question_answer

Direction: Read the passage carefully and answer the question given below it. Certain words/phrases are given in bold to help you locate them while answering some of the question.

The government directive to public sector banks (PSBs) to mandatorily offer broking services and sell products of more than one insurance company to customers from January 2014 is controversial, without properly appreciating the issues and ground realities of cross-selling at PSBs.

No one disputes the fact that PSBs can play a huge role in enhancing insurance penetration in the country. With over 400 million customer accounts, PSBs have barely achieved 1% insurance penetration. They sell mostly saving-oriented policies, turning a blind eye to low-premium, low-commission term insurance, which is a vital social security tool for vulnerable segments. Insurance selling is confined to urban and city branches, with little awareness in the rural network.

On the non-life side, banks are simply unaware of the nuances of various insurance products and their risk-mitigation benefits, especially for the millions of SME clients.

The bulk of banc assurance business is currently sourced by insurers with help from their sales staff deployed at bank branches. The number of bank personnel trained to sell insurance with the knowledge of what is good for customers and what is not is minuscule. Despite insurers' efforts, the persistency rate of banc assurance - a measure of insured customers paying renewal premium - is poor, at about 50% in some PSBs, a poor reflection of their post-sale follow up.

The key reason for the state of affairs is lack of cross- selling culture in PSBs. With years of social banking orientation, bank managements find it tough to create a new business culture that aims to look at the customer's wallet in an integrated manner. In PSBs, the internal reporting and performance evaluation are not geared to encourage cross- selling. As a result, they earn less than 1 % of profits from distributing third-party products.

PSBs attribute the reason to shortage of staff at various levels. True, there is a vacuum in most banks following large- scale retirements, and there are daunting issues of training many new recruits on banking aspects. It is, therefore, unrealistic to expect the frontline staff to become experts at suggesting insurance solutions for multiple insurers in the near future.

While our extensive banking network should aid greater insurance penetration, this cannot be achieved by compelling all PSBs to become insurance brokers overnight. It has to be a nuanced exercise, with a supportive policy framework.

First, make a distinction between banks that have consciously entered the insurance business through equity JVs, and others that have remained plain distributors. RBI has allowed only large banks the equity route, relying on their risk management and other capabilities. These banks should, set an example by offering advice-based insurance solutions to customers for more than one insurer life - non- life and health - through their network. This category should include both PSBs and private banks that have set up insurance ventures.

Second, encourage such banks to recruit staff that would be only involved in cross-selling insurance, mutual funds and pension products. It is difficult to change the mindset of banking trained staff to be broking-oriented, including on claim settlements. New recruits governed by different service conditions and intensively trained is the answer, and they should be allowed to switch to mainstream banking upon a successful track record in broking. PSBs had recruited such specialist staff in the 1980s for rural banking operations, and many of them became capable generalist bankers.

 

Direction: Choose the word/group of words which is MOST OPPOSITE in meaning of the word/group of words printed in bold as used in the passage.

Minuscule

A)  microscopic      

B)  diminutive   

C)  minute             

D)  enormous 

E)  small