NEW DELHI: In a stern message, finance minister Nirmala Sitharaman on Monday asked banks to focus on core banking and said it was an offence to mis-sell insurance products.
“I am glad that RBI is coming up with guidance on why mis-selling will not be entertained.
The message should go to the banks that you cannot afford to mis-sell. The word mis-sell, instead of offending anybody, seems to be one more word in the lexicon,” Sitharaman said after addressing the central bank’s board.
Thousands of bank customers have complained of executives hawking insurance products, which they either did not need or were sold on false projections. RBI has proposed new norms that will kick in from July.
It has suggested that banks refund the entire amount paid by the customer for the purchase of the product or service and also compensate the customer for any loss arising due to mis-selling as per an approved policy.
“My pet peeve has been that you do your core banking business, you are spending more time on selling insurance, where it is not required, perhaps… Why should he take another insurance when he has life insurance, health insurance, fire insurance?” Sitharaman said, while urging banks to focus on assessing the requirement of customers.
In what was seen as a reference to regulatory vacuum, she pointed out that earlier, the insurance regulator didn’t act as banks were involved, while RBI didn’t step in as insurance product was being sold.
FM also said that govt and RBI are keeping an eye on gold imports and there was nothing alarming. She attributed higher imports to an increase in prices, which she said came amid heavy buying by central banks.
During April-Dec last year, India’s gold imports in value terms increased by about $1 billion annually to $50 billion. Sitharaman said that gold has always been a favoured investment for households, whether as an asset class or for jewellery, and to meet the domestic requirements, India is a net importer of gold.
RBI governor Sanjay Malhotra said during April-Dec 2025, the increase in prices was offset more or less by the decrease in the volumes of imported gold.
“It’s only in Jan, we are still analysing those numbers, that there has been a sudden spurt in value as well as in volume, as the finance minister also mentioned, there is a lot of fluctuations, seasonality in that particular demand,” he said, adding that there was no case to be unduly concerned as India’s external sector remained strong.
Malhotra also said that banks were well capitalised and the monetary policy committee will take a decision on further policy rate cut, depending on evolving growth and inflation dynamics. Assuring the market about comfortable liquidity, Malhotra said the RBI will take all measures to provide durable liquidity to all market segments.
He also played down concerns over slow deposit growth, saying there had been a pick up.
