievance to complaining and resolution

Table 2 presents the life cycle of pension related grievances - this helps us understand the working of the redress mechanisms, both at the level of financial service providers (FSPs) as well as the regulators. As described earlier, 622 respondents owned a pension product, while 71 had a grievance. Out of the 71, 59 (83%) complained to the FSP. The FSP was able to resolve 33 (56%)complaints. This implies that 26 complaints were not resolved. Of these only 8 (31%) were escalated to a higher authority, leading to a resolution of 5 (63%). Overall, this suggests that 33 grievances (46%) were not resolved - either because the respondent didn't complain at all, or because the problem was not resolved either at the FSP or regulatory level.

Table 2: Grievances, complaints and resolution

Pension Product	N
Own the product	622
Had a grievance	71
Complained to FSP	59
Resolved by FSP	33
Escalated to higher authority	8
Resolved upon escalation	5

We also explore the reasons why people do not complain when faced with a grievance with pension products. We focus on those respondents who didn't complain to the financial service provider/regulator. This doesn't include those who did not escalate their complaint after it was not resolved by the FSP. As seen in Table 2, 12 out of the 71 respondents who had a grievance chose not to complain. Of these 12 respondents, four felt that their problem would not get resolved sometimes because they didn't know if their problem was valid in the first place, while four were reluctant to access the process - either because they didn't have enough knowledge of the same, or because they felt the process was too costly and complex. These are very small sample sizes, and hence the results may not be generalisable.

Impact of grievance on usage

In Table 3, we present the impact on usage for those who had faced any grievance while using the pension products.

Table 3: Impact on usage of pension schemes

Impact on usage of pensions	N	%
Changed the provider	36	51
Stopped using the product	11	15
No change	11	15
Reduced the use of product	5	7
Do not know/wish to answer	5	7
Increased the use	3	5

Regardless of the respondent's course of action, the experience of having faced a grievance is bound to have an impact on the usage. As a result of encountering grievance, a majority of the respondents chose to change their service provider. 51% of those who had a grievance (36 out of 71) changed their service provider. 7% (5 out of 71) users having faced grievance reduced the usage of the pension products, while 15% (11 out of 71)stopped using the product.

Conclusion

GRMs in the pensions sector seem to be performing better than the banking and payments sectors. The incidence of grievances is lower, and the complaint rate is higher. However, banking and payments have a substantially larger number of users, and the products also get used more frequently than a pensions product. So it is not surprising that frictions in the banking space are higher. While the incidence of complaints may be lower in pensions, the impact of poor service may be higher on users, especially as the nature of grievances suggests that these occur later in life, when people may have limited means to solve the problem. This makes the numbers reported in the survey large enough to matter.

Vimal Balasubramaniam is a researcher at Queen Mary University, London. Aishwarya Gawali and Nancy Gupta are researchers at NIPFP. Renuka Sane is a researcher at Trustbridge. Srishti Sharma is a PhD student at Texas A&M University.

Coping with stress: Household borrowing for debt repayment

by Aishwarya Gawali and Renuka Sane.

There are concerns that household balance sheets are under stress due to rising levels of debt. An important contributor to the composition and levels of household debt is the ability to repay loans on time. Difficulty in repaying debt is also potentially a useful indicator of stress on the household balance sheets. There is already some evidence which indicates that households, and in particular rural households, are borrowing for debt repayment to cope with this stress. We present evidence on the same, from a large-scale panel survey.

Data

Our analysis is based on data from the Consumer Pyramids Household Survey (CPHS), a pan-India panel household survey of about 174,000 households carried out by the Centre for Monitoring Indian Economy. In order to capture the latest available information from the CPHS, we use data from May to August (Wave 2) of 2022 and trace back to the same months of the preceding years. That is, we study data collected in the months of May to August (Wave 2) in each year between 2015 and 2022.

The data on sources and purposes of borrowing is sourced from the Aspirational India database within CPHS. This is our primary source of data for understanding credit access. Households are asked questions on their borrowing status across multiple sources and purposes. The responses are recorded as Yes/No, that is whether households have debt outstanding, and if so, whether households have borrowed from a specific source for a specific purpose. For example, if a household has borrowed for debt repayment, we would also get information on which source they borrowed from for debt repayment.

The data on income comes from the Household Income database which we use to create income deciles. The deciles are based on average monthly income of the five years prior to 2022.

We use household weights to get population level estimates of the share of households that have outstanding debt for the purpose of debt repayment.

Q1: How many households borrow, and how many borrow for debt repayment?

Figure 1 shows the number of households with debt outstanding, and number of borrower households who have borrowed for debt repayment. The number of borrower households increased from 17 million in 2015 to 165 million in 2022. The number of households borrowing for debt repayment rose from just 0.75 million in 2015 to 23 million in 2022. The share of borrowing for debt repayment in overall borrowing rose from 4% in 2015 to 14% in 2022.

Figure 1: Borrowing for debt repayment as a proportion of overall borrowing

The pandemic year of 2020 is interesting because we find that there was a decline in the number of borrower households. However, there was an increase in the number of borrower households for debt repayment. Borrower households dropped from 154 million in 2019 to 141 million in 2020; however households borrowing for debt repayment increased from 12 million in 2019 to 14 million in 2020. As of August 2022, 165 million households in India had debt outstanding. Of these, 23 million had taken a loan to repay debt.

Q2: What is the rural-urban variation in borrowing for debt repayment?

The CPHS data suggests that rural India has a larger share of borrower households than urban India. This is also borne out by the All India Debt and Investment Survey conducted by the NSSO, which shows that 35% of rural households are indebted compared to 22% in urban centres.

Figure 2 examines the rural-urban distribution of borrowing for the purpose of debt repayment. It shows two data points: the total number of borrower households in both rural and urban India, and the number of borrower households that have debt outstanding for reasons of debt repayment.

Figure 2: Rural-Urban distribution of borrowing for debt repayment

In 2015, there were about 16 million households in rural India and 9 million households in urban India that had debt outstanding. Of the 16 million in rural India, 2.26% had borrowed for debt repayment reasons. Of the 9 million in urban India, 1.35% had borrowed for debt repayment reasons. This number had increased to 12% of rural borrower households and 14% of urban borrower households in 2022. However in terms of absolute numbers, there are a lot more borrower households (overall and for debt repayment) in rural India than in urban India.

Q3: What are the sources of borrowing for households with borrowing for debt repayment?

CPHS provides information on the source of borrowing for each purpose. Figure 3 presents the share of the main sources from which households have borrowed for debt repayment between 2015 and 2022.

Figure 3: Sources of borrowing for debt repayment

There are two interesting patterns that emerge. First, in the earlier years, the biggest source of borrowing for debt repayment were the money-lenders. In 2015, 84% of households borrowing for debt repayment had borrowed from a moneylender. This has now flipped to self-help groups.

Interestingly, we also find that borrowing for debt repayment comes largely from Andhra Pradesh and Telangana. Perhaps the reliance on self-help groups is just a reflection of the largest share of borrower households for debt repayment being located in these regions which have a higher presence of self-help groups.

The next major source is relatives, friends and family followed by banks. It is important to note that these shares may not always add up to 100 because a household can take a loan for repayment of existing debt from more than one source.

Q4: What is the relation between income and borrowing for debt repayment?

Figure 4 plots the number of households with borrowing for debt repayment, in each income decile for Wave 2 of 2015-2022. Borrowing is higher between the fourth and eighth income decile households.

Cumulatively, the fifth, sixth, seventh and eighth deciles accounted for almost 60% of the total number of households that borrowed for debt repayment in 2022. In the eighth decile, 3.93 million households borrowed for repayment in 2022. This indicates that 17% of the households that borrowed for debt repayment belonged to the eighth decile. 15% of the total household borrowing for debt repayment was from the sixth decile, with 3.47 million borrowers. The seventh and fifth deciles followed closely with shares of 14% (3.33 million) and 13% (3.10 million) respectively.

The number of households in these deciles have also grown over the years and 2022 has the highest number of households in each decile. The lines for 2015 and 2016 are almost flat which indicates the low level of borrowing for debt repayment. The rise becomes prominent from 2017 as the gaps between the lines start to widen. This is most visible in the case of 2022, where all deciles, but especially the sixth and eighth decile saw a huge rise in borrowing for debt repayment.

Figure 4: Debt repayment and Income

Conclusion

In this article we have established some basic facts about household borrowing for debt repayment in India. First, there has been an increase in the number of borrower households, as well as the number of households who borrow for reasons of debt repayment. Second, the increase is greater in rural areas as against urban areas. Third, self help groups seem to be the most prominent source of borrowings for debt repayment. Fourth, households between the fourth and the eighth decile have the highest number of households with borrowing for debt repayment. These facts are building blocks of a larger research agenda on understanding debt and distress.

Renuka Sane is a researcher at Trustbridge and Aishwarya Gawali is a researcher at NIPFP.

Examining grievances and redress for banking products

by Vimal Balasubramaniam, Aishwarya Gawali, Renuka Sane and Srishti Sharma.

Banks are witnessing persistent consumer complaints. These range from high service charges, lack of transparency in pricing and mis-selling. The regulatory system is currently not designed to capture the total number as well as nature of grievances. Without this information, it becomes difficult to design a policy solution.

We examine the grievance and redress experience for a heterogeneous set of consumers, with a large scale survey in five major states of India. Through this survey, we map the journey of a consumer's experience-- from usage and grievance to resolution. We also study the impact that a grievance has on subsequent usage of the product. In this article, we present information on the consumer's experience for a comprehensive set of banking and payment products that fall under the regulatory ambit of the Reserve Bank of India. These include:

1. Banking deposits.
2. Bank credit.
3. ATM/Debit Cards.
4. Net banking/ Phone Banking(including NEFT/IMPS/RTGS).
5. NBFC.
6. UPI Wallets.
7. Microfinance institutions.
8. Co-operative credit societies.

The evidence from our study can form the basis of a more responsive system of grievance redress for retail consumers.

The survey design

Our survey was conducted in Maharashtra, Bihar, Haryana, Madhya Pradesh and Andhra Pradesh. We used a multi-stage stratified sampling method to draw the sample of households. The Primary Sampling Units (PSUs) were the villages for rural areas and census enumeration blocks (CEBs) for urban areas. The Ultimate Sampling Units (USUs) were the households from these PSUs.

The 2011 Census served as the sampling frame for the identification of the districts within each state. All the districts in a state were divided into terciles on the basis of distribution of households using banking deposits, curated from the RBI data across four quarters of 2020-21. To ensure proportionate distribution in each tercile, two districts were picked from each tercile using systematic random sampling. This exercise was repeated for each of the five states. In states such as Maharashtra, Bihar & Haryana where one district held a substantially high proportion of deposits, it was treated as two districts and over sampled to account for the large proportion of deposits. Accordingly, we got a sample of six districts each from Madhya Pradesh and Andhra Pradesh, and five districts each from Maharashtra, Bihar and Haryana which gave us a total of 27 districts.

Within the district, the allocation of the sample between villages and CEBs was proportional to the rural-urban distribution of the population. Villages in a district were stratified on the basis of distance from district headquarters and CEBs were stratified on the basis of share of CEB in the district's urban population. Three strata were created on the basis of the above mentioned criteria, for both villages and CEBs. The number of households from each strata was selected in proportion with the population share of each strata. So if one village strata has 40% of the rural population, then 40% of the rural sample of the district came from that strata.

We collected information on the demographics, physical and financial assets, and liabilities of the household. The core module of the questionnaire focused on experience of consumers with grievances & redress regarding financial products. The total sample size was 21,355 respondents.

Measuring grievances in the banking system

According to the current grievance redress system for banks, NBFCs and Prepaid Payment Instruments, consumers must first lodge a complaint with their service provider. If the service provider is unable to provide resolution in a satisfactory manner in 30 days, the consumer may escalate the complaint to the Ombudsman. The Ombudsmen for banks, NBFCs and digital payments have been harmonised under the Integrated Ombudsman Scheme in 2021. Consumers can lodge their complaints with the Ombudsman using the Complaint Management System (CMS) portal or by using a complaint form. We asked the following questions to understand the consumer's experience at each step of the grievance redress process:

• First we asked if the respondent is using/has ever used the mentioned product. This ensures that we also capture past users of a financial product.
• We asked if they have faced an issue with the mentioned financial product in the last 12 months. This helps us capture the grievances faced by consumers.
• We then asked the respondent what their latest/most recent issue was for the mentioned financial product.
• We also asked them their first course of action after encountering the grievance. Through this question, we understand how many people complain after facing a grievance. We consider that a respondent has complained if they went to the service provider or regulator with their issue. We do not include complaints to the police or consumer courts as this is not in the ambit of the regulatory grievance redress system.
• Additionally, we asked if their issue was resolved after their first complaint.
• For those who did not receive resolution at this stage, we asked if they escalated the complaint to a higher authority.
• For those who escalated their complaint, we asked if they finally received resolution.
• To all those who faced a grievance, we asked what the impact of the grievance was, on their usage of the product.

Overview of grievances in the banking system

In Table 1, we describe the extent of usage and grievance for the various banking and payment products. Columns (1) and (2) provide the number and percentage of the sample who have used a particular financial product. Columns (3) and (4) describe the number and proportion of users that reported that they faced an issue/grievance related to the financial product in the last 12 months.

Table 1: Usage and incidence of grievance

Product	Usage		Incidence of grievance
	(1)	(2)	(3)	(4)
	N	%	N	%
Banking deposits	17407	81.51	2112	12.13
ATM/Debit Card	8625	40.39	1279	14.83
Netbanking (IMPS/NEFT/RTGS)	3161	14.80	503	15.91
UPI Wallets	2825	13.23	531	18.80
Bank credit	1640	7.68	242	14.76
MFI	961	4.50	104	10.82
NBFC	448	2.10	82	18.30
Cooperative credit society	386	1.81	72	18.65

Banking deposits were the most used product, followed by ATM/Debit cards. Netbanking was the third most used product, followed closely by UPI wallets. All the others were used by less than 10% of the sample each. Co-operative credit societies had the smallest share of users.

The incidence of grievance ranged between 10% to 19%. Even though bank deposits were the most used product, they had the second lowest incidence of grievances. The highest grievance rate was for UPI wallets, at about 19%. Co-operative credit societies had the second highest incidence of grievances, even though the usage of these products was the lowest in our sample. The same is true for NBFCs as well - only 2% of the sample used NBFC products, but 18% of these had faced a grievance.

Nature of grievance

In Table 2, we describe the nature of grievances faced by consumers. We select the top 3 grievances for each product and present the number and proportion of consumers who faced the given issue.

For banking deposits, 28% of those with a grievance had an issue related to transaction failure. 26% of the issues were related to charges being deducted without information. More worryingly, 12% of the issues were related to difficulties with opening a bank account. This has implications for financial inclusion as such issues may dissuade people from participating in the formal financial system.

Table 2: Nature of grievances

Product	N	%
Banking deposits
Failures or delays in transactions	585	28
Deductions or charges without information	555	26
Difficulty in opening bank account	244	12
Bank credit
Loan/interest rates	130	54
Fraud, hidden charges etc	102	42
Other, specify	10	4
ATM/Debit card
Lack of cash in ATM	490	38
ATM closed/non functional	259	20
Server down	156	12
Netbanking
Server down	204	44
Delays in services	92	20
Money deducted but transaction failed	85	18
UPI Wallets
Server down	188	35
Delays/Failure of transactions	115	22
Transaction failed, but money debited	99	19
NBFC
Complex terms and conditions/no adequate notice	36	44
Non transparency in contract/ loan	23	28
No communication about loan sanctioned	7	9
MFI
Charged higher interest rate than informed	56	54
Threat to increase interest rates	27	26
Painful recovery process	12	12
Co-operative credit society
Charged higher interest rate than informed	42	58
Threat to increase interest rates	23	32
Painful recovery process	6	8

For bank credit, the dominant issues were interest rate related, however, 42% of consumers reported having faced fraud which is a far more serious nature of grievance.

For ATM cards, 38% of the issues are related to lack of cash in ATMs, 20% were related to dysfunctional ATMs and 12% of the issues came up because the server was down. 44% of netbanking issues were also because the server was down. While transaction, server and service infrastructure related issues dominate in case of payment products such as UPI and net banking, interest rate and loan contract related issues are significant for credit products.

From grievance to complaints and resolution

In Table 3, we report the number of people who complained to either the service provider or regulator when faced with the grievance. Column 2 presents the total number of grievances for the given product. In Column 3, we report the number of users who complained to either their service provider or regulator. In Column 4, we report the number of consumers whose complaint was resolved at the first stage itself. In column 5, we report how many of those who escalated their complaint reported that their issue was resolved.

Table 3: Complaining, resolution, escalation and final resolution

	(1)	(2)	(3)	(4)	(5)
Product	Had a grievance	Complained to FSP	Resolved by FSP	Escalated to higher authority	Resolved upon escalation
Banking deposits	2112	1064	661	88	47
Bank credit	242	201	104	61	6
ATM/Debit Card	1279	521	410	39	22
Netbanking(IMPS/ NEFT/RTGS)	503	252	180	24	13
NBFC	82	72	43	8	4
UPI Wallets	531	187	141	9	6
MFI	104	69	34	8	4
Cooperative credit society	72	64	37	7	5

Out of the 2112 consumers who faced a grievance regarding banking deposits, 1064 (50%) complained, which is how we define the complaint rate. Of these, 661 (62%) reported that their problem was resolved after their first complaint, which is how we define the resolution rate. This suggests that 403 users' complaints were not resolved in the first instance. Of these, only 88 (21%) escalated the complaint. Of these 88, 47 (53%) reported that their problem was resolved after escalation. The other half of the complaints that were escalated remain unresolved.

Banking deposits have the highest number of complaints. However, co-operative credit societies had the highest complaint rate at 88% followed by NBFCs at 87%. ATM card complaints have the highest rate of resolution at the first stage -- 410 out of 521 complaints (78%) got resolved at the first stage. This is followed by UPI wallets at 75% and netbanking at 71%. High resolution rates suggest that grievance redress at the first point of contact, which is usually the Financial Service Providers (FSPs) is performing efficiently. MFIs have the lowest resolution rate (49%) at the first stage, and points to the deficiencies in the redress system.

Reasons for not complaining

In the previous section we examined what happens to the complaints that enter the official grievance redress system. However, it is evident that not all grievances turn into complaints. What about the users who do not lodge a complaint?Table 4 shows the reasons why people do not complain when faced with a grievance. The rows show the number of users who did not complain for the reason given in the column.

For banking deposits, the main reason for not complaining was that users did not know the process of grievance redress. 38% of those who did not complain, did so because they did not know the process. For bank credit, the costly and complex nature of the process was the main reason for not complaining with 34% users not complaining due to this reason. 36% ATM/debit card users who did not complain did so due to the complicated and expensive nature of the grievance redress process. 26% did not complain because they did not know the redress process. Another 15% did so because they were not sure about whether their problems would be resolved. For netbanking and phone banking, 33% users did not complain because the redress process is too costly and complex, 15% did not complain because they were not sure about their issue being resolved and 17% because they didn't know the process.

Product	Did not complain to FSP	Costly and complex process	Did not know validity of complaint	Do not know/wish to answer	Fear of retribution	Resolution unlikely	Unknown process	Was advised not to by friends family
Banking deposits	1048	177	88	96	38	188	408	19
Bank credit	41	14	6	-	2	6	5	2
ATM/Debit card	758	278	71	31	17	120	198	17
Netbanking	251	85	25	18	7	43	39	12
UPI wallets	344	114	41	9	5	60	94	15
NBFC	10	1	-	-	2	2	2	-
MFI	35	-	1	3	2	8	19	-
Co-operative credit society	8	-	-	1	1		2	-

In the case of UPI wallets, the expensive nature of the process, lack of information about redress procedures and the prospect of resolution being unlikely, were the main reasons for not complaining. For NBFCs, 20% of users who did not complain, did so because of the fear of retribution, another 20% did not complain because they were not sure about whether their problems would be resolved. Finally, 20% did not complain because they did not know the process. For MFIs, 54% of users did not complain because they were unaware of the process and for co-operative credit societies, this number was 25%.

Impact of grievance on usage

The experience of having faced a grievance is bound to have some impact on the consumer's usage of the product. In Table 3, we present the number and proportion of people who either changed their provider, reduced usage of the product or stopped using the product after facing a grievance. These actions indicate that the grievance had an adverse impact on the user. Grievances related to deposit or payment products lead about 30% of consumers to take some action. The response by consumers is higher for credit related products.

Table 4: Changed provider/reduced/stopped usage

Product	Had a grievance	Took action
(1)	(2)	(3)	(4)
	N	N	%
Co-operative credit society	72	63	88
NBFC	82	65	80
MFI	104	65	62
Bank credit	242	129	52
Netbanking	503	166	34
UPI Wallets	531	173	31
Banking deposits	2112	666	31
ATM/Debit card	1279	388	29

In the case of co-operative societies, 88% of those who faced a grievance either changed their provider or reduced or stopped using the product as a result of it. This indicates the co- operative society members who faced a grievance may not have had a satisfactory experience with the grievance redress process. This number stands at 80% for NBFCs and at 62% for MFIs. The impact of grievances for non-bank lending institutions is far more adverse than for any of the other products.

Conclusion

Improving outcomes for consumers is one of the core goals of finance. It is important to understand how the system deals with grievances of consumers, and where there is scope for improvement. Our results present a heterogenous picture. We find that the usage of deposit and payment products is higher than credit products, while the grievances are higher for credit products. Deposits are the most used product but have an incidence of grievance of 12%. Co-operative societies are used by less than 2% of the sample, yet almost 19% of its users have faced a grievance. NBFCs are used by just about 2% of the sample, and have an incidence of grievance of 18%. Deposit and payment related services are able to resolve grievances faster - more than 70% of the complaints were resolved in the first instance. This is not true of credit related products - for example, only 49% of the complaints were resolved for MFIs. Further research could explore the possible reasons for this heterogeneity.

Renuka Sane and Aishwarya Gawali are researchers at NIPFP. Vimal Balasubramaniam is a researcher at Queen Mary University, London. Srishti Sharma is a PhD student at Texas A&M University.

Author: Pavithra Manivannan

Pavithra Manivannan is a Senior Research Associate at XKDR Forum and Chennai Mathematical Institute.

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