The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a ₹1 crore penalty on IndusInd Bank for violating corporate agent norms. This followed an onsite inspection in June 2023, which uncovered compliance breaches related to the bank's insurance distribution activities. IndusInd Bank failed to establish a dedicated, policyholder-facing grievance redressal framework for insurance customers. Instead of offering insurance-specific grievance channels, such as IVR and website options, the bank used its generic banking grievance system.
During enforcement proceedings, the bank claimed it had taken steps to meet regulatory requirements and submitted representations and screenshots of a grievance portal as evidence. However, IRDAI's test verification found the portal non-functional, as it failed to generate acknowledgments for complaints. This raised concerns about policyholders' ability to access an effective system to lodge and track insurance grievances.
The regulatory action highlights the need for proper grievance redressal systems and adherence to insurance distribution rules for corporate agents. It also demonstrates IRDAI's role in monitoring intermediaries and enforcing standards designed to protect policyholders. The ₹1 crore penalty serves as a strong reminder that financial institutions distributing insurance products must maintain functional, accessible, and insurance-specific grievance mechanisms backed by working systems.
