File Picture : ANI
Finance Minister Nirmala Sitharaman came down heavily on banks for mis-selling of financial products, including insurance and urged them to focus on core business.
“Banks should concentrate on their core business… My pet peeve has always been …. you’re spending more time on selling insurance when it is not required, and conveniently, it fell between two stools (of RBI and IRDAI),” Sitharaman told reporters after her customary post-Budget address to the Central Board of the RBI.
On February 11, the RBI had issued draft guidelines on mis-selling, saying banks will have to refund the entire amount paid by the customer for purchase of the product or service and also compensate the customer for any loss arising due to mis-selling as per an approved policy.
The public has been given time until March 4 to give feedback. The stricter norms on mis-selling will come into effect from July 1, the RBI had said.
“I am glad that the RBI is coming up with guidance on why mis-selling is not going to be entertained. I think the message should go to the banks that you cannot afford to mis-sell. And this word mis-sell, instead of offending anybody, seems to be one more word in the lexicon,” she said.
Stating that banks were asking customers to buy insurance products even though they already had their required insurance, Sitharaman said RBI did not monitor such mis-selling thinking that it falls under the domain of insurance regulator. IRDAI, on the other hand, felt banks are not regulated by the insurance regulator and customers suffered due to regulatory gap.
