In a aim to increase insurance penetration within country, the Reserve Bank of India on Thursday permitted banks to set up insurance joint ventures on risk participation basis and also to undertake insurance business as agents as insurance companies on fee basis, without any risk participation by banks and their subsidiaries.
The Finance Minister in the budget speech 2013-14 announced that banks will be permitted to act as insurance brokers.
"It is advised that banks may undertake insurance business by setting up a subsidiary/joint venture, as well as undertake insurance broking/ insurance agency/either departmentally or through a subsidiary". said in the notification.
"However, it may be noted that if a bank or its group entities, including subsidiaries, undertake insurance distribution through either broking or corporate agency mode, the bank/other group entities would not be permitted to undertake insurance distribution activities, ie, only one entity in the group can undertake insurance distribution by either one of the two modes mentioned above", added further.