Mundra warns banks of stern action for mis-selling

Mumbai, Aug 16 (PTI) In a stern message to banks, DeputyGovernor S S Mundra today said the Reserve Bank is "deeplyconcerned" about mis-selling of insurance products, warningthat it may press for making penal provisions more stringentto deal with the problem. "There is one area in customer service where we’re gettingdeeply concerned. This is around mis-selling, particularly ofthird-party (insurance) products. Everyday, we keep on hearingnumerous instances where such practices are going on," Mundrasaid at the annual Fibac bankers’ summit here. When asked to elaborate, he told reporters that there isscope to make the penal provisions in law "more stringent". "Pinch should be felt harder than what it is felt now.That may require some changes in the legislation, somefinancial penalties," he said. The former commercial banker, however, exuded confidencethat lenders will "get the right message" and disciplinethemselves so that other steps will not be required. "Mis-selling is one area which should concern us verydeeply and if we don’t feel a perceptible improvement and wesee that the instances are continuing to come out, I think theconsequences can be very serious, which can be variety ofways, including financial penalties," Mundra said. He said ideally, this should get the attention of the topbank management and should not be seen merely as a complianceexercise. "You have to ensure that customers coming to you aregetting a fair deal and they’re not misled by the staff atdealing level," he said. Mundra also wondered if bank staff themselves are fullyfinancially literate. PTI AA HV BEN NRBABMRDS