They didn’t ask for it. They didn’t need it. And they didn’t know that banks are illegally stripping funds out of their accounts for the Union government's multiple insurance and pension schemes.
The latest from The Reporters’ Collective is an investigation into banks illegally forcing unwanted insurance on customers to bulk up the numbers for Prime Minister Narendra Modi’s pet social welfare schemes -- the Pradhan Mantri Jeevan Jyoti Bima Yojana for life insurance, Pradhan Mantri Suraksha Bima Yojana for accident insurance and Atal Pension Yojana for micro-pension.
Narendra Modi launched these schemes in 2015 to provide financial security to the poor. Life insurance and accident insurance policies get renewed annually and cost ₹436 and ₹20 a year respectively. The fee for the pension scheme, which promises a monthly pension up to ₹5,000 after the age of 60, depends on the plan and is charged monthly.
State-run banks, as well as private ones, have been imposing these schemes on customers. Though rules say these schemes are voluntary and require explicit permission to charge customers, banks have been either enrolling customers directly from the backend or by obtaining consent signatures through lies, deceit or coercion.
Evidence in the form of audio and video clips of bank employees confessing to malpractices to achieve industrial-level enrolment, RTI responses, internal letters setting targets for bank employees shed light on the scam.
Convincing people to buy coverage, especially when they think they don’t need it, can be difficult. But the story by Hemant Gairola exposes the rather devious way banks, under pressure from the top, have adopted to ensure compulsory coverage for uninsured Indians.
Senior managers who chase promotions abuse branch heads and threaten them with suspension, transfer, loss of pay, etc. if they do not deliver a high number of enrolments. This pressure compels branches to enroll customers by hook or by crook.
Banks activate the schemes en masse on customer accounts with the click of a button from the back office. Another method banks use to get customers to sign up is to quietly slip in these schemes’ forms along with the account-opening forms, getting unsuspecting customers to sign on every form without scrutiny. Whereas those who do pause the pen at these forms are told these are a must to open an account. The same lie is repeated to the poorest of the poor who knock on bank doors to avail of government schemes. Some branch managers trick customers into sending scheme-activation text messages to the bank.
Account holders who shared their stories with The Collective had a common refrain: they got enrolled without consent or through coercion. Some people noticed the deception only after banks started deducting fees. Besides causing harassment and indignation, an unwanted policy can burn a hole in the pocket of the poor.
The bigger picture is that the prevalence of the illegal behaviour shows banks lack the necessary oversight. And the worrisome part is that the banking regulators are treating the widespread fraud as a trite con where customers are being tricked every day into parting with their money.
Click here to read the story published by The Wire