Finance Minister, Nirmala Sitharaman, has issued a firm warning to banks over rising complaints of mis-selling, highlighting two major concerns customer harassment and excessive pressure on bank staff.

From the customer’s perspective, she made it clear that no bank has the right to mislead or compel customers into purchasing insurance or investment products without proper explanation. Full transparency regarding risks, lock-in periods, charges, and returns is mandatory. Informed consent must be taken in clear terms, not through confusing or technical language.

At the same time, Sitharaman acknowledged that many bank employees face intense pressure to meet aggressive sales targets. Such internal performance stress often leads to unethical selling practices. She indicated that bank managements must review their target-driven systems so that staff are not forced to prioritize commissions over customer interest.

The Reserve Bank of India (RBI) has also taken a strong stand on the issue. The central bank has repeatedly instructed lenders to follow fair practice codes and ensure that third-party products are sold only after proper suitability assessment. RBI has emphasized that customer protection is a regulatory priority and that banks must strengthen internal controls, compliance monitoring, and grievance redressal mechanisms. It has warned that violations of fair practice norms could attract supervisory action.

The Ministry of Finance and RBI together have signaled that while business growth is important, trust remains the backbone of the banking system. Any compromise on ethics — whether due to profit motives or target pressure will not be tolerated.