Pune, MAHARASHTRA – When Sandeep Bakhshi was appointed ICICI Bank’s Chief Executive Officer in October 2018, his media handlers were keen to portray a lingering controversy from his previous role as Ceo of ICICI Prudential as the isolated misdeeds of a few bad apples.
At ICICI-Pru, an insurance company in which the bank holds a majority stake, Bakhshi had presided over rampant misselling of insurance policies in Rajasthan. Hundreds of mostly poor farmers had seen their life savings evaporate when ICICI-Pru salesman sold them insurance products instead of the fixed deposits the farmers had asked for.
In October 2019, an Udaipur court issued a bailable warrant against Bakhshi for his alleged role in filing a false criminal case against an ICICI-Pru whistleblower; the sessions court revoked it in November that year. Police inquiry into ICICI Prudential’s selling practices in Rajasthan is underway.
HuffPost India has now found a similar pattern of mis-selling by ICICI-Pru in nine cases in Maharashtra. In the cases reviewed by HuffPost India, poor farmers, some of whom had dropped out of school and worked as daily wage labourers, visited their local ICICI bank branch to put their hard-won savings into a fixed deposit. At the branch they were intercepted by ICICI-Pru sales representatives who sold them life insurance policies instead.
In some instances, insurance executives falsified or misrepresented the financial position of these farmers and labourers in their sign-up documents.
When these victims went to withdraw the money, they were told the money had been forfeited as they hadn’t paid the yearly premiums.
The cases in Maharashtra are significant; they suggest mis-sale of insurance by ICICI-Pru is not confined to Rajasthan, and is happening through branches of the bank elsewhere; ICICI Bank has over 5,000 branches in India.
HuffPost India shared a detailed questionnaire with ICICI-Pru. The insurance firm declined to comment on specific cases highlighted by HuffPost India, but noted the company’s grievance redressal metrics and persistency ratio — a measure of the percentage of customers who continue to pay their annual premiums — was higher than the estimated industry average.
“The above measures serve to establish that the quality of our business is one of the best in the industry and does not suggest any widespread pattern of mis-selling,” the company said, through a spokesperson.
“The Company has a robust grievance redressal mechanism as mandated by the Regulator, for the entire insurance industry. Customers can approach the Company to register their grievances at multiple touch-points, irrespective of the place of sourcing,” a company spokesperson said in an email. “The Company has a specialised team which conducts thorough due diligence for every grievance received including the ones you have referred to in your email. Based on the merit of each case the most appropriate resolution is provided in line with regulations.”
Below poverty line villager loses money
In 2013, Vijaya Khandekar’s son sent her Rs 20,000 that she hoped would serve a much-needed financial cushion. A farm labourer, Khandekar had spent much of her adult life working for as little as Rs 150 per day on the farms of others. Khandekar holds a Below Poverty Line ration card, and is a beneficiary under the state’s Sanjay Gandhi Niradhar Anudan Yojana, a scheme that offers Rs600 per month to destitute people who do not earn a pension, and suffer from a handicap, diseases like HIV/AIDS or TB, or are widows of farmers who committed suicide.
Khandekar deposited the money in what she thought was a five year fixed deposit at her local ICICI bank in Maharashtra’s Sangli district. When she went to withdraw the money in 2018, five years later, bank officials said the Rs 20,000 had been used to purchase a life insurance policy. Since she had skipped paying the annual premium, she could now not claim any money.
Her son wrote a complaint letter to the bank on August 21, 2018. They made several trips to the bank, but found no help. They kept the documents safe, but did not know who to turn to.
“There are villagers who have torn their documents in anger. They now have nothing to prove they lost money. Now, so many years after that deposit of 2013, my brother works in Hyderabad and I work in a local dairy,” her son Shashikanth told HuffPost India over the phone.
“I have made over 10 trips to the district headquarters about 80 km away to recover the amount; each time, I was told the money was lost for good,” Shashikanth said. “The insurance documents show we have a grocery store ― the villagers will tell you that we’ve never owned any shop.”
Sachin Srimanth Khilari, a young farmer from the same village, also lost money under similar circumstances. In 2014, Khilari’s father sold some land and a few goats for Rs 800,000. When Khilari went to deposit the money at his local ICICI branch, branch officials convinced him to buy an insurance policy for an annual premium of Rs 2 lakh on which he was promised an annual interest of 15%, the rest of the money was supposed to be put into a fixed deposit. Khilari says, ICICI-Pru executives sold him two more insurance policies instead.
A year later, Khilari found that he would have to pay a total premium of Rs 600,000 a year on three policies. When he tried to get his money back, he was told it was forfeited.
“The money belonged to all of us, and there were frequent squabbles at home. I now work in Sri Lanka to make ends meet, after a friend told me of this job opportunity here that allows me to earn Rs20,000 a month,” Khilari told HuffPost India over the phone. “There was a time when I thought I would just end my life, the amount is so large.”
Khilari said he had no notion that a well established company like ICICI could cheat him of his family’s money.
“The documents are in English, why don’t they translate them and give documents to villagers in Marathi?” he said. “I studied only till Class 7, my qualifications are listed as Class 12.”
He said his cousin Tukaram had been similarly cheated, but ICICI-Pru had returned his money with interest. Tukaram had since signed a letter saying he had no complaints against the bank, Khilari said.
Narayan Govind Sagar, from the same Maharashtra village as Khilari and Khandekar, sought to deposit Rs 25,000 in a fixed deposit with ICICI. A year later, he said, he was informed that he had an insurance product — and if he didn’t pay up, he would forfeit the money. Sagar says he borrowed money from moneylenders to meet his annual premium so he would not lose the money.
A review of Sagar’s documents suggests ICICI-Prudential executives falsified information on his insurance form. His date of birth is recorded as 1960; it is in fact 1946. And his annual income was shown as Rs 400,000; he has never earned more than Rs 60,000 a year.
Whistleblower taking up cases
HuffPost India heard of these cases through Nitin Balchandani, a former ICICI Prudential employee turned whistleblower, who now helps victims of insurance fraud through a website called ‘Insurance Angels’. In 2012, after Balchandani went public in his accusations against his former employer, ICICI Prudential filed a case against him, alleging he had stolen confidential information. He spent 30 days in judicial custody. In January 2018, the Rajasthan High Court cleared him of all charges.
Documents show ICICI Prudential’s Ceo at the time, Bakhshi signed off on the company’s decision to file what appears to be a false case against Balchandani. As mentioned earlier in this article, Bakhshi is now Ceo of ICICI Bank.
Balchandani has documented over 300 such cases. Over 90% of the time, the money is eventually returned. “When we raise a complaint and shoot off emails, that particular complaint is addressed and the money returned. The system of harassing customers, many of them quite poor and voiceless, however, continues. The regulatory mechanism seems not to be working,” he said.
“An FIR was filed in November 2017. Three years later, there is still no action. The matter is being investigated by the Special Operations Group of Rajasthan Police, which was set up for curbing such white-collar crime,” Balchandani said. “The investigation officer has been changed several times, and witnesses have recorded statements several times before different officers. However, in these three years, the accused have not been summoned even once for questioning.”
ADG Ashok Rathore of the Special Operations Group of Rajasthan police told HuffPost India that the matter is under investigation.
In December last year, the Rajasthan HC dismissed a PIL in this matter, stating that the case was being probed by police. During the hearing, the insurance regulator admitted that it had received over four lakh complaints in just one year; it said it was not feasible to probe each of these. The RBI was to submit a reply in court, but the case was dismissed before it was filed.
Former employees speak up
Former employees of ICICI bank say that — in their experience – mis selling in insurance was systemic. Ramesh Modak, who joined the Sangli Bank Ltd in 1982, became an employee of ICICI Bank when the two banks were amalgamated in 2007.
“People who would earlier greet us would turn away; if we did encounter someone, we had difficult questions to answer,” Modak said, explaining that mis-selling insurance, and forfeited premiums, had made bank employees unpopular in their villages.
Modak said he wrote letters to then ICICI Ceo Chanda Kochhar, complaining of the quality of services offered by ICICI. He was relieved of his services in 2013, after he refused to accept a posting to a new location 500 km away. Kochhar stepped down as Ceo in 2018 over allegations of fraud and money laundering.
Narayan Singh Rao worked with ICICI Prudential in Rajasthan between 2008 and early 2015. He is now an organic farmer.
“I remember one case of a certain Mr Kumawat in Rajsamand district who was sold insurance fraudulently and took the matter to police. The money was returned to him later,” Rao said. “I did, in the course of work, come across people I thought might have trouble paying the premium each year, and I would inform them that they would have to keep paying annual premiums. That way, some of them escaped the trap.”
HuffPost India has not verified this specific case of Mr. Kumawat.
Anil Mehta, worked with the Bank of Rajasthan. In 2010, his bank was amalgamated into ICICI and he became an employee of the branch in Dungarpur. He quit in 2013, and now runs a grocery store. Mis-selling insurance, Mehta said, “is the norm with private insurance agencies.”
“I worked in the branch in Dungarpur, which is also where I was born. To see so many people, my very own, being fooled was painful,” Mehta said. “I was also tongue-tied, since I was myself an employee of the bank.”
Mehta described an aggressive selling culture in which employees who did not meet their annual sales targets were made to feel small.
“Even those who leave one bank and seek employment in another cannot speak against these practices. One’s career depends on silence,” Mehta said. “I have moved to being a shopkeeper, so I can say these things to you freely. My former colleagues now working in other banks cannot; I tell you, the situation is not very different in other private banks.
ICICI Pru: We engage with customers proactively
In its correspondence with HuffPost India, Prudential ICICI highlighted its “13th month persistency ratio” of 86.8%. It claimed this was proof clients were happy. This means that for every 100 people who bought an insurance policy from ICICI Prudential, 86.8% paid their premium in the second year of their policy.
However, the bank’s 2020 annual report suggests that the 61st month persistency – ie, the number of people who stay with their policy for over 5 years — is 58%, implying that 42% of their clients did not complete five years.
As noted earlier, the company has also returned money in some cases where mis-selling has been established. Prudential ICICI did not respond to a HuffPost India question on the number of cases and policies in which the company has returned money due to mis-selling.
“As a process the Company continuously and proactively engages with customers. As a responsible organisation, whenever customers highlight issues regarding their policies to us, each grievance is assessed thoroughly and based on merits, appropriate resolution is provided,” the spokesperson said. “In case customers are not satisfied with the resolution provided by the Company they have the option to approach the Insurance Ombudsman or any other appropriate judicial forum.”
Yet there is a vast gulf in the resources available to an insurance company such as ICICI Prudential, and those who say they have been defrauded of their savings.
“We save money for family expenses – a wedding, an illness in the family. How can they do this with that money?” said Khilari. “I will return to my village over Diwali and take this up again. Even if my money is not returned, it should become well known that a bank too could cheat you.”