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“If I lose the money, it will lead to a situation where we will have to die.”

These are the words of Pyarelal Dangi, a farmer in Rajasthan who was allegedly duped by officials at ICICI and fraudulently sold an insurance policy, when he thought his money was going into some sort of savings scheme – such as a fixed deposit.

In the words of Pyarelal, ICICI officials put half his money into a fixed deposit and gave him the documentation. He didn’t know where the other half went, till he got a post from ICICI Prudential a few months later asking him to pay his insurance premium - an insurance policy that he had been signed up for without his knowledge or consent.

He says he has now lost his hard-earned money, and does not know how to secure the future of his children.

This is not just one man’s story. ICICI has allegedly done this with at least 200 people in rural Rajasthan – many of them farmers. They have fraudulently sold them ICICI insurance schemes with premiums that none of them can afford.

Nitin Balchandani, a former employee of ICICI Prudential, began noticing this pattern in 2010. After resigning from the organisation, Nitin says that he has found around 250 such cases. In most of the cases that Nitin has highlighted, he says that the customers were signed up for insurance schemes where they would not get any of their money back if they did not pay their premium.

Employees of ICICI have been accused of forging signatures, reducing the age of customers to make them applicable, increase their education level and income levels to fraudulently sell insurance schemes in at least three cases, according to an FIR filed by a Special Operations Group (SOG) of the Rajasthan Police in November 2017.

What is ICICI accused of doing?

“They have been doing this since 2010, or even earlier. Now, it’s a company accepted practice,” Nitin said.

The bank would allegedly ask unsuspecting customers, often people who were taking out loans or those who were depositing money, to put a part of the money into a fixed deposit. Customers usually agreed and signed paperwork. Once they did so, the bank allegedly put a part of the money into a fixed deposit, and the rest into either a traditional insurance policy or a unit linked insurance plan (ULIPs).

“When they don’t pay the premium, if the plan is traditional, all the money gets forfeited. If it’s a ULIP that has been issued after 2010, if he doesn’t pay the premium, he still gets the money back after the time period, where he would earn minimal interest.”

In the cases that Nitin has dealt with, he says that most of them have been cases where the bank has signed up the customer for traditional insurance plans, which would ensure that the customer’s money was forfeited.

For the unsuspecting customers who were signed up for ULIPs, they would get their money back after the time period even if they did pay the premium, but their money is locked in for the time.

“If the bank had told the person that it was an FD, then they would get a higher rate of interest, and they can take the money out whenever they want to. In a ULIP, the money is locked in for the time period, and the person would also earn a lower rate of interest. Another advantage for the company is that they do not have to cover the policyholder after the first year,” Nitin said.

Nitin claims that when he was an employee, he took this up with the senior management in ICICI, but was ‘pressured to resign’. He resigned from the organisation in 2012.

ICICI officials are suspected to have violated the regulatory norms of the Insurance Regulatory and Development Authority of India (IRDAI).

How did they allegedly go about the practice?

In June 2017, Nitin approached the Inspector-General of Police, SOG, Rajasthan Police, along with a few farmers and filed a complaint. After preliminary investigations, the SOG filed an FIR in November 2017, where it cited three instances.

The first complainant, the FIR states, is Bhagwan Lal Gadri, a farmer who had only studied till class 5, and had taken a loan under the Kisan Credit Card scheme. He was sold an insurance policy by the bank where he had to mandatorily pay Rs 50,000 as a premium every year. The investigators also noticed that the bank had not obtained his signature on the benefit illustration, which is an IRDAI requirement.

The policy form, however, states that his education is 12th pass and that he has a yearly income of Rs 3,00,000.

In the second instance, Manohar Das Vaishnav, a 60-year-old who retired from Tilam Sangh, received money from his employer, which one of the bank officials was aware of. The official reportedly went and told the other officials, asked him to put a part of it as a fixed deposit, but instead signed him up for an insurance policy that required him to pay Rs 1,01,000 as premium, and even lowered his age by a year, as the policy could not be sold to someone who was aged 60 or above. It also states that his yearly income was Rs 4,00,000, but Manohar was only earning a pension of Rs 1,850 after his retirement. His signature was also not taken on the benefit illustration.

As per the rules, the customer is supposed to call up the call centre of the company to provide permission for the scheme. In Manohar’s instance, the FIR states, ICICI officials made this call themselves.

In the third instance, for 80-year-old Khemraj Meghwal, the bank created the policy in his wife’s name, where they had to a pay a premium of Rs 50,000. However, even that policy could not be given to someone over the age of 65, which his wife was.

The FIR has been filed against officials of ICICI and ICICI Prudential under Sections 420 (Cheating and dishonestly inducing delivery of property), 406 (Punishment for criminal breach of trust), 467 (Forgery of valuable security, will, etc), 468 (Forgery for purpose of cheating), 471 (using as genuine a forged [document or electronic record]) and 120-B (Punishment of criminal conspiracy).

Tussle with ICICI

“I have been highlighting these cases since 2012. Initially, we started with the company and informed them till 2014. We informed the Managing Director, the CEO and so on. They helped us in 3-4 cases and returned the money, but otherwise, no action was taken. Then they stopped responding because they realised how big the fraud was,” Nitin said.

From then till 2015, Nitin said there was no response from ICICI’s end. This was until the Nitin wrote to IRDAI and RBI. In early 2016, he also wrote to the Director of the Serious Fraud Investigation office.

In early 2016, officials from ICICI Prudential reached out to Nitin, and asked him to flag cases to them instead of the regulators. Nitin did not agree to this.

“In Dec 2015 and Jan 2016, when I highlighted cases as a whistleblower to IRDAI and to the Serious Fraud Investigation office, ICICI officials came to meet me and asked me to highlight the cases only to them, and not to the regulators. I told them that I initially started highlighting cases to them only, and only when you did not take action did I escalate,” Nitin said.

This is where things began to take a turn. ICICI officials filed a case against the whistleblower in April 2016, accusing him of stealing information.

The investigating officer sent Nitin a notice, asking him for an explanation. Nitin claims that the officer found the explanation he sent satisfactory, and the case was closed in April 2016 itself. TNM has accessed a copy of the closure report.

According to Nitin, he continued writing to RBI, IRDA and the Serious Fraud Investigation Office as he got wind of more cases.

In June 2016, over a month after the case was closed, Nitin said he was approached again by ICICI officials, who told him that they were putting in place measures to keep the practice in check, and also assigned him a point of contact for highlighting cases. Nitin claims to have asked for a letter in writing.

“Give it to us in writing that your intention is right and you want to stop this practice. They said they couldn’t give it to us. However, ICICI did say that they would give me a letter of appreciation for the work done, but later they refused that as well,” Nitin said.

In September that year, Nitin filed a writ petition in the Rajasthan High Court, asking the court to ensure that this practice was kept in check.\

On September 26, a day before this petition was to come up in court for hearing, Nitin was sent to judicial custody as the case against him that earlier closed was reopened. He was kept in judicial custody for a month, and released on bail on Oct 25.

In 2016, Nitin said that ICICI began returning money to those cases which were being flagged. However, he believes that the magnitude of the problem could be much larger.

“I have only been able to highlight 250 cases in 4 years. This practice is still going on, in complete knowledge and cognizance of the senior management as well as the regulators but the regulators are just not taking any action,” Nitin said.

Nitin’s story

In January 2018, the Rajasthan High Court quashed all proceedings against Nitin pertaining to the case by ICICI that was reopened in September 2016.

The petition that Nitin filed in September 2016 was against ICICI Bank, ICICI Prudential, RBI and IRDA and the Union of India. In this, Nitin asked for banks and insurance companies to clamp down on their practice, and for the regulator to keep a check on such practices and to install proper mechanisms, as well as make data pertaining to complaints public.

This was disposed of by the court in October 2016, stating that IRDAI had powers to not only protect policyholders but to also “enforce high standards of integrity, financial soundness, fair dealing and competence to those who are regulating the insurance”, settle grievances and to prevent insurance fraud.

The regulator

During the period that Nitin wrote to IRDAI, one officer regularly took cognizance of his emails and flagged them to his seniors. In February and May 2016, MS Joshi, an Officer on Special Duty (Grievance) in IRDAI forwarded emails to his seniors that say that they must take note of these allegations.

The only response Nitin received from IRDAI was after the High Court said that the regulatory body had enough powers. In its reply to the various questions posed by Nitin in his petition, IRDAI said that it had directives and regulations for all the things asked. Pertaining to ICICI Prudential Life Insurance, the regulator said that they had sought a response from the bank.

ICICI Prudential’s response

An ICICI Prudential Life Insurance Company spokesperson said:

“ICICI Prudential Life Insurance Company and ICICI Bank conduct business with the highest level of compliance to regulatory and legal requirements. We have a well-defined Code of Conduct which our employees have to adhere to.

“All life insurance products are approved by the insurance regulator which has put in a multi-level grievance redressal mechanism. ICICI Prudential Life has one of the lowest customer ‘grievance ratio’ and one of the best ‘persistency ratio’ in the life insurance industry.

“There are three cases mentioned in the FIR filed by SOG. ICICI Prudential Life refunded the money to the customers, well before the FIR being filed in November 2017.

“We have been and will continue to extend full co-operation to the authorities.”