Jagoinvestor

February 20, 2010

Force Selling combined with other financial products

Can some one force you to buy ULIPs when you take a loan from the bank? I am seeing very unethical things going on in financial world these days in India. Lot’s of people are complaining that many companies are selling junk things like Endowment plans or ULIPs (which make big commissions) along with big loans or something big where a small ULIP might look like “Ok, let’s take this small thing for that big thing”. But this is not right! This is breaking the faith and such practices are against the principal of  utmost good faith!             Let’s see some real life cases:

Force Selling along with Loan Approval

I had to take this policy without knowing any details about this, as the Barclays finance company said this is mandatory for approving any loan , not sure how far it is correct. But as I was running out of time, i opted for it.

Force Selling along with Locker Facility

I requested for a locker in ICICI Bank in Hydderabad, VIdyanagar Branch, and they said there is lot of people in queue for lockers so they cant give me. But if I invbest in ULIP or make a FD of 5-10 Lakhs he said they will consider my Locker request on priority. This is forced selling and I told them straightaway that making investments for a locker is ridiculous reason and stayed away. I wish I could complain this to somebody but there is no written proof of they asking for investing in ULIP as it was verbal conversation.

Force Selling along with Home Loan

I thought banks like SBI would be straight in their clauses. I had a difficult experience recently with my loan.

 

Pre-Processing Blues:

The loan agent who works in my office, did not have any clue on the terms and conditions on loan. He was a retired officer from SBI and used his position to leverage the file movement. One fine day, he asked for payment against the services rendered (It was a shock to me). I guess, he would be getting some service fee on my loan from Bank already. I gave some required papers for gaurantor to him which was not in my file. I think he lost them. I reduced my loan amount during processing, for which I had submitted the request letter. Upon my loan approval, I noticed that there is a 1.9 Lakh additional loan sanctioned for me and added to the loan amount. I had declined the insurnace cover for the loan as I had planned to cover it on yoy basis. I discussed this with the manager and he agreed to waive it.

Next, the gauranor must be present when you go to sign the papers. I managed to get the gaurantor to accompany me during early morning hours.

Forcibly Selling SBI-Insurance with the Loan

I saw that Insurance cover has not been removed and the SBI person would not agree to waive it even when i told that i would buy SBI insurance policy. I was told that I need to go to branch where I applied for loan and get the approval from bank manager and then it will again go for approval in the loan processing center. After a lot of persuation with the sanctioning office and Chief manager, I managed to convince for a year on year insurance cover which I had to buy for this year on the spot.

Further, I was told that my this year loan is fixed for 8% ( I was happy that I was wise in choosing SBI) then I was updated that my loan is fixed at 9.75% for next 4 years. No one had told us this clause until we went for signing. We had asked this question from clerk to Manager level. No one had a clarity on it but the clause was there in the documents and I had no option but to sign it. In the recessionary situations, I understand that the rates will look further south but I will be stuck at 9.75 for next 4 years.

Otherwise, I am kind of satisfied with the pace and professionalism of officers but I feel that more transparency in the terms and condition is must.

Moral of the story: Read all the clauses before you go to sign and do not be satisfied if you do not get an answer. Private or Public banks – every one has clauses in fine prints that suits the bank and there is no one to tell you about them.

Link to original comment

Force selling along with Opening NRE Account

About a year ago, a 70-year-old non-resident Indian (NRI) woman went to one of the largest private sector banks in the country to open a non-resident external (NRE) account. While opening the account, an executive from the bank lured the lady into buying a co-branded insurance product under the pretext of ‘mandatory’ rules. He also told her that she will have to pay the amount of Rs10 lakh only once. With no option left for opening the account, the lady obliged and left for her overseas home.

“When that lady returned after 12 months, she was asked to pay one more premium for the insurance plan. Since the bank would not return the money which she had paid for the first premium, she was again forced to pay the second instalment for the insurance policy that was forced upon her,” revealed an independent financial advisor (IFA). Read full article

Another Case of force selling along with transfer of loan

I also also seen a case where one guy wanted to transfer his Home loan (ICICI Bank)  from Pune to Delhi and just for this , he was being forced to buy an ULIP from the officials who would be helping him in the paper work , other wise his work was stuck . At last when he approched Delhi branch , his work was done smoothly . So in this case the officials were forcing the unsuitable product.

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How to Complain for the Force Selling

To tackle such increasing fraudulent cases, the Reserve Bank of India (RBI) introduced a banking ombudsman scheme under Section 35 (A) of the Banking Regulation Act, 1949. The Act is in effect from 1995. A customer can register a complaint with an ombudsman if no reply is received from the bank within one month or if the bank rejects the complaint, or if the customer is not satisfied with the reply given by the bank. If a complaint is not settled within one month, the banking ombudsman may pass an award up to Rs10 lakh or to the extent of the losses suffered by the customer up to Rs10 lakh, whichever amount is lower. Between the years 2002-06, the banking ombudsman has settled around 36,000 complaints.

Conclusion

This is nothing but a form of corruption happening in Financial world these days. Sellers are thinking that loans are critical things for everyone and in order to let them happen smooth they can force people by miss-selling them, they feel like people in India are anyways frustrated with other things, what will they do? They will enquire a bit and then finally they will lose the patience and just buy the products and that happens. But please don’t let this happen. Raise your voice, ask explanation, demand proof and evidence, threaten them to complain and take matter higher to banking ombusdsman and consumer court etc. I am sure they will budge after some time.

Even on this blog which discussing PPF account opening at SBI we came to know that SBI bank officials sometimes force PPF account openers to start a Saving Bank account at SBI, which is a form of force selling.

Comments, please share some live examples you know of? Has this happened to you? What can be done to solve? Come unite and share ideas, you can leave a mark!!

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वित्तीय उत्पादों (ऋण) के साथ जबरदस्ती अन्य वित्तीय उत्पादों को बेचा जाना (Force Selling combined with other financial products) | कल
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वित्तीय उत्पादों (ऋण) के साथ जबरदस्ती अन्य वित्तीय उत्पादों को बेचा जाना (Force Selling combined with other financial products) | Kalptar
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Nikhil Mehta
Nikhil Mehta
11 years ago

I experienced a similar forced selling sometime back at ING bank. I wanted a locker and the Relationship manager said I need to make an FD of Rs. 100000/-. when I said NO. they said its a rule.
I said there is no Rule book which mentions this. Rules are same for all banks and branches. the Relationship Manager stubbornly said ‘This is the rule of this branch’

I just went to their website, found the no. of Chief compliance officer and spoke to the officer who helped me on this. After 2 hrs, I got a call from the same Branch of ING and they requested me to come to the branch and gave me a locker without any kind of FD!
This is one effective mechanism of staying away from forced selling!

Nikhil Mehta
Nikhil Mehta
Reply to  Jagoinvestor
11 years ago

My Pleasure Manish!

Vayuan garg
Vayuan garg
11 years ago

i am intrested to take over a home loan through SBI, i submitted file with a cheque of rs 3500, but now bank officers asked taking a SBI LIFE INSURANCE is must and wants to add premium rs 1,20,000 with H/L of 20 lakhs for twenty year tenure.While i am not interested for life insurance please tell me IS it compulsory or not ? If yes then i take from other side?

Joel Anthony Trinidade
Joel Anthony Trinidade
12 years ago

Dear Manish ,

I complained to the operations head , the bank manager and they told me rules are rules . Nobody would give in writing that for locker such things are mandatory . From where i was there were two possibilities either to go their way or be without a locker.

Now why am i raising this point now —- It is to create awareness Manish , sometimes people fall into a trap because they are gullible and there are still others that fall into it because they have no option. I am sharing my live experience thats why i posted over here. I am just highlighting how they took advantage of my desperate situation. In the above posts there is a mention about three points Information , time and power. They took the benefit of information ( i wanted locker desperately ) and time ( lockers are getting exhausted soon ….). Regarding knowledge , it was what i lacked because i was not aware that somewhere , someplace there existed something like Jaago investor. I wished I knew about the wonderful site Jaago investor back then.

Btw i explored other options too : Many banks did not have locker facility , some had but did not have vaccant lockers. SBI asked me to make a FD of Five lakhs , IDBI asked me to make a FD of 50 K and take some ulip .

Joel Anthony Trinidade
Joel Anthony Trinidade
12 years ago

Hello everybody,

This is my personal experience of forced selling. I was in search locker. I went to indusind bank borivali branch next to Gokul hotel and enquired for a locker . I was told that for getting a locker it is mandatory to open a indusind maxima saving bank account with minium quarterly balance of Rs25000/- and it was mandatory to take a Aviva dhan vridhi policy for a minimum tenure of 10 Years ( Premium amount Rs 21 K for insurance cover of 1.5 L , i know i feel like kicking myself ) apart from the usual FD . I argued but to no avail and then finally after much arguement had to settle for the policy as well as open a Savings bank account. Worst part is where do i go and complain and to whom there is no actual proof that such misselling occured because everything was verbal. The only fact which might slightly indicate misselling is allocation of locker , start of insurance policy and Savings bank account are all with very near dates.

upendra
upendra
12 years ago

My question is that does this free look period include the day of receipt of the policy document and also does this 15 days include the non working days also such as public holidays, sunday etc? And also what will be the free look period if the the insurance company office is not located in the same city? I tried to find the answer every where but no clarification was available regarding this?

Pradeep
Pradeep
14 years ago

Absoultely right!!!
Even I personally got offered this yesterday itself. This site really made me to take a firm decision. kudos guys!!
I need to take decision on my homeloan payment, I put my story on comments board.PLs help me. If anyone wants to help me in taking the decision please mail me at [email protected]. I dont know if i can put my discussion here. so ping me pls

bala
bala
14 years ago

true
when opening bank lockers (including public sector ones), there is a defacto unofficial rule to open an FD from 1.5 lacs upto 5 lacs. depends on which bank you choose.
this is apart from the annual charges you pay for lockers

Marshal
Marshal
14 years ago

manish,

are riders facility available with term insurance (LIC)

Marshal

Ninad
Ninad
14 years ago

I faced this while opening a locker.

1. IDBI bank asked to me buy MFs/Insurance from them. I refused.
2. One cooperative bank asked me to open FD of 25K. I found this better option than IDBI and opened FD with them.

Sandeep
Sandeep
14 years ago

hello

My question is a bit out of the topic..But i would like to know the best free portfolio manager. I dont like money control just because too many ads.. can you suggest some good ones.

Thanks
Sandeep

mitesh
mitesh
14 years ago

manish ….what u think about LIC’s New wealth plus pln. ??

ICICI duped me
ICICI duped me
14 years ago

What to do when u r a victim of such a fraud?
======================================
This is based on my experience, i was forced a ULIP when i went for a home loan switch by ICICI Pune.

1. send them a mail with all the relevant docs (keep a copy of it, i sometimes find it hard to keep an offline copy so i made a blog which server dual purpose http://icicidupedme.blogspot.com)
2. send a mail to all the three level of escalations mentioned at ICICI website – this is just a formality as u need to give a proof of ur complaint before sending a mail to Banking Ombudsman.
3. now send a mail to ICICI ombudsman with all complaint letter attached. Make sure you provide the complaint in the desired format.
4. send a mail to ICICI Pru Bombay, thru mail and online, if u have been asked to buy a ULIP. Trust me the ICICI Pru is very fast in resolving any dispute.
5. Keep sending stinker mails to ICICI, well they not budge but you will feel good and light.
6. online blog will help u maintain the flow of sequence, the best part is that u will learn blogging very fast 🙂
7. keep on following and one day someone will respond, in my case it took them 9+ months…..

OR
============================================
There is this very simple way of getting ur work done smartly by complying to all the stupid rules set by ICICI or any other bank for that matters.

1. Go to the bank and take the visiting card of all the people who takes ur case (this is very important, if no visiting card atleast take their name, designation and mobile no.)
2.Agree to their ULIP demand, pay the premium.Get ur work done
3. wait for the ULIP welcome kit
4. there is a freelook period of 15 days to 1 month during which u can refund the policy without provide any reason.
5. as soon as u get the welcome kit, go to the nearest ICICI pru office and tell them u were forced to buy this policy by so you dont want it. give them in writing the details of the people who attend u at the bank. Write a strong mail, screw them.
6. ur money will be refunded and ur work will be done 🙂

choose which ever way is comfortable to u, i have learned the second way after going thru so much a pain but you guys can easily opt for solution no 2 🙂

http://icicidupedme.blogspot.com

S S
S S
Reply to  ICICI duped me
14 years ago

My colleague kind of did that..plan no 2. He and his friend entered the bank, the friend posed to be a journalist. He was running from piller to post since 2 months, everything got settled in 1 week.

ICICI duped me
ICICI duped me
14 years ago

oh my god .. so this is an organised racket .. and i used to think only ICICI is doing it …. see my blog which i have made for ICICI and how they forced me to buy a ULIP ….. for home loan conversion……

man he whole banking system is gong for a tos…damn

http://icicidupedme.blogspot.com/

ICICI Duped me
ICICI Duped me
Reply to  Jagoinvestor
14 years ago

Thanks Manish,

Well actually after 9+ months i finally got all my answers but the solution itself has created another set of questions.

I have sent ICICI a recommendation mail for all those who helped me along with my new queries which i guess, will never answered.

http://icicidupedme.blogspot.com/2010/02/3hzyqwd2ka64.html

All i can say to the investors is to get everything in writing and if the bank officials act smart, show them this blog.

tc
http://ICICIdupedme.blogspot.com

Vinod
Vinod
14 years ago

Manish,

I said well-timed because advertising and marketing by financial institutions have become so aggressive lately that people are more prone to buy investments that they may not need.

I have put up a reference to your article in my latest blog at http://www.investjunction.com/

Vinod

Mukul
Mukul
14 years ago

one doubt, can i purchase MFs online from my demat account?

Sathya
Sathya
Reply to  Jagoinvestor
14 years ago

Sharekhan also allows 🙂

Swathi
Swathi
14 years ago

Good article Manish. People need to be aware and raise their voice against this unethical practice.

I would like to share my dad’s experience. My dad has a savings account with ICICI bank and when he went to take a DD of 1.5 lacs (which is urgent) from the bank, they forced him to take a ULIP policy with premium 30k per annum.They haven’t processed the DD until he signed the ULIP policy docs.

Mahesh
Mahesh
14 years ago

@Jagoinvestor,

This article is really an eye opener, no wonder atleast 8 out of 10 home loan applicants are becoming victims of misselling of products by so called banks. Surpriselying, PSU banks are harassing the common man on par with private banks. I had bitter experience with SBI housing loan and still there was no end of this issue. Would like to share our experience with you all.

I am NRI and took housing loan of 16.5Lac for the tenor of 10 years along with my mother.
I am a co-borrower of this loan and all obligations will be with myself including repayment
of EMI. I provided all the documents to banker at the intial stage itself. No nody from SBI, mentioned that buying insurance product is mandatory to approve the housing loan at that time. But, just before approving the loan, they started cribbing and told that term insurance cover of 75K should be taken on my mother name.

My father questioned the bank field officer and wrote a letter to SBI chief manager saying that why there was no communication during the application of loan and why you are insisting to take term insurance on my wife’s name even though our son is taking the obligation and sole responsibility. If they want me to take term insurance, surely insurance amount would have been much lesser considering my age. So far, there is no response from SBI branch officials, we are awaiting for the response from them. Mean while, they disbursed 10Lac and credited to our account.

They might be thinking that, people are not aware of platform where they can raise concerns.
Please advice, how can I take it up further to resolve the issue with my bank ?

Your views and comments are much appreciated. I am sure, there are so many victims like me.

Regards, Mahesh

Srinivas
Srinivas
Reply to  Mahesh
14 years ago

I suggest you talk to senior SBI officials and if no response you can approach consumer court.
Recently in Medical insurance case, Court ordered Oriental insurance pay the amount and judgment was towards the consumer.

Keep us updated. Good luck
Srinivas (http://money360.wordpress.com/2010/02/22/top-3-elss-mutual-funds-for-2010-11/)

Sathya
Sathya
Reply to  Jagoinvestor
14 years ago

This news was on the front page headlines of Times of India (Main Paper)….it shows the importance of the case winning by the party…thou it took a long time and they got some 50k bucks but the point is of winning it….

Note: I m also planning to take medical insurance from oriental 🙂

prabeesh
prabeesh
Reply to  Jagoinvestor
13 years ago

I dont know if many have hearded it. I used to read deccan herald paper in which a weekly issue used to come where the questions on consumer court cases are written. I had seen many case against the no payment of the court ordered amount. There are cases where court has to give another order to initiate the payment.. have you people heard of theses things?

prabeesh
prabeesh
Reply to  Jagoinvestor
13 years ago

Dont have exact link but should try the GOD for any links

usual place where they put in deccan herald is in here
eg:
http://archive.deccanherald.com/Deccanherald/jan272004/spt12.asp

krish
krish
14 years ago

Excellent one manish…Thanks for the info…

krish
krish
Reply to  Jagoinvestor
14 years ago

Hi Manish,
I am currently in US. I am not sure how it works in India but let me explain how it works here.
Here we have a group called BBB (Better Business Bureau). If we have any such problem here with any retail stores / Banks / hotels etc… , we just have to launch a complaint with BBB. We just have to file a complaint over online. The entire process is very simple in such a way that any lay man can do it over online in 5 minutes. Thats it…our job is done. Now its BBB ‘s job to contact the retailer / Banks and take the disciplinary action againts them. They do have a SLA of 15 working days. The retailer has to respond and close this case within this timeframe. Otherwise the retailers / Banks will have to face the court hearings etc…Once they get into this loop, their reviews & ratings will get affected badly and they gets screwed. Because of this, the retailers here will take this seriously and they don’t do these kind of stupid work behind us.

Finally EOD, our job will get sorted out in just 2 weeks of time and that too we don’t need to visit any offices or any person for this.

I am not sure whether the same kind of things can be possible in India but the Government should implement all these things to help the ordinary people like us.

immm…looks to be long way to go!!!!!!!!