After SBI, Bank of Baroda orders officers not to conduct parties related to third party products
Public sector lender Bank of Baroda (BOB) has issued a directive to its zonal heads, prohibiting the conduct of wealth business campaigns related to life, general, and health insurance policies or mutual funds until March 31. The move comes in response to growing concerns about mis-selling practices within the industry.
“It is further advised that all zones and field units should not conduct any business conclaves, seminars or reward and recognition programs/ facilitation program during this quarter and until further instructions,” the letter stated.”It is also directed by our top management that no campaigns including any local training programs/reward programs etc, with any of our channel partners shall also be conducted till March 31, 2024, ” it added.
Internal Communication: An internal letter dated January 12, accessed by Moneycontrol, reveals BOB’s decision to curb wealth business campaigns. The bank emphasizes the need to ensure proper product suitability, alignment with customer requirements, and the recording of customer consent at all stages of the sales process.
Industry-Wide Crackdown: BOB becomes the third bank, following State Bank of India (SBI) and Chennai-based Indian bank, to crack down on mis-selling practices. SBI had earlier instructed senior employees to refrain from conducting business conclaves, seminars, or felicitation functions until March 31, emphasizing the need for prior approval for any deviation.
Withdrawal of Campaigns: The internal letter specifies the withdrawal of all existing campaigns, including the PRIDE 6.0 campaigns, for the current quarter. Additionally, zones and field units are directed not to organize business conclaves, seminars, or reward and recognition programs during this quarter.
Department of Financial Services (DFS) Advisory: The Department of Financial Services had previously communicated to public sector banks about an alarming increase in customer complaints related to forced purchases of insurance products. Banks were warned against adopting fraudulent and unethical practices, especially selling policies to elderly customers.
Industry Pressure and Practices: Bankers, on condition of anonymity, have revealed the immense pressure from top management to sell third-party products, including insurance. Targets for selling these products have led to informal penal actions for non-compliance and perks for meeting targets, such as lavish parties.
Employee Perspectives: A Bank of Baroda manager, speaking anonymously, expressed concerns about the disruption of core banking work due to the increasing focus on selling insurance products. The All India Bank Employees Association (AIBEA) General Secretary, CH Venkatachalam, highlighted the practice of insurance companies offering gifts and lavish incentives to bank managers promoting their products.
This regulatory intervention and internal directive from BOB reflect the industry’s efforts to address mis-selling challenges and ensure responsible wealth business practices.
