Private lenders may turn to other fee pools as IRDAI proposes insurance commission cuts
Private lenders are engaging with the regulator on IRDAI’s proposed insurance distribution norms, but are also preparing for the possibility of lower commissions. While the impact will vary across lenders, banks say they could see pressure on insurance fee income and are looking to offset it through higher volumes, other fee pools, product-mix changes and efficiency gains.
Axis Bank says it will take a medium-term view and look to alternative fee sources, higher insurance volumes and product-mix changes
RBL Bank expects 50–60% impact on about Rs 300 crore annual bancassurance income if the draft is implemented in its current form
AU SFB expects some headwind but is looking to forex, credit cards and trade finance to support fee income
HDFC Bank says the proposed commission cuts are “quite high” but sees scope through higher insurance volumes, persistency and cost efficiencies
IDFC First Bank expects FCNR savings, rate hikes and product agency income to broadly offset the insurance revenue loss
Ujjivan SFB says Q4 implementation could create “some stress”, but does not expect the draft to affect its committed numbers if implementation is later
JM Financial estimates Ujjivan’s insurance income contributed 19.2% of FY26 PBT, among the higher exposures across SFBs
Private sector lenders are assessing ways to offset a potential decline in insurance distribution income as the Insurance Regulatory and Development Authority of India (IRDAI) proposes lower commission payouts and tighter distribution norms. The impact, however, is expected to vary significantly across lenders depending on their dependence on insurance fees.
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