Misled and Mis-Sold: Financial Misbehaviour in Retail Banks?

42 Pages Posted: 18 Jul 2016

See all articles by Renuka Sane

Renuka Sane

Trustbridge Rule of Law Foundation; National Institute of Public Finance and Policy

Monika Halan


Date Written: July 18, 2016


We use an audit methodology where auditors ask for tax saving instruments from banks and document the disclosures made on product features at the time of sale. In private sector banks with high sales incentives, the high commission product is recommended. In public sector banks, where there are deposit mobilisation targets, fixed deposits are recommended. Banks rarely make voluntary disclosures on product features. When specifically requested, information provided is inaccurate or incomplete. Our results demonstrate the challenges of mandating disclosures when buyers have little understanding of the relevance of product characteristics, and distributors are themselves ignorant or influenced by incentives.

Keywords: retail finance, banks, consumer-protection, disclosure, sales incentives, India

JEL Classification: D14, D18, G21

Suggested Citation

Sane, Renuka and Halan, Monika, Misled and Mis-Sold: Financial Misbehaviour in Retail Banks? (July 18, 2016). Available at SSRN: https://ssrn.com/abstract=2811150 or http://dx.doi.org/10.2139/ssrn.2811150

Renuka Sane (Contact Author)

Trustbridge Rule of Law Foundation ( email )

New Delhi

National Institute of Public Finance and Policy ( email )

18/2, Satsang Vihar Marg
New Delhi, 110067

Monika Halan

Independent ( email )

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