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how banks cross sell with loans

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If you visit a bank to apply for a personal or home loan, you might end up not just with a loan but also two additional products. This happens because banks and financial institutions are putting more focus on cross-selling


to their strong customer base. This cross selling strategy has gone wrong from consumer’s perspective since these add-ons make little economic sense from borrower’s perspective. It’s common to see salespeople misusing customer’s ignorance and up-selling products even though there is no value addition for the customer. Earlier, banks did not sell other products even though the customer was enquiring about them, as there was no incentive for the salesperson involved. Now, banks have introduced incentives for cross selling and it’s quite common these days that a salesperson would be simply pushing his agenda and getting the customer to pay for it. This push towards cross-selling by banks is aimed at increasing fee based income and retail disbursements.


Let us look at some of the add-ons being offered to borrowers and define some guide lines based on which they should accept or reject the offer.

Famous Cross Sold Products

The table below lists most of the famous cross sold products with different types of loans. Your agent might try to up sell these products for personal gains. It’s you who needs to decide if you want these add-ons or not. Before saying yes, carefully examine your current financial status as you might end up paying for the product which you do not need.

Type Of Loan

Cross Sold Product


Desired features

Word Of caution

Home Loan, Vehicle Loan

Loan Insurance/Payment Protection Insurance

This type of insurance protects your monthly loan payments if you become unemployed or suffer an accident or sickness. Loan protection insurance is available for home loan, car loan and sometimes for personal loans.

Insurance cover takes care of the EMIs in case of death, disability, unemployment etc

1. You have to pay high premium.

2. Be careful about the cover they provide.

3. You might have to pay a single premium for the protection which is very high.

Life Insurance

Generic Life Insurance (Term/Endowment, Money back)

Life cover is provided

If you already have substantial life and disability coverage insurance policies you do not need this. No need to pay extra premium.

Mutual Fund

Normal mutual fund products like debt, ELSS etc

Capital appreciation potential and tax saving

1. If you already have exposure in these products reject the offer.

2. Before saying yes, properly research about the return and fee structure of the scheme. Don’t apply if the returns are not good and you can get it cheaper from other sources.

Credit Card

Credit card of various types like Gold, Platinum etc

You get a credit card with no extra documentation and verification

1. You might overspend and get into debt trap.

2. There is a fear of theft.

3. Chances are you already own a credit card with same features and you do not need another.

Credit Card

Credit Card Insurance

Credit insurance can come in a variety of forms. The three main types are credit life, disability, unemployment

You get a coverage for demise, disability and unemployment

1. If you already have substantial life and disability insurance policies, you do not need this. Credit insurance may not be as cost effective and is not as flexible as traditional life insurance policies.

2. If you are not employed at the time of getting the unemployment insurance you are paying for a coverage that you are not using

3. Some policies are limited to age restrictions and the credit insurance sales person will often not ask your age but instead will opt for insurance on your behalf.

Personal Loan

Credit Card

Banks try to cross sell products and they will offer a credit card on personal loan or ask the person to open an account with them

You get a credit card with no extra documentation and verification

1. You might overspend and get into debt trap.

2. There is a fear of theft.

3. Chances are you already own a credit card with same features and you do not need another one.


Above discussion doesn’t intend to doubt the intent of the bank but aims at informing consumers regarding the incentivized up selling loophole. It’s not wrong on the part of banks to cross-sell various products with home, auto, personal loans and credit cards if the product is suitable for the customer. At the end of the day, banking is also a business and not social service. The real problem arises because of mis-selling intended for incentives and enhancement of fee based income.


It’s recommended to analyze one’s financial needs before approaching a bank for buying a financial product. Having clarity regarding your financial needs will save you from a lot of unwanted surprises in future.



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