RBI allows banks to act as Insurance brokers to increase insurance penetration

Jan 16, Seeking to increase insurance penetration in the country, the Reserve Bank of India has allowed banks to act as brokers for insurers, set up their own subsidiaries and also undertake referral services for multiple companies. In the guidelines for entry of banks into insurance business, RBI said that the banks may undertake insurance agency or broking business departmentally and or through subsidiary. The banks have also been allowed to set up subsidiaries and joint venture companies for undertaking insurance business with risk participation. They can also act as corporate agents without seeking prior approval from the RBI. However, they will have to comply with IRDA guidelines. There are 52 insurance companies operating in India; of which 24 are in the life insurance business and 28 are in general insurance business. In addition, GIC is the sole national reinsurer.