In this episode, Monika delves into a significant move by the Indian government and financial regulator to address the mis-selling of insurance products by banks. At a recent banking event, Finance Minister Nirmala Sitharaman highlighted the need for banks to prioritize their core business—mobilising deposits and lending. She noted that aggressive insurance sales have indirectly increased borrowing costs for customers, signaling a call for reform. IRDAI Chairman Debashish Panda echoed this, urging banks to keep insurance sales secondary to their primary banking functions. Together, these statements hint at a potential shift in banking practices, putting customer needs above aggressive sales targets.

Monika explains how bank staff are incentivized to push high-commission products, like money-back or endowment policies, often at the expense of traditional fixed deposits. This has slowed deposit growth, with first-year insurance premiums via bank channels hitting Rs 81,000 crore in 2022-23. The push for change may depend on the RBI’s role, which is key to enforcing stricter guidelines and shielding consumers from misleading sales practices. Successful reforms could ease pressure on customers, especially those needing more traditional banking services.

The episode also covers the concept of the discount rate, a crucial financial tool for assessing investment value. Monika illustrates how the discount rate helps calculate the present value of future cash flows, aiding in financial planning. By comparing various investment options—from secure bank deposits to riskier equities—listeners learn how risk impacts expected returns. This segment aims to equip the audience with a clearer understanding of making well-informed investment decisions.

Listener questions span several financial scenarios. Megha (name changed) seeks advice on balancing transparency with her fiancé while safeguarding her assets. Vishwas, a freelancer, asks how to adapt the 3-account cash flow system for irregular income. Pooja from Bangalore shares her path to financial independence and seeks Monika’s thoughts on legacy planning as a single woman, discussing inheritance and charitable giving. These real-life cases provide practical insight into financial challenges and choices many face today.

Chapters:

(0:34 - 5:34) The government crackdown on insurance mis-selling

(5:35 - 7:49) Understanding the discount rate in personal finance

(7:53 - 12:21) Should you disclose your finances before marriage?

(12:25 - 15:43) How to implement the 3-account system as a freelancer?

(15:45 - 19:32) Legacy planning and charity goals for a single person

If you have financial questions that you’d like answers for, please email us at ⁠[email protected]⁠ 

Monika’s book on basic money management

⁠⁠⁠⁠https://www.monikahalan.com/lets-talk-money-english/⁠⁠⁠⁠

Monika’s book on mutual funds

⁠⁠⁠https://www.monikahalan.com/lets-talk-mutual-funds/⁠⁠⁠

Monika’s workbook on recording your financial life

⁠⁠⁠⁠https://www.monikahalan.com/lets-talk-legacy/⁠⁠⁠⁠

Calculators

⁠⁠⁠⁠https://investor.sebi.gov.in/calculators/index.html⁠⁠⁠⁠

You can find Monika on her social media @monikahalan. 

Twitter ⁠⁠⁠⁠@MonikaHalan⁠⁠⁠⁠

Instagram ⁠⁠⁠⁠@MonikaHalan⁠⁠⁠⁠

Facebook ⁠⁠⁠⁠@MonikaHalan⁠⁠⁠⁠

LinkedIn ⁠⁠⁠@MonikaHalan⁠⁠⁠

Production House: ⁠⁠⁠www.inoutcreatives.com⁠⁠⁠

Production Assistant:⁠⁠⁠ Anshika Gogoi⁠⁠