The newly appointed RBI Governor, Sanjay Malhotra, on Friday cautioned banks against mis-selling of products and said any violation in this regard will be taken “very seriously”.
In his post-MPC meeting presser, the RBI governor came down heavily on regulated financial entities, including banks and insurance companies, many of whom have been accused of mis-selling their financial products under pressure to meet their sales target.
Replying to a query on prevalent mis-selling in the banking and financial sector space, the RBI chief said that any violation regarding mis-selling by banks will be taken “very seriously”.
Mis-selling of products by banks and insurance companies has been rampant in the Indian market for a very long time. The menace had been brought to the notice of the RBI on multiple occasions in the past as well, but the situation has not improved much.
Also read: RBI announces additional authentication layer for online international digital payments
What is mis-selling in banking and insurance space?
When a bank sells a product or service to a customer without fully informing them of the product or service, it amounts to mis-selling. According to the RBI guidelines, any regulated entities responsible for mis-selling products like insurance policies and mutual funds shall attract penalties and disciplinary actions.
Meanwhile, the RBI has cut the repo rate by 25 basis points (bps) to 6.25%, the first reduction since May 2020 and the first revision after two-and-a-half years.
If banks pass on the repo rate cut benefit to consumers, all kinds of loans, including home loan, will see a drop in interest rates.
On the economy front, the new Governor cutting the key benchmark rate for the first time in almost five years will give some boost to the sluggish economy.
» Read More
