RBI to train its focus on mis-selling of insurance policies by banks

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Chennai, Aug 29 (IANS) The Reserve Bank of India (RBI) will train its focus on “mis-selling” of insurance products by banks to their customers and also see whether new regulations are needed for protection of banking customers, Governor Raghuram Rajan said.

In his foreword to RBI’s annual report for 2015-16, released on Monday, he said as more institutions and technologies bring more people into the financial system, the RBI has to make sure they are adequately informed and protected.

Referring to the code – Charter of Customer Rights – that banks had to follow in dealing with the customers, brought out by RBI in 2015, Rajan said the banks were asked to appoint an internal ombudsman to monitor grievance redressal process.

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“We now will examine how banks are faring, and whether further regulations are needed to strengthen consumer protection. In particular, we will focus this year on the issue of mis-selling, especially of insurance products,” he said.

Complaints are heard from life insurance policyholders against banks for mis-selling of policies.

“We will also focus on enhancing our communication with the broader public, with a view to informing them on what they need to do to take best advantage of financial opportunities, as well as protecting themselves,” Rajan said.

He said the RBI will work to enhance grievance redressal procedures, both within the financial institutions, and if the customer is still unsatisfied, subsequently through the RBI’s ombudsman scheme.

Rajan said the grievane redressal mechanism in the rural areas as well as to the weaker sections of the society will be strengthened.

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