The Hindu Business Line : RBI terms for NBFCs insurance agency biz

THE Reserve Bank of India today announced that non-banking finance companies (NBFCs) registered with it might take up insurance agency business on a fee basis and without risk participation, without its approval.

However, the permission comes with the following conditions, stated a circular issued by RBI to all non-banking finance companies and residuary non-banking companies: (i) The NBFCs should obtain requisite permission from the Insurance Regulatory Development Authority (IRDA) and comply with the IRDA regulations for acting as `composite corporate agent' with insurance companies. (ii) They should not adopt any restrictive practice of forcing its customers to go in only for a particular insurance company in respect of assets financed by them. The customers should be allowed to exercise their own choice. (iii) As the participation by a NBFC customer in insurance products is purely on a voluntary basis, it should be stated in all publicity material distributed by it in a prominent way. There should be no `linkage' either direct or indirect between the provision of financial services offered by the NBFC to its customers and use of the insurance products. (iv) The premium should be paid by the insured directly to the insurance company without routing through the NBFC. (v) The risks, if any, involved in insurance agency should not get transferred to the business of NBFC.

However, NBFCs intending to set up insurance joint ventures with equity contribution on a risk participation basis or making investments in insurance companies, would continue to obtain the prior approval of RBI.

More Stories on : NBFCs | Insurance | RBI & Other Central Banks

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
After 25 years, ICAI revises accounting norms `Preface'

No exposure cap for bank advances for ESOP, IPO

Mobile ringing in numerology

MF investments point to hardening interest rates

IPCL: Sale document to be filed this week

Private banks ahead of PSBs in advances

RBI terms for NBFCs insurance agency biz

Fallout of broking firms' downgrade — ICICI Bank share price moves down 8 pc

Shoppers' Stop IPO in 3 months