Selling insurance products: Bank staff wilting under pressure?

Federal Bank Employees Union turns up the heat on management

KOCHI: “Yesterday, I was sitting with the manager of an SBI branch in her cabin doing the final formalities of an education loan being taken for my daughter’s education abroad. Here comes a person to meet me to sell some investment products. Though he looked much more than a staff of the same branch, in reality, he represented an insurance company elsewhere, but operating freely from the SBI branch.”

The above scenario narrated by a borrower gives a picture of how the branches of banks have nowadays become virtual fiefdoms of insurance agents seeking to sell their third-party insurance products to customers visiting the branches.

Private sector banks

The offices of private sector banks have a different story to tell. The unsuspecting customers seeking loans or opening savings bank accounts with the banks are forced to buy insurance products as a condition to sanction loans or open accounts, according to employees of a Thrissur-based private sector bank.

The pressure on the bank staff to sell insurance products is so severe that they had to acknowledge that they do mis-sell such products more often than not, by deploying coercion tactics.

The sorry state of these employees is evident from the fact that it’s the top executives of these banks who stand to benefit significantly from the sales of third-party products.

According to a former employees’ union leader, it has become a norm rather than the exception that the higher-ups in these banks are incentivised through overseas trips and other benefits that can escape the radars of tax authorities.

While explaining the compulsions the employees face to hard-sell these insurance products, the SBI manager stated with a bit of pain, “In most cases, the bank employees are forced to advise the prospective customers that it would always be beneficial for them to break their deposits with the bank and invest in such insurance products.”

“And mind you, they have to do this at a time when banks are struggling to make ends meet – between deposits and advances.”

In fact, it’s in an effort to boost the ‘other income’ or the non-interest income, the banks have pursued the path of selling third-party products, which never swell the balance sheet, and hence don’t warrant any additional capital.

Federal Bank was penalised

It’s a known fact that Federal Bank, the largest Kerala-based bank, was imposed a monetary penalty of Rs5.72 crore by RBI more than a year ago, for its staff reportedly having accepted incentives from insurance companies for selling third-party products.

According to sources close to different banks, despite the RBI’s repeated warnings and imposition of fines, the selling of insurance producthas been taking place relentlessly through the bank branches.

In most banks, insurance agents have designated seats or even cabins to supervise the prompt sales of these third-party products.

All said it’s not without the due share of backlashes these activities are progressing.

At Federal Bank, a lady who was reportedly mis-sold an insurance product under the guise of a one-time payment, which was meant to be a multi-year commitment, put up a strong fight by physically being at the branch and ultimately won the battle.

The bank had to refund the full Rs10 lakh paid against two policies, along with the interest.

Harassment against union leaders

The employees unions in several banks though had initiated actions to save the customers from being taken for a ride, in many cases, the management has resorted to harassing them through unjustified transfers, and in some cases, dragging the employees into legal fights.

In most cases, the management took the route of accusing these active employees of working against the goodwill of the banks.

But recently, the Federal Bank Employees Union has spearheaded an agitation against the management, seeking to stop the practice of compelling employees to sell insurance products.

Talking to businessbenchmark.news, AR Sujith Raju, General Secretary, Federal Bank Employees Union, said: “We are here primarily to carry out banking activities. We are not against selling the third-party products too, but the management should refrain from pushing the employees too much to sell insurance products as it’s not good for employees as well as our bank in the long run.”