Calling for reviewing of mis-selling of third-party products, especially IndiaFirst Life Insurance (IFLI) policies, the Bank of Baroda Officers' Union (BoBOU) has requested the top management to delink the insurance product from employees. Bank of Baroda owns a 65% stake, while Carmel Point Investments India Pvt Ltd and Union Bank of India hold 26% and 9%, respectively, in IndiaFirst Life Insurance.
BoBOU, in a letter to the managing director and chief executive officer (MD&CEO) of Bank of Baroda (BoB), says, "No one is voluntarily taking this policy (of IndiaFirst Life) as it is totally unattractive and non-profitable, having more negative features when compared to many insurance policies available in the market... A very simple analysis of this worst policy is that more than 75% of policies are not rolling over and defaulted in the very next year..."
"...for this unworthy insurance, the Bank has publicly issued a circular that first five days are to be allotted for Baroda bima diwas login drive. The incentive-hungry executives, including top bosses, are not aware of the impact on the business in the form of loss of man days, which comes to around 74964 staff x 5 days x 12 months=44.97 lakh man days in a year. If average daily pay and allowances per employee is taking as Rs1200, it comes to a whopping amount of Rs539.74 crore, " the Union says.
The letter is shared on X by We Bankers Association (@Bankers_We).
BoBOU also alleges that a forensic audit of IFLI will show that the profit is not coming from the investment of the insurer's funds but from the money lost by insurers by non-rolling of non-attractive policies. "This profit is unethical and immoral, which is pocketed by misguiding the customers. Previously, the subsidiary used to give huge cash incentives to executives. Though stopped now, it has taken a different shape in the form of incentives ranging from expensive electronic gadgets to foreign trips. Where is this money coming from? Again, it is from the lapsed policies due to non-rollover. The lucrative incentives are the reason behind the enormous pressure put by executives on the branches to achieve incredible targets."
According to the Officers' Union, to avoid insults in team meetings, several branch managers and officers, including some sensitive executives, paid the premiums from their pockets to facilitate incentives and foreign tours to a few executives.
The letter from BoBOU also highlights staff and officer shortages across branches of Bank of Baroda. It says there are more than 2,500 branches or one-fourth of branches running with either a single officer or with a single clerk. "...you are forcibly allocating five man-days for doing insurance business. How long should the officers suffer at the cost of work-life balance? Some young officers are committing suicide and several others have resigned for the simple reason that their family life has been imbalanced. Whether the Bank is going to accept the responsibility for the loss of their lives?"
Further, BoBOU claims that it has information about the mis-selling of IFLI in branches which cannot be disclosed openly. "...constitute an independent committee to look into the issue and take corrective measures for delinking the insurance business from employees," the Union urges the managing director and chief executive officer (MD&CEO) of Bank of Baroda.
As pointed out by Moneylife in 2018, the mis-selling of insurance policies by banks (bancassurance channel) is on the rise, thanks to high commissions and business links. Several banks have invested in life insurance companies and, hence, there is a push for selling policies to bank customers. However, bank officers are now demanding that top management be restricted from setting targets for bank employees to cross-sell insurance products to customers.
"With utter dismay, we have found that no action has been initiated from any of the authorities till date to try to curb this menace of cross-selling in banks, although we sent a letter with all the details way back in August 2017. Even today, the situation is the same, if not worsened," says a letter from All India Bank Officers' Confederation (AIBOC). The Confederation had sent a letter to the Indian Insurance Regulatory and Development Authority (IRDAI) chairman on 3 August 2017.
In this letter, DT Franco, the then general secretary of AIBOC had stated, "Instead of setting unrealistic 'cross-selling' targets for its employees and officers, the bank management would do well to focus on its core banking areas such that customer trust is reinstalled. Also, just in case any 'cross-selling' activity is tried upon, the welfare of the bank and its customers should be kept in mind instead of just incentive mongering on the part of some self-centred officials."
The letter provides clear proof of how the Reserve Bank of India (RBI) continues to ignore consumers and non-government organisations (NGOs) which have protested against the mis-selling of insurance policies by banks without regard to customer harassment. The travails of bank officers forced to meet targets and the cost of selling insurance are also issues brought out in the letter. (Read:
Insurance Cross Selling: Bank Officers Want Restriction on Targets, Pressure for Sales)
Moneylife has been reporting such rampant mis-selling for the past several years. After receiving numerous such complaints about banks cross-selling risky investment products, many of which are from senior citizens, in April 2013, Moneylife Foundation took up this issue with RBI. The memorandum asked RBI to free the system of mis-selling of financial products by bankers, misusing the savers' trust. (
Read: Moneylife Foundation memorandum to RBI on mis-selling by banks)
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