The Department of Financial Services, Ministry of Finance, has advised the heads of banks that the commission on cross-selling business should be paid to the bank, and not the employees.

Such commission should be treated as an income for the bank, a circular from the Department and addressed to the Chairman, State Bank of India, and MD & CEOs all public sector banks, has said.

Advice from CVC

The letter flags the topic of 'public sector banks' engagement in cross-selling of insurance business on the basis of an advice from the Central Vigilance Commission (CVC).

The department was told to examine the consequences of cross-selling on bank's own functioning and devise/draw up suitable guidelines to guard against 'faulty policies' being followed by 'certain banks.'

CVC had alerted the department to instances of cross-selling of products of insurance companies in which the officer concerned often takes resort to 'unethical acts' in order to achieve the target.

It was on perusal of the matter that the department came round to the view that the commission on cross-selling business should not be paid to the bank employees.

"They are full-time employees and are paid fixed salaries. Commission on this business should be paid to the bank and should be its income," it said and requested banks to evolve suitable instructions/guidelines in the matter.

Staff union 'happy'

The All-India State Bank of India Staff Federation said it had passed a resolution that the commission earned by award staff from cross-selling should be deposited in the profit of the bank.

The resolution was passed on April 20 during an executive committee meeting held in Kerala, according to A Raghavan, General Secretary, State Banks' Staff Union, Kerala Circle, and Member of the Central Committee, National Confederation of Bank Employees.

"We are happy about the Centre taking cognisance of the matter and issuing a notification dated 10 September 2018, to the chairmen of all public sector banks," Raghavan said.

Banks moving away from conventional banking and focussing on cross-selling has been detrimental to its interests and against development banking role it has been playing all along.

"There is a need for a national debate on various financial sector reforms and we hope the Centre will come forward to invite United Forum of Bank Unions, the umbrella organisation of nine unions in the banking sector, for a dialogue," Raghavan said.

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