Reserve Bank of India on 15 January 2015 issued final guidelines for banks to act as insurance brokers. he banks were allowed to look forward for participation in insurance business in accordance to Union Government’s notification in which it allowed banks to do business of insurance under Section 6(1)(o) of the Banking Regulation Act, 1949.
Banks setting up a subsidiary or joint venture (JV) for undertaking insurance business with risk participation:
The criteria is
a) The net worth of the bank should not be less than 1000 crore rupees
b) The CRAR of the bank should not be less than 10 percent
c) The level of net non-performing assets should be not more than 3 percent
d) The bank should have made a net profit for the last three continuous years
e) The track record of the performance of the subsidiaries, if any, of the concerned bank should be satisfactory
Banks undertaking insurance broking/corporate agency through a subsidiary or joint venture:
The criteria are
a) The net worth of the bank should not be less than 500 crore rupees after investing in the equity of such company
b) The CRAR of the bank should not be less than 10 percent
c) The level of net non-performing assets should be not more than 3 percent
d) The bank should have made a net profit for the last three continuous years
e) The track record of the performance of the subsidiaries, if any, of the concerned bank should be satisfactory
NET WORTH- Net worth is the difference between the asset and the liability of an individual or a company. A high net worth relates to good financial strength and ultimately good credit rating of an individual or a company. Similarly a low or negative net worth will relate to a weaker financial strength and a lower credit rating, thus directly affecting the individual's or the company's ability to raise funds from the market.
Banks setting up a subsidiary or joint venture (JV) for undertaking insurance business with risk participation:
The criteria is
a) The net worth of the bank should not be less than 1000 crore rupees
b) The CRAR of the bank should not be less than 10 percent
c) The level of net non-performing assets should be not more than 3 percent
d) The bank should have made a net profit for the last three continuous years
e) The track record of the performance of the subsidiaries, if any, of the concerned bank should be satisfactory
Banks undertaking insurance broking/corporate agency through a subsidiary or joint venture:
The criteria are
a) The net worth of the bank should not be less than 500 crore rupees after investing in the equity of such company
b) The CRAR of the bank should not be less than 10 percent
c) The level of net non-performing assets should be not more than 3 percent
d) The bank should have made a net profit for the last three continuous years
e) The track record of the performance of the subsidiaries, if any, of the concerned bank should be satisfactory
NET WORTH- Net worth is the difference between the asset and the liability of an individual or a company. A high net worth relates to good financial strength and ultimately good credit rating of an individual or a company. Similarly a low or negative net worth will relate to a weaker financial strength and a lower credit rating, thus directly affecting the individual's or the company's ability to raise funds from the market.
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