3 min readNew DelhiMar 11, 2026 05:39 AM IST
India’s public sector banks (PSBs) earned almost Rs 30,000 crore in the last five financial years as commission or fees from the sale of third-party financial products such as life and non-life insurance, mutual funds, credit cards, and demat accounts, the Ministry of Finance told the Rajya Sabha on Tuesday.
According to data provided by Minister of State for Finance Pankaj Chaudhary in response to a written question, the 12 PSBs got Rs 28,647 crore from the sale of these financial products in the five years spanning from FY21 to FY25, with each year showing an increase from the previous: Rs 3,728 crore in FY21, Rs 4,734 crore in FY22 (up 27%), Rs 5,944 crore in FY23 (up 26%), Rs 6,528 crore in FY24 (up 10%), and Rs 7,714 crore in FY25 (up 18%).
State Bank of India, the country’s biggest bank, accounted for 59% of these commissions, with Rs 17,043 crore earned over the five years from selling these third-party products. Rounding off the top three were Punjab National Bank (Rs 2,866 crore) and Canara Bank (Rs 2,060 crore).
While banks can sell third-party products to their own customers, the practice has been criticised repeatedly over the years due to instances of ‘mis-selling’, with Finance Minister Nirmala Sitharaman saying last month that banks should focus on their core business rather than spending “more time on selling insurance when it is not required”.
The Reserve Bank of India (RBI) has also taken cognizance of the issue. On February 11, it issued draft amendment directions for ‘Advertising, Marketing and Sales of Financial Products and Services by Regulated Entities’. These draft guidelines also cover third-party products and services. Comments on the same were invited by the central bank by March 4.
According to a senior banking industry official, while there is only anecdotal data on mis-selling, it typically doesn’t occur when banks sell their own products to customers. However, mis-selling rises when third-party products, employee targets, and commissions are involved.
“Action has been taken for mis-selling from a supervisory angle in the past. The RBI will come out with robust guidelines on the same,” the official added, requesting anonymity.
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In his response to the question in the Rajya Sabha on Tuesday, Minister of State for Finance Pankaj Chaudhary said that the RBI’s draft directions contain “comprehensive instructions” to all commercial banks to ensure that their policies and practices neither create incentives for mis-selling nor encourage employees to push the sale of products.
The new guidelines are proposed to come into effect from April 1, 2026.
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