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The Finance Ministry has said that private sector banks too will have to sell insurance policies of multiple insurers only through the broking route.
The Ministry had earlier asked all public sector banks to start insurance broking — selling products of multiple insurance companies — from January 15.
In a closed door meeting on Tuesday, Financial Services Secretary Rajiv Takru met members of the Indian Banks’ Association (IBA) and indicated that the insurance broking mandate would be applicable to private banks too.
A Chief Executive Officer of a public sector bank, who did not want to be identified, said issues were raised relating to uneven playing fie field for public and private sector banks when it came to selling insurance products.
Takru made it clear that since sale of insurance products by banks via the broking route is a part of the Union Budget announcement by the Finance Minister, it is applicable to private banks as well. He said if private banks do not implement it, the regulator will have to issue a directive to them. The Chairman of the Insurance Regulatory and Development Authority, TS Vijayan, said the regulator is in favour of all scheduled commercial banks following the broking model since it is in the larger consumer interest.
KR Kamath, CMD of Punjab National Bank and Chairman of the IBA, said, “The whole idea is that we need to look at what is good for the customer and there is no dispute on that. But, the issue is how it needs to be done. So, instead of offering one company’s products, the bank should provide options to the customer and that can be done in different ways.”
“While each model has its own advantages and disadvantages, one particular model may not be the right way to do it. Along with that there are contractual obligations; different banks have their own joint ventures… all these points were discussed.”
Meanwhile, Takru announced the setting up of a working group to come up with an ‘acceptable solution’ to the issue of insurance broking model applicable to banks. The group will include members from the RBI, IRDA, insurers and senior bankers.
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