RBI issues guidelines for entry of Banks into Insurance Business
Banks require prior approval of RBI for setting up a subsidiary/JV. Accordingly, banks desirous of setting up a subsidiary for undertaking insurance broking/corporate agency and which satisfy the eligibility criteria (as on March 31 of the previous year) given below may approach Reserve Bank of India for approval to set up such subsidiary/JV:
a) The net worth of the bank should not be less than Rs.500 crore after investing in the equity of such company;
b) The CRAR of the bank should not be less than 10 per cent;
c) The level of net non-performing assets should be not more than 3 per cent.
d) The bank should have made a net profit for the last three continuous years;
e) The track record of the performance of the subsidiaries, if any, of the concerned bank should be satisfactory.
As hitherto, RBI approval would also factor in regulatory and supervisory comfort on various aspects of the bank’s functioning such as corporate governance, risk management, etc.
3. Banks undertaking corporate agency functions/broking functions departmentally
Banks need not obtain prior approval of the RBI to act as corporate agents on fee basis, without risk participation/undertake insurance broking activities departmentally, subject to IRDA Regulations, and compliance with the conditions given in the Annex.
4. Banks undertaking referral services
In terms of IRDA (Sharing of Database for Distribution of Insurance Products) Regulations 2010, no bank is presently eligible to conduct insurance referral business.
<< GO BACK TO PAGE 1
Check out the exclusive section on Insurance Click here