Banks Urged to Refocus on Core Business Amid Stricter Mis-Selling Guidelines

Finance Minister Nirmala Sitharaman criticized banks for mis-selling financial products, urging them to prioritize core banking activities. New RBI guidelines stipulate refunds and compensation for mis-sold services. Banks face stricter rules starting July 1, as the RBI aims for better customer protection and a focus on core banking functions.

Finance Minister Nirmala Sitharaman strongly criticized banks for the mis-selling of financial products, including insurance, during a post-Budget address to the RBI's Central Board. She urged banks to refocus on their core activities rather than mere insurance sales, pointing out an ongoing oversight gap between regulators.

The RBI has introduced draft guidelines to tackle mis-selling, mandating refunds and compensation for customers adversely affected. The public can provide feedback until March 4, with the stricter regulations set to be enforced from July 1. Sitharaman welcomed the measures, emphasizing the need for transparent banking practices.

Meanwhile, RBI Governor Sanjay Malhotra indicated stable deposit growth alongside loan advancements. Despite global economic uncertainties, the central bank remains committed to maintaining liquidity, with potential policy adjustments to be announced in April, aiming to foster growth amid low inflation.

(With inputs from agencies.)