Mint, Hindustan Times and NDTV, bring you a personal finance show, Let’s Talk Money. The weekly call-in show, anchored by Monika Halan, editor, Mint Money, and Manisha Natarajan, editor and senior anchor, special programmes, NDTV, aims to answer viewers’ questions about money-related issues. Here are edited excerpts from the show that aired over the weekend on NDTV Profit and NDTV 24x7.
Natrajan: There’s nothing which hurts more than to be misled by someone you trust. When a bank executive or relationship manager (RM) miss-sells a financial product or even loads you up with credit cards and personal loans that you don’t need, it’s nothing short of a crime, which needs to stop. Joining us today are Ashwin Parekh, partner and national leader, global financial services, E&Y; B D Narang, former chairman, OBC.
George D’souza, Mumbai: My brother is a ship’s captain. About two years ago, his RM cajoled him to go for a Ulip. The premium was one-third of his yearly salary. The RM should have evaluated the fact that my brother already had an insurance with Life Insurance Co. of India. He was single with no dependent, hence did not need life insurance. He was not informed of a window period, and was told of a lock-in period of three years. That lock-in has become 5 years. What is the liability for bad investment advice given?
Halan: Everything is in favour of the bank manager because he knows how much money you have in your savings account, what is the inflow and then he is selling a product which is benefiting him and not the consumer. So yes, there is a problem with the banking sector, there is a problem with the regulator, who is not making any attempts.
Natrajan: Narang, you think that banks are the institutions where highest trust is reposed, and then you see such lies being told, just to meet those targets.
Narang: A bank’s main business is to get deposits and give loans, but now they are selling lot of other products. The key index to the profitability of the bank is the percentage of non interest income to total income. Banks which have got a 30-50% of the non-interest income to total income are very profitable banks, banks which have got less than 15-20% are very non-profitable banks. Nationalised banks fall into the category of 12-15% of the non-interest income to total income. Nationalised banks get their non-interest income from guaranteed fee, exchange commission, remittances fees, etc. Most foreign banks, private banks, focus on cross-selling of products. In India banks normally sell one product to one customer but abroad, the intensity of banking is high. Cross-selling is not bad, but this is totally different, as this gentleman said Ulip, it was the classic case of miss-selling and all the regulators slept over it for a long time till there was a hue and cry. It was a most institutionalised example of a fraud.