IndusInd Bank showed IRDAI screenshots of a grievance portal that didn't work

An IRDAI onsite inspection in June 2023 found that IndusInd Bank, one of India's largest private banks and a registered corporate agent selling multiple insurers' policies, had no dedicated grievance redressal mechanism for its insurance policyholders. Its website displayed a grievance policy written for banking customers, with no insurance-specific channel, escalation path or information telling policyholders how complaints would be handled.

The bank's defence was that its general banking machinery already covered insurance: complaints were captured in its CRM system, monitored against turnaround times, and its toll-free IVR could take them. IRDAI rejected this outright — a generic banking grievance system cannot substitute for a policyholder-facing insurance channel, and a corporate agent's duty to protect insurance customers is distinct and non-delegable under Regulation 20(1) of the Corporate Agents Regulations.

The fatal move came during enforcement. At and after its personal hearing, the bank represented that its grievance mechanism had been simplified and made accessible on its website, furnishing screenshots as proof. IRDAI lodged a test complaint through that portal: no acknowledgement number, SMS or email came back. The regulator concluded the mechanism had been neither established nor implemented, noted the default was still continuing, and imposed a ₹1 crore penalty under Section 102 of the Insurance Act.

Four other charges travelled alongside: late disclosure of RBI, SEBI and Enforcement Directorate penalties (including two ₹1 crore RBI fines and a ₹1 crore SEBI fine), and inadequate website disclosure of its intermediary registration — drawing cautions and advisories, while a fifth charge was not pressed.

₹1 crore penalty under Section 102 of the Insurance Act, plus cautions and advisories on three further charges, with the default still continuing at order date

The bank treated insurance distribution as pure sales volume and never built the after-sales obligation that comes with a corporate agent licence — service infrastructure lagged years behind revenue.

It argued a shared banking grievance system was equivalent, when the regulation demands an insurance-specific, policyholder-facing channel with its own escalation and reporting framework.

When cornered, it chose to demonstrate compliance with screenshots rather than build a working portal — turning a fixable inspection finding into evidence of misrepresentation before the regulator.

Even penalties from other regulators went unreported to IRDAI within the required window, signalling that regulatory liaison itself was treated as an afterthought.

Compliance demonstrated by artifact rather than by function will be tested: a regulator that clicks through your portal finds out in one session what your paperwork hid for three years.

The order, announced on 11 September 2026, directs IndusInd Bank to strengthen its grievance mechanism so every policyholder complaint immediately generates an acknowledgement number, and to file compliance. Cautions and advisories keep separate scrutiny on renewal notices, disclosure of other regulators' actions, and website disclosures. For a bank still repairing its reputation after the 2025 derivatives scandal, the order documents a compliance shortfall in an unglamorous corner too — insurance customers had no working way to complain for roughly three years.