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India – Insurance Snapshots.

28 January, 2014

 


Pursuant to the IRDA (Licensing of Banks as Insurance Brokers) Regulations, 2013, dated July 19, 2013 (‘Regulations’), RBI has issued draft guidelines dated November 29, 2013, in relation to the entry of banks into the insurance broking business (‘Draft Guidelines’). In terms of the Draft Guidelines, any bank desirous of offering insurance broking services is required to obtain the prior approval of RBI. While the Regulations impose specific obligations on such banks (including maintenance of professional indemnity insurance cover, compliance with deposit requirements and preparation of separate books of accounts for broking operations), the Draft Guidelines have also introduced eligibility criteria for banks to offer insurance broking services including inter alia, net worth requirements, capital to risk ratio and profitability and NPA levels (based on published accounts as on March 31 of the previous year), including:


i. any violation of the Regulations or the conditions imposed under the Draft Guidelines may invite prescribed penal consequences; and
ii. the restriction on foreign investment in an insurance broking entity (currently capped at 26% of the share capital of such broking entity) does not apply in the context of banks acting as insurance brokers and such banks will be subject to limits applicable to the banking sector as prescribed by RBI from time to time.

 

AZB

 

For further information, please contact:

 

Zia Mody, AZB & Partners
[email protected]

 

Abhijit Joshi, AZB & Partners 
[email protected]


Shuva Mandal, AZB & Partners 
[email protected]

 

Samir Gandhi, AZB & Partners
[email protected]


Percy Billimoria, AZB & Partners 
[email protected]

 

Aditya Bhat, AZB & Partners 
[email protected]

 

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