DEDUCTION OF INSURANCE PREMIUM AND OTHER CHARGES IN EXCESS
OF ACTUAL COST OR THE AMOUNT PAID TO SERVICE PROVIDERS
refer to BPRD Circular No.11 dated August 01, 2006 and
BPRD Circular No.12 dated August 01, 2007 wherein the
banks/DFIs have been instructed not to charge any amount
under the head of insurance premium without the consent
of customer in writing. They were also advised that all
charges, other than mark-up to be recoverable by them
should be clearly disclosed to the customers at the time
of entering into agreement.
It has been observed that some banks/DFIs are not properly
complying with above instructions in the matter. In view
of the above, the existing instructions have been revisited
and following instructions will become operational with
i. Banks/DFIs should not retain a part of insurance premium
received from customers for payment to insurer.
The banks/DFIs may not charge any amount in excess of
their actual cost under various heads being paid to the
The Banks/DFIs should clearly disclose all charges recoverable
from the customers at the time of entering into agreement
with them and the same shall also be duly incorporated
in their schedule of charges.
3. All banks/DFIs are advised to ensure strict compliance
of the above instructions in letter and spirit as non-compliance
will attract punitive action under BCO, 1962.
Other instructions on the subject shall, however, remain
Please acknowledge receipt.