Moneylife Foundation has sent a memorandum to the governor of the Reserve Bank of India on behalf of more than 21,500 members to free the system of mis-selling of financial products by bankers, misusing the savers’ trust
Moneylife recently reported a case of a 79-year old senior citizen duped by IndusInd Bank to transfer Rs7 lakh from a fixed deposit to a mutual fund scheme locked in for five years. (Read: Will this 79-year old’s protest move the government and the RBI to stop mis-selling by banks?) The RBI Ombudsman had rejected the senior citizen’s appeal without a detailed study of the case. Moneylife campaigned against this malpractice and the senior citizen got back his money (Read: Mangelal Sharma gets his Rs7 lakh back—another Moneylife victory). We have been reporting such malpractices for the last several years. Now, after receiving numerous such complaints about banks cross-selling risky investment products, many of which are from senior citizens, Moneylife Foundation on behalf of its 21,500 members took up this issue with the Reserve Bank of India (RBI).
Over the past few years, we have heard numerous such cases where banks have used the financial information of their clients and have exploited this to sell products that more often than not are not suited to the client’s needs. Such hard-selling bankers are aptly described as banksters these days, operating with a license to cheat from top management. The RBI is fully aware of problems as well as solutions.
When the RBI set up the Damodaran Committee on Customer Services, we expected this issue to be taken up seriously. Yet, despite 13 months of deliberation, the committee failed to even address this issue. In August 2011, Sucheta Dalal, founder and trustee, Moneylife Foundation, wrote in Moneylife: “One of the biggest omissions is the absence of a detailed discussion on the rampant mis-selling of financial products-including insurance, mutual funds and derivatives or structured products by target-driven Relationship Managers and Wealth Managers.” (Read: Damodaran Committee: More talk, less substance)
Recently at a seminar in Pune, Dr KC Chakrabarty, deputy governor, RBI, raised a few important points on consumer protection. However, this needs to be converted into rules and best practices that need to be followed by banks. Moneylife Foundation has mentioned these points in the memorandum as well as a few suggestions drawn from complaints of its members. The memorandum below has been sent to Dr D Subbarao, governor, RBI.
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