New Delhi, Dec. 3 (PTI): The IRDA today ruled out the possibility of allowing banks to become “insurance brokers” for selling products of more than one company.
“Banks can become corporate agent and sell products of only one insurance company. For selling products of more than one company, banks need to become broker for which the Banking Regulation Act needs to be amended,” IRDA chairman N Rangachary said on the sidelines of a banking summit here.
Virtually all the private insurers have tied up with one or more banks. LIC, for instance, has ties with Corporation Bank and Oriental Bank of Commerce, Aviva Life with Canara Bank, ABN Amro Bank, Prudential ICICI Life with Bank of India, Birla Sunlife with Bank of Rajasthan.
Although the spate of tie-ups, the IRDA chief said the concept of ‘bancassurance’ has not caught up till now in the country. Bancassurance would enable banks to sell insurance linked savings products.
“The Banking Companies Act permits banks to carry out only certain functions in the banking sector. In insurance sector, banks are allowed to take a maximum 49 per cent except for State Bank of India which was allowed to take 74 per cent,” Rangachary said referring to regulatory aspects.
He also dismissed claims that absence of a “super regulator” would pose any problems in the inter-mingling functions of banks and insurance companies in the country.
“If there is any overlapping, the high level committee on financial sector takes up those issues,” he said. Commenting on the performance of private insurers, Rangachary said all companies have to submit their business plans to IRDA and the regulator monitors them.