The Hindu : Insurance: Region-wise tie-up with banks planned

Online edition of India's National Newspaper
Friday, Apr 19, 2002

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Insurance: Region-wise tie-up with banks planned

By Our Staff Reporter

CHENNAI APRIL 18. The Insurance Regulatory and Development Authority of India (IRDA) is evaluating a proposal to allow insurance companies to have region-specific tie-up with banks for distributing their products. At present, banks can act as corporate agents for only one life insurance and non-life insurance company.

The Chairman of IRDA, N. Rangachary, in his inaugural address at a national seminar on Bancassurance, organised by the Indian Institute of Bankers here today said if banks wanted to have more flexibility, they could float a separate entity and act as brokers. In which case, banks would have to undertake performance guarantee and meet all solvency requirements. As per the proposed Brokers Regulation Act, which was yet to come into effect, banks would be required to float a separate company with a minimum paid-up capital of Rs. 1 crore. The IRDA chief also ruled out any change in allowing banks to sell insurance products of more than one insurance company at the moment. He also said that there would be a `congruence of these two giant institutions (banks and insurance companies)' over seven to ten years in India. However, Cherian Varghese, Chairman and Managing Director, Corporation Bank felt that IRDA should permit banks to offer insurance products of more than one company.

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