No More Mis-selling: RBI To The Rescue

By | May 24, 2016

RBI To The Rescue

The Reserve Bank of India (RBI) is looking at setting up regulations that will limit the amount of liability a customer would have in case of fraudulent transactions. This means that the next time you become a victim of an online fraud, you can be sure that you are not harassed by your bank.

Keeping Frauds In Check

Speaking at a function, SS Mundra, the deputy Governor of the RBI, has said that online transactions have gone up and therefore complaints related to mobile banking have also increased. These seem to be complaints that relate to fraudulent fund transfers, unauthorised withdrawals from ATMs and phishing e-mails that try to trick customers into giving personal information. The RBI has observed that banks need to have a strong system in place to prevent such occurrences of frauds but you can do your bit to ensure that you don’t become a victim. Here’s what you should do:

  • Shred all documents having sensitive information, including ATM and withdrawal slips.
  • Never use free Wi-fi (offered by shops/restaurants) to login to your bank account.
  • Make your password strong with at least one special character.
  • Never have the same password for your mail account and bank account.
  • Remember that banks don’t ask for information such as CVV number over the phone or email.
  • Look for uncommon activities in your bank statement as well as credit report.

No More Fat Fees

Mundra has mentioned that banks cannot charge excessive fees for any of their services. Did you know banks cannot charge you for non-maintenance of a minimum balance in your savings account? It’s true, they can’t. So, if you do notice that you’re being charged, let the bank know about the RBI rule regarding non-imposition of such charges.

Don’t Be Fooled

Mundra also warned banks that there have been many instances of mis-selling. This is especially true for insurance products. Mundra has said, “There has been an increasingly sizable number of cases of mis-selling, particularly for insurance products. This has been done by bundling third party products with loans.” You might know that banks often offer you insurance for a small sum when you take loans from them. This is not the right way of selling insurance. According to the Insurance Regulatory and Development Authority (IRDA), insurance needs to be sold only when the customer needs it. So, not surprisingly, Mundra has warned that the RBI may be forced to take strict action against such practices. This would include imposing heavy penalties on banks that continue such unethical practices. You can also be on your guard so that you don’t become involved in such rackets. Here’s what you need to do.

  • Enlist the help of a financial expert (read, financial planner) before opting for insurance.
  • Check if the person selling insurance has performed a ‘need’ analysis. You shouldn’t be buying insurance unless you need it, right?
  • The number of dependents in your household needs to be taken into account before deciding on the sum assured.
  • The person selling insurance has to disclose his commission if questioned on the same.

Additional reading: How to judge an insurance agent

If you think you can trust no agent, why not try getting insurance online? It is easy to compare policies and choose a premium that suits your pocket.

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