Finance Minister Criticizes Banks for Mis-selling Financial Products
Finance Minister Nirmala Sitharaman criticized banks for mis-selling financial products, urging them to focus on core banking. RBI issued draft guidelines against mis-selling, requiring refunds and compensation. Banks mis-sold insurance due to regulatory gaps, leading to customer dissatisfaction. Sitharaman emphasized customer-centric banking to build strong relationships.
- Country:
- India
Finance Minister Nirmala Sitharaman has reprimanded banks for their involvement in the mis-selling of financial products, particularly insurance, advising them to return to their primary banking duties. Addressing reporters after her post-Budget address with the RBI's Central Board, Sitharaman expressed discontent over banks' overemphasis on insurance sales.
On February 11, the RBI released draft guidelines focusing on the issue, mandating banks to refund customers for any mis-sold products alongside compensating them for resulting losses. These regulations aim to address regulatory gaps and will be effective from July 1, following public feedback until March 4.
RBI Governor Sanjay Malhotra noted robust deposit and advance growth in the banking system while emphasizing the central bank's commitment to managing liquidity and debt strategically. As discussions on CBDC continue, the focus remains on enhancing India's payment systems rather than replacing existing methods.
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