India, Feb. 14 -- A few days ago, the Reserve Bank of India (RBI) issued draft guidelines for banks against mis-selling of products, and what constitutes irregular selling of products, even with complete customer's consent. This nudged investors to sell insurance stocks, and most of them were down by one per cent the day after the guidelines were posted on the central bank's website. Although the new rules, which will be incorporated after feedback by the stakeholders, impose restrictions on the banks, put huge penalties (including the payment of the entire extra amount charged) on them, and talk about re-training and re-skilling the staff, the impact will be felt by the insurers for several reasons.

First, according to a media report, "...