If you are stuck in such a situation, here is what to do.

Mr. Rohan Mehra, a young man who recently turned 19, decided to open his first bank account. He visited a local branch of ‘Bharat Finance Bank’ in the city of Anandpur. At the counter, the bank official informed him that to open a savings account, he needed to make an initial deposit of ₹5,000. However, the official specified that ₹2,000 of this amount would be mandatorily used to purchase a one-year “Cyber Fraud Protection” insurance policy.

Rohan clearly stated that he did not want or need the insurance policy and only wished to open a basic savings account. The official insisted that purchasing the insurance was a compulsory bank policy for all new accounts. Faced with this non-negotiable condition, Rohan decided against opening the account and left the bank, feeling pressured and confused. He now questions the legality of this practice and wonders if opening an account through the bank’s mobile application would be a way to bypass such coercive tactics.

Advice in such cases

This practice, known as “tying” or “bundling” of products, is where a bank forces a customer to buy an additional product (like insurance) as a mandatory condition for providing a primary service (like opening an account). This is strictly against the guidelines set by the Reserve Bank of India (RBI) and the Insurance Regulatory and Development Authority of India (IRDAI).

• Remain calm and do not get into a heated argument. Politely but firmly state your refusal for the unwanted product.
• Ask the bank official to provide the “compulsory” policy in writing on the bank’s official letterhead. They will almost certainly refuse, as this would be written proof of their malpractice.
• Request to speak with the Branch Manager to escalate the issue. Often, a senior official will resolve the matter to avoid a formal complaint.
• Document everything: the date and time of your visit, the name of the official you spoke with, and exactly what was said.
• If the issue is not resolved, file a formal complaint through the bank’s official grievance redressal channel, which is available on their website or at the branch.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think

Applicable Sections of Law

While this situation may not directly invoke the criminal provisions of the Bharatiya Nyaya Sanhita (BNS), it is a clear violation of regulatory and consumer protection laws.

• Reserve Bank of India (RBI) Guidelines: The RBI has issued various Master Circulars on Customer Service in Banks, which explicitly prohibit the tying of products. Banks cannot make the purchase of any third-party product, including insurance, a prerequisite for providing any banking service.
• Insurance Regulatory and Development Authority of India (IRDAI) Regulations: IRDAI’s regulations on the protection of policyholders’ interests strongly discourage and penalize mis-selling and forced selling of insurance policies.
• Consumer Protection Act, 2019: Forcing a consumer to buy a product or service as a precondition for buying another product or service is defined as an “unfair trade practice” under this Act. A consumer has the right to file a complaint in the appropriate Consumer Disputes Redressal Commission.

If you are the complainant

• Your first step should be to lodge a formal written complaint with the bank’s designated Grievance Redressal Officer or Nodal Officer. Keep a copy of the complaint and acknowledgement of receipt.
• If the bank does not respond within 30 days or provides an unsatisfactory resolution, you can escalate the complaint to the RBI Banking Ombudsman. This is a free-of-cost service for resolving disputes with banks.
• Simultaneously, you can file a complaint with the Consumer Commission for indulging in an unfair trade practice, seeking compensation for the harassment and any potential loss.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think

If you are the victim

• If you were coerced into buying the policy, you have rights. Every insurance policy comes with a “free-look period,” which is typically 15 days (30 days if sold online). During this period, you can cancel the policy without giving any reason and get a full refund.
• If the free-look period has passed, you should still file a complaint of mis-selling or forced selling with the bank and the insurance company.
• Opening an account via the bank’s official mobile app or website is often a good alternative. These digital channels usually have a standardized, automated process that does not involve such coercive cross-selling tactics.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think

How the police behave in such cases

This is primarily a regulatory and civil matter, not a criminal one. The police will generally not register an FIR for such a complaint. They will likely advise you to approach the appropriate forums, such as the Banking Ombudsman or a Consumer Court. Police involvement would only be warranted if there are clear elements of criminal deception, forgery, or cheating as defined under the Bharatiya Nyaya Sanhita (BNS), which is not typical in cases of institutional pressure to buy a product.

FAQs people normally have

• Is it legal for any bank in India to force customers to buy insurance?
  No, it is illegal and a direct violation of RBI and IRDAI regulations.
• What if the bank calls it a “processing fee” but it’s actually an insurance premium?
  Always ask for a detailed breakdown of all charges in writing. Any fee that is actually a premium for a product you did not consent to is illegal.
• Can I record the conversation with the bank official as proof?
  While recording a conversation can serve as evidence, be aware of the legal nuances of recording someone without their consent. However, a detailed written complaint made immediately after the incident is strong evidence in itself.
• Will complaining against the bank affect my future relationship with them?
  No. Banks are legally obligated to provide services without prejudice. Complaining is your right as a consumer, and the bank cannot deny you services as a form of retaliation.

What evidence is required?

• A detailed written account of the event, including the branch location, date, time, and the name/description of the bank official.
• Any brochures, forms, or documents the bank provided you.
• The names of any witnesses who were with you.
• A copy of the formal complaint filed with the bank and its acknowledgement.
• Correspondence with the bank regarding the issue.

How long will the investigation take?

• Bank’s Internal Grievance Process: Banks are required to resolve complaints within 30 days.
• RBI Banking Ombudsman: The process can take anywhere from 4 to 12 weeks, depending on the complexity of the case and the bank’s cooperation.
• Consumer Commission: Legal proceedings in a Consumer Court can be more time-consuming, potentially taking several months to over a year to reach a final verdict.

Advocate Sudhir Rao, Supreme Court of India