Press Esc to close
Tuesday 02 September 2014
News updated at 12:06 AM IST
Weather
Max: 27.4°C
Min : 19.4°C
In Bangalore
Sunny day

Banks can only sell standard insurance products through branch

New Delhi, Sept 9, 2013 (PTI):

Banks will be allowed to sell only standard or vanilla insurance products through their branches following the relaxation of brokerage norms by the sectoral regulator Irda, said a finance Ministry official.

The move is aimed at ensuring that lenders do not sell customised insurance products where risk assessment is more complex.

It will also address various concerns of the Reserve Bank, including those pertaining to conflict of interest. RBI does not want banks to undertake new risk in the form of insurance broker.

"Products with same features will not only prevent mis- selling but also ensure that customers can chose a product based on the performance and efficiency of the insurer," the official said.


Irda will ensure that all products sold through banks are standardised in terms of features and commission structure, the official added.

A broking licence will allow a bank to sell products of multiple insurance firms, compared with the current bancassurance model that allows lenders to sell products of just one life and non-life insurance company.

Banks have wide network of delivery channel, over 1 lakh branches, which can be leveraged to increase insurance penetration in the country.

Finance Minister P Chidambaram in his budget speech this year had said: "Banks will be permitted to act as insurance brokers so that the entire network of bank branches will be utilised to increase penetration."

Life insurance penetration in the country is as low as 4.4 per cent of GDP.
Last month, the Insurance Regulatory and Development Authority (Irda) notified rules allowing banks to act as brokers of insurance companies, a process termed as bancassurance.

As per the norms, there is no capital requirement for insurance broking business carried out by banks, according to Irda (Licencing of Banks as Insurance Brokers) Regulations, 2013.

To qualify for the licence, each bank will have to have the principal officer - an officer of general manager or equivalent category, who is appointed exclusively to carry out the functions of an insurance broker.

The licence, once issued, will be valid for three years from the date of issue, it said, adding that the renewal of licence can be applied 30 days before expiry of licence.

Every insurance broker will, before the commencement of the business, deposit and keep deposits with any scheduled bank as sum of Rs 50 lakh, it said.

Go to Top

Photo Gallery
President Pranab Mukherjee grants degree to a student at the 14th convocation of the University...

President Pranab Mukherjee grants degree to a student at the 14th convocation of the University...

Fireworks on the occasion of 410th installation anniversary of Sri Guru Granth Sahib, the holy...

Fireworks on the occasion of 410th installation anniversary of Sri Guru Granth Sahib, the holy...

Left Front activists take part in a rally to observe anti-imperialist day in Kolkata on...

Left Front activists take part in a rally to observe anti-imperialist day in Kolkata on...

Flood water flows through Srisailam dam after its four crest gates were opened in Kurnool on...

Flood water flows through Srisailam dam after its four crest gates were opened in Kurnool on...

BJP president Amit Shah during a visit to Sree Padmanabhaswamy temple in Thiruvananthapuram on...

BJP president Amit Shah during a visit to Sree Padmanabhaswamy temple in Thiruvananthapuram on...

Prime Minister Narendra Modi shakes hands with Japanese Minister of Foreign Affairs Fumio...

Prime Minister Narendra Modi shakes hands with Japanese Minister of Foreign Affairs Fumio...

Actress & BJP MP from Chandigarh Kirron Kher speaks during a seminar on...

Actress & BJP MP from Chandigarh Kirron Kher speaks during a seminar on...

Prime Minister Narendra Modi and Japan's Prime Minister Shinzo Abe makes a toast during a banquet...

Prime Minister Narendra Modi and Japan's Prime Minister Shinzo Abe makes a toast during a banquet...

Congress president Sonia Gandhi prays in a temple during a visit to her constituency Rae Bareli...

Congress president Sonia Gandhi prays in a temple during a visit to her constituency Rae Bareli...

Congress president Sonia Gandhi in a village hut during a visit to her constituency Rae Bareli on...

Congress president Sonia Gandhi in a village hut during a visit to her constituency Rae Bareli on...

Copyright 2014, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bangalore - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523