Finance ministry pulls up PSBs over mis-selling of insurance products

Banks have been advised to ensure '100 per cent' compliance of know your customer (KYC) guidelines while sourcing insurance business

The finance ministry has advised public sector banks (PSBs) not to force-sell insurance products to customers and said such a practice impacts the core businesses of banks.

Banks have been asked to issue instructions to concerned vertical heads to put in a mechanism for avoiding unfair and unethical practices of selling life insurance policies to customers.

In a communication to banks last month, the finance ministry said, “Department has received a complaint that fraudulent and unethical practices are adopted by banks and life insurance companies (channel partners). It is for procuring life insurance policies from the bank customers.”

The ministry