Determinants of sales misconduct in Indian retail banking services. Does sales approach lead malpractices?

Author:Suman Mittal, Krishan K. Garg
Position:Lingaya’s University, Faridabad, India

Purpose The purpose of this paper is to demonstrate those factors which are responsible for the sales misconduct in Retail banking services across the world and try to find out the determinants which majorly affect the Indian Retail banking industry. The authors also try to find out whether the sales approach leads to malpractices in sales and how does it affect the different categories... (see full summary)

Determinants of sales misconduct
in Indian retail banking services
Does sales approach lead malpractices?
Suman Mittal and Krishan K. Garg
Lingayas University, Faridabad, India
Purpose The purpose of this paper is to demonstrate those factors which are responsible for the
sales misconduct in Retail banking services across the world and try to nd out the determinants
which majorly affect the Indian Retail banking industry. The authors also try to nd out whether the
sales approach leads to malpractices in sales and howdoesitaffectthedifferentcategoriesofthe
Design/methodology/approach Primary data have been collected from the bank account holders
having accountin various private and public sector banks operating in India.
Findings The authors have come out with nding that sales misconduct is majorly affected by
misrepresentation offacts, complexity of products, lack of disclosure norms and more.They also found that
push sales approach is adoptedby banks, particularly by private banks to majorly tap the class customers to
sell the nancialproducts without their requirement and achievethe revenue targets.
Practical implications Banking regulators can keep a close supervision on sales mal practices in
banking sectorand implement stringent norms to reducethese kinds of practices.
Originality/value Very few studies have been conducted on the basis of the class of the customer,and
how sales approachleads the malpractices in sales and how it affects the class of the customers.
Keywords Misrepresentation, Malpractices, Class customers, Inappropriate sales, Sales approach,
Sales misconduct
Paper type Research paper
1. Introduction
In todays era of competitive banking, everything from product to sales approach has
become complex. Its not only the bank and staff, whose orientation has been changed, but
customers have also changed drastically in their demand, expectationsand aspiration from
the banks. Now-a-days customerwants everything on their doorstep, and for that, he/sheis
ready to pay a handsome price. Bankers are also very smart and well aware about this
tendency of the customer and take advantage of those customers who like to boast of their
wealth and want to feel a classabove the general public. Since a long time, regulatory bodies
are trying to relax the banking norms, so that a common man can understand the banking
procedures and take advantage of the nancial products. However, in the wake of banking
scandals it has become a major challenge for the regulatorsto do so. A fundamental belief is
that competition is healthy for the growth and development of any industry, but in the
recent research (Bennett et al., 2012) it has echoed differently on this sentiment, as per the
report, competition is having a dark sidewhich leads to malpractices in sales and retaining
the customers. Unfortunately, todays scenario is exactly same in Indian banking industry,
in 1990s when LPG (Liberalization, Privatization and Globalization) had taken place it was
expected that with the participation of foreign and privateplayers, the banking services will
improve and it happened. The motive was accomplished, but gradually the focus has
Indian retail
Journalof Financial Crime
Vol.26 No. 1, 2019
pp. 313-329
© Emerald Publishing Limited
DOI 10.1108/JFC-12-2017-0126
The current issue and full text archive of this journal is available on Emerald Insight at:
changed from providing good services to all the bank customer, it has been shifted to
providing good services to few premium customer who are able to keep funds in their
accounts and can be a protable deal for the bank.
In fact, nowadays, the basic banking activities are getting squeezed and more and more
staffs are engaged insales and marketing activities to generate revenue.The basic activities
like cheque clearing, account opening, service request, fund transfers, foreign exchange
services etc. which were earlier processed in the branch premises, are shifted to centralized
unit, so that the staff can focus on maintaining customer relationship and sell the nancial
products to the customers to meet the protability targets of the bank. This kind of bank
practices is having another facet, that staff majorly focuses on wealthy or premium
customers and a common or poorcustomer is neglected knowingly or unknowingly. Its not
only the customers who suffers but also the bankers who feels immense pressure to
complete the target to remainin the organization and get yearly appraisal.
Modern marketing conceptof CRM (Customer relationship management) has emerged as
a tool for maintaining a continuous relationshipwith the prospect and premium customers
and sell the product or provide services to them with an ease. However, gradually this
concept is getting distorted bydemanding the favor from the customer by pushing them to
purchase the banking products (for which targets are provided to the staff) in lieu of
banking services provided to them with an ease. In the rat race of making prot and
acquiring the maximum number of premium customers, CRM is a tool that binds the
customer with the banker. In this race of achievingthe number one position in the industry,
sometimes bankers indulge inmalpractices to accomplish the targets. This study will cover
the reasons responsible for sales malpractices in banking industry and try to evaluate the
reasons which are affecting sales practicesin India adversely. In this paper, we will nd out
the sales approach used by the bankersand how it affects the sales misconduct and different
categories of the customer.
Data have been collected from Private and Public bank customer for a comparative
analysis. Private and public banks are distinguished on the basis of the ownership of the
banks. In addition, data arecollected from Mass and Class customer. This classication has
been done on the basis of the type of account maintained by the customer. If a customer
is maintaining a normal savingaccount or a low variant account that customer is termed as
Mass customer. Mass customers are those who keep and maintain their accounts for the
basic purpose like salary credits, maintaining small savings and doing small investments.
They are basically less revenue generatingcustomers.
On the other hand, Class customers are those who maintain a premium or a high-end
account with the banks, they would like to enjoy a superior bank services in lieu of their
money, they keep a handsome amount in their accounts and invest large amount in the
banking products. Account maintenance and banking relationship is a matter of reputation
for them.
The rst section is related with the identication of the determinants of the sales
misconduct/mis-selling which adversely affect the Indian retail banking sector. Second
section discuss about the type of sales approach used by different types of banks (Bank
categorization is based on ownership i.e. Private banks and Public sector banks) and its
impact on various customercategories, also we try to nd out that does sales approach leads
to malpractices in thebanking industry.
1.1 What is sales misconduct
Misconduct can be dened as violation of standards or law, willingly or unknowingly.
Misconduct is a broader term which includes behavioral,operational, sales and many more

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