India's Seniors: Banks' New Mis-selling Target

Generations of Indian senior citizens have relied on banks for the security of their savings, viewing fixed deposits and pension accounts as symbols of stability. However, this trust is increasingly being exploited as they become prime targets for mis-sold insurance and investment products. Banks and intermediaries often pitch these complex, high-commission items as "safe" or "guaranteed," despite long lock-in periods and poor returns.

Financial institutions capitalize on seniors' frequent branch interactions and their natural trust in bank staff. Many elderly individuals, due to limited digital literacy and a belief in banks acting solely in their best interest, rely heavily on verbal assurances. This vulnerability is amplified by the presence of substantial, often idle, balances in their accounts, making them attractive, low-resistance targets for sales representatives incentivized by high commissions.

Regulatory data reveals a concerning rise in grievances related to "Unfair Business Practices," with complaints about mis-selling increasing by approximately 14% in FY25. Despite existing rules like mandatory need analysis, safeguards often remain on paper, with customers signing documents based on trust rather than full comprehension. Experts advocate for classifying sales to seniors as high-risk, enforcing stricter underwriting, and implementing truly punitive penalties to curb these systemic incentive-driven mis-selling practices.