Within days of the finance ministry issuing a diktat against mis-selling, the State Bank of India (SBI) has asked its field officers to desist from forced selling of insurance products to its customers.
In a communication to all public sector banks, the Department of Financial Services (DFS) had said there was an alarming increase in the number of complaints arising out of customers being forced to buy insurance products.
We are confident that the circles must be fully adhering to the best practices and need based selling of insurance products, still there is an ongoing requirement of a strong emphasis and re-iteration of the zero-tolerance policy of bank towards any incident of mis -selling and forced selling to all operating functions,” SBI said in a communication to all its chief general managers.
The bank asked the field functions to ensure that the branches conduct need-based selling of insurance products with strict compliance with the Assessment of Suitability and Appropriateness Framework (ASAF) and sourcing of business is undertaken for 100 per cent KYC compliant accounts.
Many complaints received
The DFS letter to heads of public sector banks said it had received complaints that fraudulent and unethical practices are adopted by banks and life insurance companies for procuring policies from the bank customers. There have been instances where life insurance policies were sold to customers aged above 75 years in tier-II and III cities.
Usually, branches of the banks push products from their subsidiary insurers. When resisted by customers, branch officials would sheepishly admit that they are under pressure from the top. Insurance products are pushed when customers go to seek any kind of loan or buy a term deposit.
In this regard, the letter had said, the department has already issued a circular wherein it has been advised that a bank should not adopt restrictive practices of forcing customers for obtaining insurance from a particular company.