Bank unions and civil society forums have urged the Reserve Bank of India to impose a cap on commissions and conduct spot audits of branches to curb the mis-selling of government sponsored as well as private insurance and pension schemes.
Even bank HQs have stepped up sensitising branch offices against any sale of such financial instruments without the consent of the account holders.
The Telegraph saw a letter from the fraud detection and monitoring department, corporate centre, SBI, requesting the local head offices to sensitise operating units, particularly relating to enrolment in schemes such as PMJJBY, PMSBY and Atal Pension Yojana.
This comes amid the bank receiving allegations that accounts were being debited without the required mandate from the account holders. An e-mail sent to the bank was yet to evince any response.
Banks across the board, be it public or private, are engaging in measures to boost their profitability through other income with net interest margins under pressure.
“Accidental insurance policy premiums are being debited from customers’ accounts without their mandate. In most cases, the amount of Rs 100 is not detected by the customer yet the banks are reaping substantial premium from these unauthorised transactions,” Biswaranjan Ray and Soumya Datta, joint convenors of civil society forum Bank Bachao Desh Bachao Manch, said in a letter to RBI governor Shaktikanta Das.
“The modus operandi is similar to the Wells Fargo cross-selling scam that had taken place in the USA in 2016. Often the controlling office is initiating such debit transactions from their end without even the knowledge of the account holders,” the letter said.
“From the union side, we are strongly against such practices,” said Rajen Nagar, president, AIBEA, and general secretary, BPBEA.
“On February 20, I received a mail from SBI that I have been enrolled in PMSBY and a sum of Rs 20 has been deducted. I also received another mail with the enrollment certificate. I had no intention to enrol in this scheme and did not inform the bank to do so and was, therefore, surprised when the debit happened,” said Kasturi Basu, a resident of Baishnabghata, Patuli.
“When enquired with the branch manager, she could not explain why this happened. While the debited amount was reversed when I took up the issue, I am yet to get an explanation from the bank,” Basu said.
Regulators aware
Sectoral regulators — RBI, IRDAI and PFRDA — as well as the Department of Financial Services are aware of the issue.
“At present, the regulated entities drive the sales teams with targets and bonus incentives. There have been many instances when the product is not suitable for the customer and is different from her requirement,” a committee for review of customer service standards in RBI Regulated Entities had said in its report last year.
“The Committee, therefore, recommends that cross-selling of third-party products by the sales team of the RE (regulated entity) should be subject to verification by the audit function to ensure that there was no mis-selling and all instructions/guidelines with respect to the sale of such products were adhered to,” the report said.
Insurance sources said policy servicing continues to top the list of complaints ahead of death and survival claims.
