Financial Services Secretary Vivek Joshi has emphasized the need for public sector banks to curb the mis-selling of insurance products and protect the interests of account holders.
Joshi stated that banks have been sensitized to address complaints about fraudulent practices in selling insurance policies to bank customers. He highlighted the importance of prioritizing the interests of account holders and ensuring ethical practices within banking institutions.
Instances of selling life insurance policies to elderly customers and pressuring branch officials to promote subsidiary insurers’ products have been reported. Joshi emphasized the need to resist such practices, ensuring that customers are not coerced into purchasing unnecessary products.
The Central Vigilance Commission’s objection to incentivizing staff for selling insurance products was noted, highlighting concerns about compromising banking standards for commission-driven incentives.
Reviewing Gold Loan Portfolios
In addition to addressing insurance mis-selling, the DFS directed state-owned banks to review their gold loan portfolios. Concerns about non-compliance with regulatory norms and anomalies in fee collection and loan closure were raised, prompting banks to conduct thorough reviews of their gold loan activities.
Banks were advised to review gold loan disbursements over the past two years to ensure compliance with regulatory requirements and internal policies. With the surge in gold prices, ensuring proper collateral and adherence to regulations becomes imperative to safeguard banks’ interests and maintain financial stability.
Conclusion
The directive underscores the government’s commitment to consumer protection and regulatory compliance within the banking sector. By addressing issues of mis-selling and non-compliance, banks can enhance trust and transparency, ensuring a fair and ethical banking environment for all stakeholders.