FM Nirmala Sitharaman flags mis-selling of insurance, calls for collateral free loans to MSMEs
Nirmala Sitharaman on Monday expressed concerns over the mis-selling of products, particularly insurance, stating that it adds to the customers' borrowing costs.
Speaking at the State Bank of India Economist Conclave, on whether there is a case for a policy rate cut, the FM said «banks’ interest rates will have to be far more affordable» while adding that she does not want to get into the debate about whether perishables should be part of the inflationary measure index.
Banks have facilitated the distribution of insurance project products, Sitharaman said. «While this model has significantly contributed to improving insurance penetration across the country, it has also raised concerns about instances of mis-selling … I would say, it added or contributed in indirect ways to the increased cost of borrowing for the customers.»
She directed banks to remain focused on their core activity of mobilising deposits and lending money.
On interest rates, she said: «When you look at India's growth requirements, and you can have so many different voices coming out and saying the cost of borrowing is really very stressful, and a time when we want industries to ramp up and building capacities, bank interest rates will have to be far more affordable.»
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