Raising concerns over banking practices, Union Finance Minister Nirmala Sitharaman has cautioned lenders against spending excessive time selling insurance products instead of concentrating on their core functions.
Speaking to reporters after the Central Board Meeting of the Reserve Bank of India in New Delhi, alongside RBI Governor Sanjay Malhotra, Sitharaman flagged issues related to mis-selling and cross-selling of financial products.
“We have been discussing mis-selling with banks. Banks need to focus on their core business,” Sitharaman said.
Mis-selling concerns flagged
The Finance Minister questioned the practice of bundling insurance products with loan offerings, especially when borrowers have already provided sufficient collateral.
“Why should a customer asking for a home loan with collateral, why should he take another insurance cover?” Sitharaman said. “Glad that RBI clarified to banks that they cannot mis-sell,” she added.
Banks must focus on core functions
Sitharaman emphasised that banks should prioritise traditional banking activities such as deposit mobilisation and lending, rather than depending heavily on cross-selling insurance and other products.
“Emphasis has been to mobilise deposits and lend, make money from that which is core business,” she said.
CASA mobilisation in focus
The Finance Minister also pointed to weaknesses in low-cost deposit mobilisation, particularly in the Current Account Savings Account (CASA) segment.
“Banks had not mobilised CASA enough, but reached a point where there was no comfort of CASA level,” Sitharaman said.
Recalling earlier discussions with lenders, she stated that the government had made it clear it would not step in to meet banks’ funding requirements. Instead, banks were asked to raise resources independently by strengthening CASA mobilisation.
Sitharaman indicated that improving deposit growth and maintaining healthy lending activity should remain the priority for banks, rather than relying on ancillary product sales.
Also read: Viksit Workforce for a Viksit Bharat
Do Follow: The Mainstream LinkedIn | The Mainstream Facebook | The Mainstream Youtube | The Mainstream Twitter
About us:
The Mainstream is a premier platform delivering the latest updates and informed perspectives across the technology business and cyber landscape. Built on research-driven, thought leadership and original intellectual property, The Mainstream also curates summits & conferences that convene decision makers to explore how technology reshapes industries and leadership. With a growing presence in India and globally across the Middle East, Africa, ASEAN, the USA, the UK and Australia, The Mainstream carries a vision to bring the latest happenings and insights to 8.2 billion people and to place technology at the centre of conversation for leaders navigating the future.
