Millennium Post

Bank honchos tell RBI of worries about insurance broking diktat

‘We requested the Reserve Bank not to make broking compulsory and continue with the current agency model,’ R K Dubey, chairman and managing director of Canara Bank, whose board had reportedly rejected the proposal, told reporters on the sidelines of an IBA function.

Asking banks to compulsorily act as insurance brokers and discontinue their banc assurance model also has some legal issues, he said, also questioning if the move will help achieve the aim of deepening insurance penetration.

The bankers will be meeting Financial Services Secretary Rajiv Takru here on Tuesday to air their reservations, Dubey said, adding that he hopes for some amicable solution.

Other bankers who were present at the meeting (which also had representatives from insurance watchdog Irda) included Chanda Kochhar of ICICI Bank, KV Kamath of PNB and Shikha Sharma of Axis Bank. Takru had last week said the government was asking banks to phase out bancassurance model gradually, not immediately.

After RBI issued a notification on 29 November last year allowing banks to enter insurance broking, the Finance Ministry asked banks to begin switching to the broking model and start phasing out the bancassurance model.

The Indian Banks Association last fortnight wrote to the Finance Ministry saying the management of each bank should be given the freedom to decide whether they would be competent enough to sell products of more than one insurer.
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