Huge In­cen­tives to Staff Trig­ger Mis-selling

RBI deputy gov­er­nor SS Mun­dra urges lenders to work on porta­bil­ity of ac­counts

The Economic Times - - Finance & Commodities - Our Bu­reau

Mumbai: A se­nior RBI of­fi­cial on Mon­day blamed huge in­cen­tives given by banks to their staff for mis-selling fi­nan­cial prod­ucts. Deputy gov­er­nor SS Mun­dra also urged lenders to work on the porta­bil­ity of ac­counts.

“Chal­leng­ing tar­gets set for em­ploy­ees, in­cen­tive-linked quo­tas, lack of train­ing and fast ro­ta­tion of front­line staff ” lead to mis-selling of prod­ucts, Mun­dra said at the an­nual con­fer­ence of bank­ing om­buds­men, and asked the top man­age­ment of banks to look into it. In the past, Mun­dra has warned banks of mak­ing “pe­nal pro­vi­sions more strin­gent to deal with the prob­lem”.

Banks could de­ploy lat­est an­a­lyt­i­cal tools to ad­dress cus­tomer griev­ances, he said, while point­ing out that lack of co­or­di­na­tion be­tween back and front of­fices was af­fect­ing mea­sures to­wards cus­tomer pro­tec­tion.

Bank­ing cor­re­spon­dents (BCs) are now equiv­a­lent to bank­ing out­lets, he said, adding: So banks should “pay close at­ten­tion to ser­vices ren­dered by BCs, es­pe­cially in ru­ral and semi-ur­ban ar­eas, and take pre­cau­tions to curb mis­selling of prod­ucts and ad­dress the prob­lem of il­lit­er­ate cus­tomers get­ting duped by ag­gres­sive mar­keters of fi­nan­cial prod­ucts.”

EX­PERT AD­VICE

Mun­dra urged the banks to work to­wards ac­count num­ber porta­bil­ity as the tele­com in­dus­try has im­ple­mented, whereby a cus­tom- er can re­tain his ac­count num­ber even if he switches to an­other bank. This “will be a far-reach­ing step to­wards en­hanc­ing com­pe­ti­tion and im­prov­ing cus­tomer ser­vice,” he added. He urged banks to move away from seek­ing ‘neg­a­tive con­fir­ma­tion’ from cus­tomers on le­gal agree­ments that of­ten have sev­eral fine prints. In­stead, he said, banks should ob­tain ‘pos­i­tive con­fir­ma­tions’ from cus­tomers that they have read and un­der­stood the terms and con­di­tions of the prod­uct or the ser­vice.

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