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SBI's Daylight Loot Continues, Illegally Deducts Money from Student's Account and Sends It to SBI Life for Renewal of PMJJBY, PMSBY
Yogesh Sapkale 09 August 2024
Consumer Interest
State Bank of India (SBI), the country's largest State-run lender, continues its breach of trust by deducting money without any authorisation or consent from account-holders for two insurance schemes, the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and the Pradhan Mantri Suraksha Bima Yojana (PMSBY). After illegally deducting the money, SBI transfers it to its own subsidiary, SBI Life Insurance Company Ltd (SBI Life), as premiums for the insurance policies. Most appalling is that, to date, SBI has not even bothered to inform the customer, a student in this case, about the 'issuance' and 'renewal' of the PMJJBY or PMSBY policies in her name.  
 
Last year, Moneylife reported how SBI unauthorisedly deducted Rs342 from a student account holder, even though its official position is that no insurance or investment service is mandatory to avail its banking services. After our report, some official from SBI deposited Rs342 in cash in the student Reena's account, in her home branch while she was busy attending college in a different city. 
 
While SBI surreptitiously deposited Rs342 by cash in Reena's account, neither SBI nor SBI Life cancelled her policies. It resulted in the continuation of the illegally enforced PMJJBY and PMSBY policies. 
 
This year, SBI deducted Rs436 from Reena's account for renewal of PMJJBY and Rs20 for PMSBY policies, again without any intimation or information to her. 
 
What is more outrageous is that after SBI deducted Rs436 for PMJJBY, the balance in the student's account dipped below Rs1,000. Luckily, SBI has stopped penalising customers for non-maintenance of minimum average balance (MAB), else Reena would have ended up paying a penalty for money stolen from her account by the bank itself! (Read: SBI recovering service charges, penalty from student scholarship: Report) As reported by Moneylife, except for SBI and Punjab & Sind Bank, other public sector banks (PSBs) still levy penalties on all customers for non-maintenance of MAB in their accounts. (Read: Minimum Average Balance: Public Sector Banks Collected Rs8,495 Crore since FY19-20 from Customers, Says Govt) 
 
 
Reena does not even know any policy details or the policy number for the PMJJBY or PMSBY policies enforced on her by SBI. This clearly violates how insurance policies can be sold and ought to be punished by the insurance regulatory & development authority of India (IRDAI). 
 
This year, SBI did not even bother to inform her about the illegal deductions. Reena only received an SMS sent by SBI Life that says, "Your cover under SBI Life PMJJBY policy A/cm no. ending with xxxx has been renewed as on 01/06/2024. Pls generate renewal acknowledgement through https://xxx.xxxxx-xx."
 
 
As expected, the link opens a generic page of SBI Life's group customer portal and it neither provides any link to generate a renewal acknowledgement nor anything specific to the policy enforced on the customer. 
 
 
The basic issue is that Reena, the student, does not even know the policy number or any details, so how can she generate any information, including a renewal acknowledgement from SBI Life's website? But then, this is how our PSBs and their subsidiaries operate.
 
The illegal and unilateral debit in the name of PMJJBY by SBI, India's largest bank, amounts to the gouging of depositor funds; it is even worse that the bank has taken it out of a student account since these youngsters are usually on a tight budget. 
 
Moneylife sent an email to SBI with a copy to its chairman, Dinesh Khara. Till writing this story, we have not received any reply from SBI, except for a terse email from its RINB support team. The mail assumes I am a customer of SBI and asks me to provide "CIF number and step wise error page screenshot with date and timestamp for better assistance." 
 
 
Last year, too, when the issue of illegally deducting money from student accounts for PMJJBY was raised on X (erstwhile Twitter), SBI gave a standard reply. It said, "Kindly note that opting for insurance and other investments is purely voluntary and our branches provide the information for the benefit as well as awareness of our customers. We maintain a high standard of ethics while providing services to the customers and no transaction is done in the account of the customer without his/her consent. Also, note that any type of insurance or investment is not mandatory to avail any type of service from us."
 
As expected, the only issue was that the link shared by SBI did not work. Despite several attempts, the webpage kept saying, "An error occurred. Please try again" and "A Technical error occurred. Please verify your account number. Unable to take your request now!"
 
An alternative for the account-holder is to visit her home branch and fill out an application form to discontinue her PMJJBY subscription which she has never even subscribed to. The Bank will stop the subscription, but it may take one week, two weeks or even months. 
 
In a post on X, SBI says, "Please register a complaint in this regard at this link - https://crcf.sbi.co.in/ccf select Raise Complaint - Others >> Personal Segment/Individual Customer / PMJJBY/ PMSBY >> PMJJBY Related >> Debit to account without customer consent and mention brief details of the issue. Our concerned team will look into this. Upon successful registration, you will receive a complaint number on your registered mobile number/email ID. The complaint will be dealt with within the TAT mentioned therein and the closing remarks will be sent to your registered email address."
 
However, even after registering the complaint, an executive from SBI told Reena that she must visit her home branch and submit an application to cancel the PMJJBY policy. He also suggested contacting SBI Life because he says the insurance company that issued the policy can only cancel it.  
 
SBI Life, however, has a different answer. Responding to similar queries on X, SBI Life says enrolment, premium deduction, and deactivation of the PMJJBY policy are done at SBI's end and the customer should contact the Bank only. 
 
 
As expected, Reena is not a lone customer of SBI who is sold PMJJBY without her knowledge or even consent. A simple search on X shows several posts about illegal deductions by SBI from customer accounts for PMJJBY.
 
Raunak Gupta, a student, also found Rs436 deducted from his SBI account for the PMJJBY scheme. "SBI is debiting amount by its own. Today my account is debited by Rs436 without my consent. I am a student, I can't even afford Re1 debit. May I know why this is happening so?"
 
 
In a post, Hemant Gairola, an independent journalist, shared a newspaper clipping from Dainik Bhaskar's Shivpuri edition. He says, "Brazen meets bizarre: In a Madhya Pradesh village, SBI reportedly not only enrolled people in PMJJBY & PMSBY without consent, it also named customers' long gone fathers as their nominee."
 
 
 
 
 
 
PMJJBY, launched by the Union government, offers Rs2 lakh life insurance coverage for anyone between 18 and 50 years. It has a premium of Rs300 to Rs436 per year, and the bank automatically debits the premium from account-holders and transfers it to the insurance company. Unless opted out by the customer, the scheme is renewed every year with auto-debit from the bank account.
 
In case you are wondering if such auto debit for PMJJBY is happening for the first time, the answer is no. It has happened ever since the Union government launched the scheme and directed banks, especially PSBs, to enrol more and more account-holders for PMJJBY. 
 
Moneylife Foundation had made an effort to discuss with banks how to promote this scheme as a way for people to ensure the safety of their support staff – domestic help, drivers, security guards or anyone with a bank account—as a kind of safety net, but drew a blank. The Foundation was exploring the possibility of allowing an employer to pay for others (just as you can pay the mobile bill of a third party) with the benefits accruing only and exclusively to the policyholder. Instead of promoting such measures, PSBs, acting on government diktat, think nothing of expropriating depositors' funds at will.
 
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Comments
Vivek Shah
1 month ago
I too had faced this issue with Oriental Bank of Commerce (now PNB). This racket is going on for decades.
Reply
GOWRISHANKAR
1 month ago
Public Sector Banks have become a Mafia in the making. They just dont care for the Regulator nor do they care for the Ombudsman. They are a very dangerous virus spreading very wildly in this democracy. Neither the Government nor the Regulator has the balls to take the bull by its horns.
Reply
dummytg
1 month ago
Similar issue happened with me with Kotak Bank deducting money for PMJJBY/PMSBY. I raised in with the issuer https://www.financialservices.gov.in/beta/en/pmjjby , who either did not bothered, and rejected the RTI and put all the responsibility on the Bank.

I got the money back and also the closure of PMJJBY/PMSBY based on RBI Ombudsman complaint. Still no reason/explanation/apologies from Bank. Only the refund and closure.


Reply
ppindia18
1 month ago
Canara Bank also deducts money for PMJJBY without consent.
Reply
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