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Bandhan Bank sees Rs 200 crore annual hit from IRDAI distribution draft; seeks cost linked commission

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Bandhan Bank sees Rs 200 crore annual hit from IRDAI distribution draft; seeks cost linked commission

Bandhan Bank sees Rs 200 crore annual hit from IRDAI distribution draft; seeks cost linked commission

Bandhan Bank expects the proposed IRDAI distribution norms to impact its third party income by around Rs 200 crore annually, MD & CEO Partha Pratim Sengupta told ETBFSI and that the bank has represented directly to the regulator seeking recognition of the costs, technology investments and effort involved in insurance distribution.

Bandhan Bank currently generates around Rs 500–600 crore annually from distributing third-party products, with management estimating a potential Rs 200-crore hit if the proposed norms are implemented in their current form.

The bank has made an individual representation directly to IRDAI and is seeking a commission structure that factors in the effort and costs involved in distribution, including technology investments required to prevent mis-selling.

Bandhan said its insurance business is predominantly retail and concentrated in semi-urban and rural markets, and it does not undertake credit-linked insurance.

The bank plans to mitigate the impact by shifting its insurance strategy towards Tier-2, Tier-3 and Tier-4 cities, increasing mutual fund distribution and building other fee-income streams through wholesale banking, trade finance and forex.

Kolkata based private sector lender Bandhan Bank expects the proposed changes to IRDAI's insurance distribution norms to result in a potential hit of around Rs 200 crore to its annual third-party income, the lender is however looking to alter its insurance distribution strategy and build alternative fee-income streams to offset the impact. The bank currently generates around Rs 500–600 crore annually from distributing third-party products, according to Managing Director & CEO Partha Pratim Sengupta.


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