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  • Insurance FM, IRDAI Chief express concerns over mis-selling of insurance by banks

    FM, IRDAI Chief express concerns over mis-selling of insurance by banks

    Both said that banks should focus on core activities and ethical selling.
    Team Cafemutual Nov 20, 2024

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    The Union Finance Minister Nirmala Sitharaman and IRDAI Chief Debasish Panda expressed concerns over mis-selling of insurance policies by banks.

    They were speaking at the SBI Banking & Economics Conclave 2024 recently.

    The Finance Minister said that while banks have played a significant role in increasing the penetration of insurance in India, it has also raised concerns about instances of mis-selling. In fact, it added in an indirect way to the increased cost of borrowing to the customers. She said that banks should focus on their core activity of mobilizing deposits and lending money.

    Talking about the role of banks as an intermediary, Panda said that many people have an inherent trust in the banking system and banks should not mis-sell insurance policies to their customers. He said that banks are older than the insurance industry. However, banks should work in the best interests of customers by giving them multiple options. They should not mis-sell or force-sell insurance policies, he added.

    The IRDAI chairman said, “When we buy insurance, banks are the ‘go to’ choice for many. People expect that banks will sell the right product at the right price. While the banca channel is useful, of late, a lot of ills have happened in the system. We all need to sit together and thrash out the matter so that we restore customers’ confidence in us.”

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    4 Comments
    J F · 2 weeks ago `
    Same old story about mis selling
    Shahebaz Khan · 2 weeks ago `
    Banks Should not Sale Insurance Products👎🏻
    BHAKTI GAURVI · 2 weeks ago `
    There’s no denying that banks are increasingly mis-selling insurance products, driven by the lure of higher commissions. This has created a vicious cycle where employees are placed under immense pressure to meet unrealistic sales targets, with their appraisals hinging on the amount of insurance sold each year. This practice is not only unethical but is also contributing to rising attrition rates among bank employees.

    What’s more concerning is the double standard in the financial industry. While SEBI has taken commendable steps to regulate mutual fund distributors, banning foreign tours and upcountry trips as incentives, no such restrictions are in place for banks. In fact, many banks continue to run contests offering foreign trips as rewards for achieving high insurance sales. This creates a culture of greed, where employees, eager to win these perks, often resort to mis-selling insurance products to unsuspecting customers.

    It’s high time for the RBI to intervene and bring stricter regulations for banks when it comes to selling insurance. Mis-selling not only damages customer trust but also tarnishes the reputation of the banking sector. A fair and ethical system is the need of the hour, one that prioritizes customer interests over sales targets and employee well-being over undue pressure.
    Sourav Bose · 2 weeks ago
    Very well explained Sir. Actually Banks are not interested in selling their own products be Fixed Income or Loan. Bank staffs are asking clients to buy Insurance products instead of doing FD.
    Reply
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