Canara Bank Faces Scrutiny Over Alleged Mis-selling of Policy to 90-Year-Old

A concerning incident involving a 90-year-old individual and a life insurance policy with an unusually distant maturity date of 2124 has brought Canara Bank under scrutiny, with allegations of mis-selling. The policy, reportedly with an annual premium of Rs 2 lakh, has ignited widespread public outcry and raised significant questions about the ethical practices in bancassurance, particularly concerning the sale of financial products to vulnerable senior citizens. The family of the 90-year-old, identified as Venkatachalam V Iyer, alleges that the policy was aggressively marketed, creating undue pressure on him. According to reports, the policy was finalized in February 2025, with two annual debits totaling Rs 4 lakh already made from his savings account. The situation escalated when the elderly man received an alert for a subsequent premium, prompting his family to investigate. Further claims suggest a potential circumvention of age restrictions, with the branch manager allegedly advising the customer to open a joint account with his daughter, who was then listed as the 'life assured,' while the father funded the premiums. Documents were allegedly prepared by bank staff, with the customer's signature obtained due to his primary account holder status. Canara Bank, in response to the social media uproar, issued a statement acknowledging the inconvenience and assuring that the matter would be forwarded to the concerned team, while also requesting the user to refrain from sharing personal information publicly. However, the bank did not directly address the specific allegations of mis-selling or selling an age-inappropriate product. This incident is symptomatic of a larger issue within India's financial sector. The Insurance Regulatory and Development Authority of India (IRDAI) has reported a 14% year-on-year increase in mis-selling complaints in the 2024-25 period, with such cases forming 22% of all life insurance grievances. Recognizing the gravity of such practices, the Reserve Bank of India (RBI) has also signaled its intent to tackle these issues. Governor Sanjay Malhotra announced on February 6, 2026, that the central bank will issue comprehensive guidelines for banks and non-bank lenders concerning the advertising, marketing, and sale of financial products. These forthcoming guidelines are aimed at curbing the mis-selling of third-party products, including insurance policies, mutual funds, and portfolio management services (PMS), which are often pushed at bank counters without adequate suitability assessments. Typically, the maximum entry age for term life insurance policies in India is around 65 years, although some specialized plans may extend this. A policy sold to a 90-year-old, especially one with a maturity date set for 2124, clearly raises serious concerns about compliance with regulatory norms and the fundamental suitability of the product for the individual. The Consumer Protection Act, 2019, in India recognizes insurance as a service and provides consumers with recourse against unfair trade practices and deficiency in services. Policyholders can approach consumer courts at the district, state, or national level, depending on the claim value. Furthermore, the RBI's Banking Ombudsman scheme offers a free and expeditious grievance redressal mechanism for issues unresolved by banks. The recent developments underscore the critical need for robust consumer protection frameworks, especially for the elderly, who are often more susceptible to aggressive sales tactics and may lack the financial literacy to discern unsuitable products. The incident also has implications for Canara Bank's stock performance, as such controversies can erode investor confidence and attract increased regulatory scrutiny. On February 6, 2026, Canara Bank's stock was trading around Rs 147. The RBI's proactive stance in proposing stricter norms suggests a move towards greater accountability and a more customer-centric approach in the sale of financial products by banking institutions. The proposed guidelines are expected to cover advertising, marketing, and sales practices, with a strong emphasis on ensuring that products sold are suitable to customers' financial needs and risk appetite. The case of the 90-year-old policyholder serves as a stark reminder of the persistent challenges in ensuring ethical financial sales practices and the ongoing need for vigilance from both regulators and consumers.

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