Finance Minister Slams Banks for Financial Mis-selling

Finance Minister Nirmala Sitharaman criticized banks for focusing on mis-selling financial products, labeling it an offense under the Bharatiya Nyaya Sanhita. Stricter guidelines are expected from the RBI, requiring banks to refund customers mis-sold products and compensate them for losses. Banks are urged to focus on core banking activities.

Finance Minister Nirmala Sitharaman has sharply criticized banks for mis-selling financial products, including insurance policies, denouncing it as an offense under the Bharatiya Nyaya Sanhita (BNS).

During her address to the RBI's Central Board, Sitharaman expressed frustration over banks focusing on selling insurance instead of core activities like mobilizing deposits and providing loans. The Reserve Bank of India (RBI) has issued draft guidelines to address mis-selling, requiring banks to refund mis-sold product amounts and compensate customers for resulting losses. Feedback on these guidelines is welcomed until March 4, with the regulations taking effect on July 1.

Sitharaman emphasized the necessity for banks to understand their customers' needs and business cycles, while discouraging the pressure on customers to buy unnecessary insurance products. Meanwhile, RBI Governor Sanjay Malhotra reported strong growth in deposits and advances, with the monetary policy committee's upcoming stance dependent on economic factors.

(With inputs from agencies.)