Stringent norms for public sector bank’s entry into insurance sector
Mumbai: The finance ministry is believed to be against encouraging the public sector banks into the insurance sector. The ministry is currently finalising the norms for PSU bank’s entry into the insurance sector. The guidelines will be announced over the next fortnight

Even though a PSU bank is technically qualified to make a foray into insurance business, by fulfilling all conditions laid down by the Reserve Bank of India, the government may not allow them to do so. The ministry of finance is reported to be of the view that the very purpose of privatising the insurance business will be defeated, if the public sector players crowd there.

The Reserve Bank of India (RBI) has so far only allowed the State Bank of India in the public sector to float an insurance subsidiary, holding a 74 per cent stake. However, the bank is yet to move the Insurance Regulatory Development Authority (IRDA). The RBI has stipulated a minimum capital requirement of Rs 100 crore, a net worth of Rs 500 crore and a three-year profit record as part of the banks’ insurance entry norms.
Back to News Review index page