State-owned banks earned more than 15 percent higher commission at Rs 6,709.65 crore from selling insurance and mutual funds products in the financial year 2024-25 from the previous year, a Moneycontrol’s analysis has found.
Nine state-owned banks earned Rs 6,709.65 crore in FY25, up from Rs 5807.72 crore in the year before even as the government and the Reserve Bank of India (RBI) have on several occasions flagged mis-selling of insurance products by banks.
The banks analysed by Moneycontrol are Indian Overseas Bank, Indian Bank, Canara Bank, Bank of Maharashtra, Bank of India, UCO Bank, State Bank of India, Punjab National Bank, and Bank of Baroda.
The banks’ earned Rs 4,761.56 crore by selling insurance products in FY25 against Rs 4468.57 crore in FY24. Fees and commission from selling mutual funds products came in at Rs 1,948.09 crore, which was 46 percent higher from the previous year.
Bulk of these earnings were from selling life insurance policies, followed by non-life insurance policies. Banks also sold government insurance products such as PMJJBY-Pradhan Mantri Jeevan Jyoti Bima Yojana and PMSBY-Pradhan Mantri Suraksha Bima Yojana, Moneycontrol found.
In value terms, PSU banks’ earnings through fee, commission and other income were much lower compared to their private sector counterparts. But, the fact that income from non-interest channel rose sharply in FY25 merits attention. Finance minister Nirmala Sitharaman recently asked chiefs of PSU banks to be mindful of mis-selling in banks.
Misselling refers to the unethical practice of selling a policy that is not suitable for a customer's needs due to misleading or incomplete information provided by the seller.
The country’s largest state-owned bank, State Bank of India (SBI), earned the most from insurance broking, agency and bancassurance business at Rs 2,766.83 crore.
Canara Bank was next with earnings of Rs 556.83 crore from insurance products. Bank of Baroda earned Rs 499.27 crore from selling insurance and mutual funds products.
The higher income also comes at a time when RBI has expressed concerns about the growing problem of mis-selling of insurance products by banks. Last week, deputy governor M Rajeshwar Rao said that the RBI was examining if it should frame guidelines to address mis-selling of insurance products by banks.
RBI governor Sanjay Malhotra has said the central bank is absolutely against mis-selling. “If any such incident comes to our attention, then definitely there will be strict actions will be taken against them. You should be 100 percent assured about this, if there is any such complaint against anyone about mis-selling then the Reserve Bank will take action against that bank or entities.”
Moneycontrol wrote on June 10 that 15 leading banks earned a staggering Rs 21,773 crore in commissions in FY24 alone, primarily from selling life insurance, mutual funds and other financial products, many of which originated from their own group companies.
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