IRDAI has imposed a Rs 1 crore penalty on IndusInd Bank for failing to establish a dedicated, policyholder-facing grievance redressal framework for insurance customers, relying instead on generic banking mechanisms. The bank also submitted screenshots of a supposedly functional grievance portal that, upon test verification by IRDAI, proved non-functional and failed to generate complaint acknowledgments, according to The Hindu and TaxGuru reporting on the IRDAI order dated September 11, 2026.

What went wrong

  • No insurance-specific grievance channel: IndusInd Bank, operating as a corporate agent, did not create an insurance-specific IVR or website channel. Policyholders were directed to generic banking grievance mechanisms instead.
  • Non-functional portal submitted as evidence: During regulatory proceedings, the bank Principal Officer promised a simplified grievance mechanism on the website home page by June 30, 2026. Screenshots were submitted to IRDAI showing a supposedly functional portal. When IRDAI test-verified the portal, no acknowledgment was generated at any stage.
  • Renewal notice deficiencies: The bank also had issues with renewal notices and disclosures to the Authority and on its website regarding its registration and role as an insurance intermediary.

What IRDAI directed

Beyond the Rs 1 crore penalty under Section 102 of the Insurance Act 1938, IRDAI directed IndusInd Bank to strengthen its grievance redressal mechanism to ensure every complaint generates an acknowledgment number immediately upon lodging. The bank must place the order before its Board and submit an Action Taken Report within 90 days. IRDAI also issued cautions and advisories on renewal notice deficiencies and disclosure gaps.

Why this matters to you

If you hold an insurance policy purchased through a bank, the bank role as a corporate agent means it is responsible for servicing your policy and handling your complaints. The IndusInd Bank case shows that a bank cannot simply redirect you to its general customer service desk for insurance grievances. Every insurance policyholder is entitled to a dedicated, accessible channel to lodge and track complaints. If your bank-sold insurance policy has a servicing issue, check whether the bank offers an insurance-specific grievance mechanism. If it does not, you have regulatory backing to demand one.

The bigger pattern

This is the third Rs 1 crore penalty in a single week. IRDAI fined ICICI Lombard for outsourcing lapses and Canara HSBC Life for mis-selling to an 88-year-old. The pattern is clear: IRDAI is enforcing corporate governance and policyholder protection rules aggressively, and banks acting as insurance intermediaries are not exempt. For the industry, the signal is that grievance redressal is not a box-ticking exercise; it must work, and the regulator will test it.