August 25, 2015
Insurers see payments banks (PBs), a new form of banks to be established in the country, as a boon as they would give rise to cross-selling opportunities that would help deepen insurance penetration in rural areas.
The Reserve Bank of India, which is the country’s central bank, last week gave in-principle approval to 11 applicants to set up payments banks. With these licences, the differentiated banks can sell third-party insurance products and mutual funds. Designed to boost financial inclusion, payments banks will allow transfers and take deposits up to a limit of INR100,000 (US$1,504), and are expected to reach customers predominantly through mobile phones. “For any new network like payments banks, there will be an opportunity for us to grow our business and there could be some online sale opportunities,” SBI Life Managing Director and Chief Executive, Mr Arijit Basu, told the Press Trust of India.
General insurer ICICI Lombard’s Head of Underwriting and Claims, Mr Sanjay Datta, said: “Entities that are able to distribute insurance products to bring down insurance under-penetration are welcome. These new distribution channels are also likely to bring our costs down as they will be working on a digital platform. We are looking at increasing our business in the low-ticket segment.”
Mr Nageshwar Rao, Managing Director and CEO of National Securities Depository Limited (NSDL), which is among those entities that won a payments bank licence, said: “Once our payments bank becomes operational, it will enable our customers to make their premium payment directly from their bank accounts,” NSDL maintains electronic insurance account services where a policyholder keeps all insurance policies in a single online account.