Banks are now Insurance brokers
Till now, the brokers were the dedicated intermediaries for insurance distribution. With the help of this regulation, the business will be carried out department wise in bank. Now banks can easily distribute the policies of multiple insurance policies. Even the foreign owned banks can become insurance brokers.
The bank can sell multiple insurance policies subjected to two conditions. In the first one, bank will have to take clearance from RBI and the desire of the lender to itself become the broker.
The application to allow banks to become insurance agents was first announced by the finance minister in his February 2013 Budget speech.
This proposal would provide cost effective distribution network to the insurance industry. Today banks have played a very important role in generating huge amount of business for Life Insurance Industry. For instance, HDFC bank generates half of its business from its insurance associate HDFC standard Life.
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