RBI asks banks to disclose MF,insurance distribution fees

After allowing banks to distribute products of mutual funds and insurance companies,the Reserve Bank of India (RBI) on Monday asked them to make their sales process transparent in the interest of customers. The RBI has asked banks to let customers know of the fee that they might be earning by distributing financial products of MFs and insurance companies.

As the banking regulator has allowed banks to distribute schemes of various mutual funds,it thinks that there might be a conflict of interest in the sales process. It is likely that banks may be marketing several competing products of various mutual funds or insurance companies to their customers. Keeping in view the need for transparency in the interest of the customers to whom the products are being marketed,it has since been decided that banks should disclose to the customers,details of all the commissions (in any form) received from the various mutual funds or insurance financial companies for marketing their products, the RBI said in a circular.