Mis Selling of Life Insurance Policies through Banking Channel (IPPB and all other Banks)
F. No. 4/3/2018/Vig/526
Government of India
Ministry of Finance
Department of Financial Services
(Monitoring Cell)
Dated 22nd November, 2022
Subject: Mis-Selling of Life Insurance Policies through Banking Channel.
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Department has received a complaint that fraudulent and unethical practices are adopted by Banks and Life Insurance Companies (Channel Partner) for procuring life insurance policies from the bank customers.
2. In this regard, Department has already issued a circular letter vide F.No. 14/93/2013/VIG/NR dated 15.02.2015 wherein it has been advised that a bank should not adopt restrictive practice of forcing customer for getting Insurance from particular Company. It was also conveyed that CVC has raised objection, as incentives for selling insurances products, brings not only pressure on the field staff but the core business of banking gets affected and secondly quality of advances may get compromised in the lure of commission and incentives for staffs.
3. In keeping with these guidelines, you are requested to issue suitable instructions to concerned vertical of your Bank for putting in place a robust mechanism for avoiding any unfair and unethical practices adopted by Bank and the franchise Life Insurance Company for procuring life insurance policies from bank customers. Further, it is also advised that while sourcing
the insurance business, it may be ensured that 100% KYC compliance is done by the bank.