Banks have to give options to customers, no mis-selling, force selling should happen, says IRDAI Chairman Debasish Panda

Banks have to give options to customers, no mis-selling, force selling should happen, says IRDAI Chairman Debasish Panda

Insurance Regulatory and Development Authority of India (IRDAI) Chairman Debasish Panda on November 19 said banks have to give options to the customer and no mis-selling or force selling should happen.

"It should become a distribution channel of low cost, you don't need to run behind customers, you have to give option to the customer, no mis-selling, no force selling, and also Bima Sugam will facilitate all of that," Panda said at 11th SBI Banking & Economics Conclave 2024.

He also added that banks should not forget their activities and start selling only insurance.

Similarly, the Reserve Bank of India's (RBI) Governor Shaktikanta Das on November 18 also warned banks about unethical practices such as mis-selling of products or the opening of accounts without proper KTC verification.

While such practices may yield short-term gains, they ultimately expose the bank to significant long-term risks, including reputational damage, supervisory scrutiny, and financial penalties, Das added.

Finance Minister Nirmala Sitharaman, at SBI Banking and Economics Conclave, also expressed concerns on the mis-selling of products.

The Economic Survey, which was tabled in Parliament on July 22, said that banking and insurance sectors must resist the temptation to pursue short-term profits at the expense of the customer.

“Product mis-selling is too rampant to be dismissed as an aberration of a few overenthusiastic sales personnel,” the report, authored by Chief Economic Advisor V Anantha Nageswaran, said.

It called upon all the key financial services sector to focus on customer interests. “Acknowledgement of mis-selling and mis-representation and compensating for consequential losses is a good business practice enjoined upon stockbroking, fund management, banking and insurance firms,” the report said.