Recently got sanctioned a home loan from SBI. For insuring the loan, I have already assign my term plan in their favour. But again SBI is asking for a premium for insurance of house against flood, earthquake etc. And for that had asked the undersigned to bear the premium on the strength of some IRDA guidelines/circular.
Just wanted to know whether SBI can force for buying such a Insurance policy and charge premium from the undersigned. In my view it is a pure business risk of SBI and the cost towards it, if any will be borne by SBI himself and may be passed on to consumer in the form of appreciation in loan rate.On the one hand SBI is claiming lowest interest rate while on the other is extracting some unauthorised charges on the other.
Please guide us whether SBI can ask for compulsory insurance and if yes whether premium of such has to be borne by me. Please attach relevant IRDA/RBI circular on this matter