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Banks, SFBs raise IRDAI insurance commission concerns through IBA, ASFBI; seek transition time

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Banks, SFBs raise IRDAI insurance commission concerns through IBA, ASFBI; seek transition time

Banks, SFBs raise IRDAI insurance commission concerns through IBA, ASFBI; seek transition time

Banks and small finance banks are engaging with the Indian Banks’ Association (IBA) and the Association of Small Finance Banks in India (ASFBI) over IRDAI’s proposed insurance distribution reforms, with lenders seeking time to adjust to any changes. JM Financial estimates SFBs are the most exposed banking segment, with insurance income accounting for 13–25 basis points of assets.

Banks are routing feedback through IBA, while SFBs are also engaging through ASFBI

Axis Bank says lenders could get 6–9 months to prepare and is assessing mitigation through volumes, product mix and other fee income

SFBs have the highest insurance-income exposure relative to balance sheets, while Axis, Bandhan, DCB and IDFC First are among the more exposed private banks

SBI is expected to see relatively less disruption as SBI Life is already within the EOM framework

Banks and small finance banks are engaging with industry bodies including the Indian Banks’ Association (IBA) and the Association of Small Finance Banks in India (ASFBI) over the Insurance Regulatory and Development Authority of India’s (IRDAI) proposed changes to insurance distribution commissions, as lenders assess the potential impact on fee income and the viability of insurance distribution. While banks are also making individual submissions to the insurance regulator, several lenders are routing their concerns through industry bodies as the consultation process continues. A mid-sized private bank CEO told ETBFSI that the bank has already sent its representation to IBA, while the Association of Small Finance Banks in India (ASFBI) is also preparing a representation.


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