Bancassurance – The Indian Experience

  • C Chelladurai Assistant Professor of Commerce, VHNSN College (Autonomous) , Virudhunagar
Keywords: Physical Infrastructure, Insurance Products, Competition and Squeezing of Interest Rates, Financial Services Industry, Leadership Position in Bancassurance


Reserve Bank of India (RBI) has recognized "bancassurance" wherein banks are allowed to provide physical infrastructure within their select branch premises to insurance companies for selling their insurance products to the banks’ customers with adequate disclosure and transparency, and in turn earn referral fees on the basis of premia collected. This would utilize the resources in the banking sector in a more profitable manner. Bancassurance can be important source of revenue. With the increased competition and squeezing of interest rates spreads profit of they are likely to be under pressure. Fee based income can be increased through hawking of risk products like insurance. There is enormous potential for insurance in India and recent experience has shown massive growth pace. A combination of the socio-economic factors is likely to make the insurance business the biggest and the fastest growing segment of the financial services industry in India. However, before taking the plunge in to this new field, banks as insurers need to work hard on chalking out strategies to sell risk products especially in an emerging competitive market. However, future is bright for bancassurance. Banks in India have all the right ingredients to make Bancassurance a success story. They have large branch network, huge customer base, enjoy customer confidence and have experience in selling non-banking products. If properly implemented, India could take leadership position in bancassurance all over the world. Hence, the present study focuses on BANCASSURANCE – THE INDIAN EXPERIENCE and the study based on both Primary and Secondary Sources.

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