New Delhi [India], August 20 : Aam Aadmi Party (AAP) MP Sanjay Singh on Tuesday submitted a Zero Hour Notice in the Rajya Sabha to discuss the widespread mis-selling of financial products by banks and the loss incurred by ordinary citizens.
Submitting the notice to the Secretary General of the Upper House of the Parliament, he wrote, "I rise to bring to the attention of this House a matter of grave concern, the widespread mis-selling of financial products by banks and the immense loss it is causing to ordinary citizens."
Giving the reasoning behind his request, the AAP MP cited a survey and claimed that most of the bank employees asked to sell the financial products do not know the differences between regular and direct mutual funds, and real and nominal returns.
"Recent research reports reveal disturbing facts: A nationwide survey of 1,655 Relationship Managers across 20 banks found that over 57% are pressurised to sell financial products at any cost, regardless of the customer's best interest. Alarmingly, 85% could not distinguish between regular and direct mutual funds, and 98% did not know the difference between real and nominal returns. If the very frontline officers lack such basic knowledge, what protection does the consumer have?" he wrote.
Further, he said that about half of all life insurance policies lapse within five years, while the top banks have earned Rs 21,733 crore in commissions in insurance policies.
"Another data-driven study titled The Mis-selling Menace shows that: Banks earn up to 100% of life insurance commissions from their own related-party insurers, a clear conflict of interest. Nearly half of all life insurance policies lapse within five years, and in FY 2024, 43% of payouts by the top insurers were for lapsed or surrendered policies. In that year alone, the top 15 banks earned a staggering Rs 21,773 crore in commissions. On traditional life insurance, hanks pocket as high as 65% of the first-year premium a direct incentive to push unsuitable products on unsuspecting customers," Sanjay Singh said in the notice.
"Sir, this is not just about statistics. It is about the hard-earned savings of our people of pensioners, of middle-class families, of small investors, who trust their banks but end up with products that do not serve their needs. It is a betrayal of trust in our financial system. Even the Bank RMs and their branch employees are committing suicide, citing extreme work pressure," the notice read.
Meanwhile, Union Home Minister Amit Shah will introduce three bills in Lok Sabha on Wednesday - including the Constitution (130th Amendment) Bill, 2025, which seeks to remove a Central or State Minister who is facing allegations of corruption or serious offences and has been detained for at least 30 days.