Banks requested to test mis-selling, safeguard account holders’ curiosity: DFS secretary

NEW DELHI: Monetary companies secretary Vivek Joshi has mentioned that public sector banks have been requested to test mis-selling of insurance coverage merchandise and guarantee safety of account holders’ curiosity. Banks have been sensitised on the matter, because the Division of Monetary Providers (DFS) usually will get complaints that fraudulent and unethical practices are being adopted by banks and life insurance coverage firms for procuring insurance policies from the financial institution prospects, he instructed PTI in an interview. “Banks have been asked to give utmost importance to the interest of account holders,” he mentioned. There have been cases the place life insurance coverage insurance policies have been offered to prospects aged above 75 years in tier-II and III cities. Normally, banks push merchandise of their subsidiary insurers. When resisted by prospects, department officers would sheepishly admit that they’re beneath strain from the highest. Insurance coverage merchandise are pushed when prospects go to hunt any sort of mortgage or purchase a time period deposit. It is usually conveyed that the Central Vigilance Fee (CVC) has raised objection, as incentives for promoting insurance coverage merchandise carry not solely strain on the sector workers however the core enterprise of banking additionally will get affected and high quality of advances could get compromised within the lure of fee and incentives for employees. In the meantime, the DFS has additionally directed all state-owned banks to evaluate their gold mortgage portfolio as cases of non-compliance with regulatory norms have been observed by the federal government. The DFS in a communication addressed to heads of PSBs has requested them to take a look at their system and processes associated to gold mortgage. A directive on this regard was issued final month advising them to repair anomalies referring to assortment of charges and curiosity and closure of gold mortgage accounts. The letter flagged numerous considerations, together with disbursement of gold loans with out requisite gold collateral, anomalies relating to assortment of charges and reimbursement in money. The DFS urged banks to undertake an intensive evaluate of the final two-year interval from January 1, 2022 to January 31, 2024 in order to make sure that all gold loans have been disbursed in compliance with regulatory necessities and inside insurance policies of banks. It’s to be famous that the worth of the yellow steel has surged to a file degree. Worth of 10 gm gold within the final one month jumped from Rs 63,365 to Rs 67,605. In line with the letter, the division has come throughout cases of non-compliance relating to the gold mortgage portfolio and therefore issued the advisory. The nation’s largest lender, State Financial institution of India (SBI) alone has a gold mortgage portfolio of Rs 30,881 crore as of December 2023. Punjab Nationwide Financial institution’s gold mortgage publicity stood at Rs 5,315 crore, whereas Financial institution of Baroda was at Rs 3,682 crore on the finish of the third quarter.

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