Chirag Madaan, a 24-year-old graduate from the Indian Institute of Information Technology (IIIT), recently left his Rs 17 lakh per year banking job citing pressure to mis-sell products as a major reason for his departure. His decision has garnered significant online attention, with many resonating with his experience, highlighting a broader issue within the banking sector.
Frontline banking roles are increasingly resembling sales positions rather than advisory roles, with more than 84% of surveyed relationship managers feeling intense pressure to meet sales targets. Over 57% of them admitted being urged to sell products regardless of suitability, even resorting to unethical practices.
Failing to meet sales targets can lead to severe consequences for employees, including job insecurity, daily performance reviews, public reprimands, and stunted career growth. This high-pressure environment is what Madaan alluded to in his decision to leave the banking industry.
When sales targets take precedence, the distinction between providing financial advice and pushing products blurs, often leading to mis-selling practices. Insurance policies, mutual funds, and other financial products are heavily pushed due to their significant fee income potential for banks. In FY24, the top 15 banks collectively earned over Rs 21,773 crore in commissions from such products.
Bancassurance arrangements, where banks serve as distribution channels for insurance companies, further drive the push for financial products. With banks accounting for a substantial portion of insurance premiums, internal sales targets cascade down from senior management to front-line relationship managers, influencing customer recommendations.
However, the lack of comprehensive product knowledge among relationship managers complicates the situation. Many managers struggle to differentiate between various financial products, making it challenging for them to provide suitable recommendations to customers.
This combination of high sales pressure and inadequate product understanding often results in customers being offered unsuitable products, leading to negative repercussions in the long run. Madaan’s departure has reignited discussions about mis-selling practices in the banking sector, shedding light on systemic issues that have persisted for years.
While efforts were made to reach out to Madaan for comment, no response was received at the time of publication. Any response from him will be included in future updates to the story.