RBI to probe banks' practices in gold product sales
The Reserve Bank of India is looking into sale of gold coins and gold-related investment products by about 30 banks to find out whether their employees are mis-selling such products to customers. The RBI move follows complaints of customers being induced by bank employees and non-staff members within bank premises for purchase of gold coins, gold-related investment products and other wealth management schemes.
The central bank is studying the business practices of 30 banks to ascertain any mis-selling of these products and to find whether such products are being sold as a pre-condition for offering the regular banking services, sources said. The RBI is also looking into complaints that bank staff are being pressurised by their senior officers to sell gold coins and other gold-related products in lieu of incentives.
Earlier last month, the RBI had ordered an investigation into three private sector banks, ICICI Bank, HDFC Bank and Axis Bank, for alleged violation of money-laundering norms after a sting operation by a news portal claimed major lapses on this front at these banks. Along with the announcement of this probe, the RBI had also said that it has “undertaken a thematic study in respect of banks that are active in selling gold coins, wealth management products to examine whether there are systemic issues and to plug deficiencies and legal loopholes, if any“.
Now, the RBI has widened the scope of its probe to include any systemic issues in sale of gold-related investment products by the banks while the study has been widened to as many as 30 banks, sources said. Earlier, there have been talks about the RBI looking to ban sale of gold coins at banks, while the central bank’s Deputy Governor K.C. Chakrabarty recently said that the successive Financial Stability Reports of the RBI have highlighted the serious concerns over bank branches selling gold coins, mutual funds and insurance products.
An RBI Working Group has already proposed a slew of measures like mandatory quoting of PAN numbers for high-value gold purchases, restriction on gold loans and check on NBFC branches dealing with gold loans.
Source: Hindu business line.
Source: Bullion Bulletin