A 70-year-old non-resident Indian woman was lured into buying an insurance plan by paying a single premium of Rs10 lakh when she approached a bank to open an NRE account
Mis-selling by institutions like insurance companies is not new. However, with more and more financial institutions entering the insurance market, customers of a particular institution are being lured and sometimes even forced to buy co-branded products. One such incident highlights the need for stricter practices by insurance companies.
About a year ago, a 70-year-old non-resident Indian (NRI) woman went to one of the largest private sector banks in the country to open a non-resident external (NRE) account. While opening the account, an executive from the bank lured the lady into buying a co-branded insurance product under the pretext of ‘mandatory’ rules. He also told her that she will have to pay the amount of Rs10 lakh only once. With no option left for opening the account, the lady obliged and left for her overseas home.
“When that lady returned after 12 months, she was asked to pay one more premium for the insurance plan. Since the bank would not return the money which she had paid for the first premium, she was again forced to pay the second instalment for the insurance policy that was forced upon her,” revealed an independent financial advisor (IFA).
It was later found that the executive who had sold the lady the insurance policy was no longer working with the bank.
In another case, another executive from the same bank has allegedly duped a 60-year-old into paying a premium for an insurance plan for one year and later told him to forget about it.
These are only two examples of cheating by executives from financial institutions, who more than often try to sell a co-branded product to innocent customers.
To tackle such increasing fraudulent cases, the Reserve Bank of India (RBI) introduced a banking ombudsman scheme under Section 35 (A) of the Banking Regulation Act, 1949. The Act is in effect from 1995. A customer can register a complaint with an ombudsman if no reply is received from the bank within one month, or if the bank rejects the complaint, or if the customer is not satisfied with the reply given by the bank. If a complaint is not settled within one month, the banking ombudsman may pass an award up to Rs10 lakh or to the extent of the losses suffered by the customer up to Rs10 lakh, whichever amount is lower. Between the years 2002-06, the banking ombudsman has settled around 36,000 complaints.
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If you are worried about defamation cases, you are in the wrong business
Why media play a double standard if some crime is done by a common man they will write XYZ, from this city even colony done this. But if same level of crime is done by a affluent person they will write director of a big financial institution did this. People want to know who is this criminal.
These are my personal views; I don’t know your limitations.
God save us.
One fails to understand why IRDA cannot make it mandatory for all companies to transparently tell customers for every rupeee that the customer invests ..how much goes into commissions. for agents/banks..year on year..how much is the Administrative charge,ho much is the mortality charge.Most insurance companies pass on over 50 % commissions to banks for the first year and substantial percentage every subsequent year.The structuring of Insurance products is deliberately kept so opaque..that even a qualifies Actuary wld be at loss to decipher it.Structuring of insurance products is nothing short of a scandal.The Regulator is absolutely clueless..and the customer is easy prey for unscruplous banks.
Why cant this bank be made to pay a penalty which is atleast 5 times the money they duped form the Old lady
Maybe the lady should sue the bank and get the money back. Just because an employee has left the bank, does not exonerate the bank.