Unmasking loopholes: How bank employees sell mutual funds without certification

livemint.com:

insurance, is generally seen as easier. "People usually take two attempts to clear the NISM exam, whereas bank employees find it easier to pass the Irdai exam," said a relationship manager (RM) at a large bank, speaking on condition of anonymity. The challenge is compounded by the bank’s internal pressures.

Branches are often directed by headquarters to push specific products, including mutual funds. Employees who haven’t cleared the NISM exam are still expected to meet sales targets, leading some to enter their regular employee code instead of the required EUIN code during mutual fund transactions. This workaround, though technically in violation of Association of Mutual Funds in India (Amfi) rules, allows them to contribute to the branch’s sales goals without risking immediate penalties.

However, this practice can jeopardize the integrity of the sales process and ultimately harm clients. The pressure to sell is intensified by the disparity in rewards between mutual funds and other financial products. Moreover, if an employee doesn’t have the EUIN code and instead enters their employee code, they won’t earn the points that contribute to bonuses and increments.

“Frankly, some people use their colleagues' EUIN code instead since the points we get from MFs are quite low," one employee admitted. Despite this, non-EUIN employees still play a crucial role in helping the branch meet its overall targets. An employee from another large bank revealed tminehat they receive points for selling MFs even without an EUIN code, but added that the commission and points awarded for selling mutual funds are minimal compared to those for insurance products.