The Hindu Business Line : RRBs allowed to do insurance biz on referral basis

AFTER permitting Urban Co-operative Banks to conduct insurance business on a referral basis, the Reserve Bank of India has now extended this facility to Regional Rural Banks (RRBs) as well.

According to a press release from RBI, RRBs will now be permitted to perform insurance business on a referral basis, without any risk participation.

Under the referral arrangement, RRBs can provide physical infrastructure within some select branch premises to insurance companies for selling their products to the bank's customers. In return the banks earn fees on the basis of the premia collected.

The release said that RRBs wishing to do referral insurance business should comply with the Insurance Regulatory and Development Authority regulations and not force customers to opt for the product of a particular insurance company.

The period of agreement between the bank and the insurance company should initially be only for a period of three years. After that the bank can sign a longer-term contract, if it wishes, with the approval of its board.

All publicity material distributed by the bank should be displayed and there should be no connection between the banking services and use of the products, the release added.

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