SBI warns staff against enrolling customers in insurance schemes without consent

State Bank of India

State Bank of India, the country’s largest lender, has alerted its employees against enrolling customers in government-sponsored insurance schemes.

In an internal letter, the bank said it has received complaints under the whistle-blower policy regarding customers’ accounts being debited for enrolling on to policies such as Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJY), and Atal Pension Yojana (APY) without a proper mandate from the customers.

Moneycontrol has reviewed a copy of the letter.

"These transactions are being carried out by officials sitting at the RBOs (regional business offices). This has been viewed very seriously by the top management of the bank," the bank said in the letter.

The bank advised senior officials to discourage such unethical practices.

"We advise you to bring the concern of top management to the knowledge of all concerned and advise them to desist from doing such unethical practices," it said in the letter.

An email sent to SBI seeking comment on the matter was unanswered at the time of publishing this story.

SBI share

SBI's share in APY was 43.35 percent as of September 30, 2023. It was 38.52 percent in PMSBY and 32.07 percent in PMJJBY, according to the bank’s investor presentation for Q2.

Last year, Pension Fund Regulatory and Development Authority chairman Deepak Mohanty said assets under the management of the National Pension System (NPS) and APY had crossed Rs 10 lakh crore. The landmark AUM was reached on August 23 and it took two years and 10 months to double from Rs 5 lakh crore.

Of the total, AUM under APY stood at Rs 30,051 crore on August 25 while the figure for NPS Lite reached Rs 5,157 crore.

Earlier in January, SBI instructed its senior employees across circles not to conduct any business conclaves, seminars, or felicitation functions till March 31, 2024.

"Any deviation in this regard will require prior approval of the undersigned," Vinay Tonse, managing director of retail business and operations at SBI, said in an internal circular dated December 28 that Moneycontrol reviewed. "It is to be ensured that any recognition/felicitation for the qualifier in campaigns of CVEBU (customer value enhancement business unit) will be subject to achievement of certain core business parameters."

Alarming rise in complaints

Earlier, in a note to all public sector banks, the Department of Financial Services (DFS) said there was an alarming increase in the number of complaints from customers being forced to buy insurance products, according to media reports.

The DFS said it had received complaints that fraudulent and unethical practices were adopted by banks and life insurance companies to sell policies to bank customers. There have allegedly been instances where life insurance policies were sold to customers aged above 75 years in tier-II and III cities.

Usually, branches of banks push the products of their subsidiary insurers when customers seek a loan or make a term deposit. When resisted by customers, branch officials would admit that they were under pressure from the top.

The DFS said it had already issued a circular stating that a bank should not force customers to get insurance from a particular company.

"Though the situation is changing now, senior management has become very serious about unethical practices. Especially in SBI. Which is a good thing,” said a senior bank union leader who did not wish to be identified.