Rel Life has zero tolerance towards money laundering

The recent expose by Cobrapost has put the spotlight back on the regulatory framework dealing with money laundering. Despite the talk of loose ends and breach of trust, Anup Rao, CEO, Reliance Life, is pretty clear that India has some of the best regulations in place. The question is one of adherence and nothing else, he feels. In an interview with
Aswathy Varughese, he minces no words about the priorities and what needs to be done to tackle the challenges, going ahead.          

What will be your focus?
Our focus will be more on growth and market share. Improving productivity is another agenda and we are hopeful of achieving our targets. The product mix would be maintained at 80:20 wherein we have the maximum of traditional products and the rest unit-linked plans.

With the new set of product design guidelines, how will it impact your business?
Our product mix will not change and we are going to continue focusing on traditional plans. Industry as a whole continues selling traditional plans. The impact will be more on the number of agents who are going to stay with insurers because they find the commission structure not going to be favourable under the new regime... This is going to be a challenge for us.

So, you expect more agent dropout in coming months?
They may not find it viable because of the commission structure. But those who are staying back in the profession will take it seriously and take a longer-term view... We may find it difficult to get agents because of the reduced commission structure.

Do you think the proposed guidelines on bancassurance will help the industry?
Always, insurance companies have bancassurance partners who will get a disproportionate advantage. Those which already have bancassurance partners will not grow as much with the proposed regulations. We are waiting for more clarity. Eventually, banks will end up becoming brokers.

Against the backdrop of Cobrapost expose, would you agree with the fact that maximum mis-selling is happening through a bancassurance channel?
Banks are great supermarkets as far as financial products are concerned. A customer will get a variety of products there. Banks are a huge opportunity to engage with customers.

Someone who has taken a loan from a bank would be a potential customer because he would be having his savings and fixed deposits there. When a product is sold through banks, you can maintain good persistency.

Do you think that some gaps still need to be bridged in the insurance sector to prevent money laundering?
People have done a lot of loose talk and they claim that they have done through insurance products. But when I spoke to other CEOs, that’s not turning out to be true. None of them told that any such transactions happened. Regulators have already prescribed strong guidelines and they have done a fairly good job making sure everything is in place.

Having said that, what they have captured or claimed, it’s a complete breach of trust. We take serious measures on these things. We did investigate the matter internally and those employees are no longer with us. We do not take any huge transaction through cheques and the question of any suspicious transactions does not exist, and we have zero tolerance for this, in any case.

What is the regulator’s stance now?
The primary report has already been submitted to the regulator and we are in the process of submitting the final report. They have started visiting the branches. The investigation by the regulator is still going on.