Banks are no more considered as the storehouses of money. In the present era of globalization, they are expected to provide a wide array of financial services. They not only provide loans but also cater to the contemporary and ever-changing needs of both the business organizations and individuals. With the changes announced by the Reserve Bank of India during 2000-01, commercial banks were permitted to undertake insurance business. Since then, bancassurance has been expanding. Bancassurance, in simple terms, is pursuance of insurance business by commercial banks. Looking at the vast potential of insurance business in India, many banks have entered into this sphere. The article discusses some aspects of bancassurance.

Insurance business has been quite flourishing in the past few years. After the the economic reforms, there has been a paradigm shift from economic organization to a consumer-oriented organization in the insurance industry, which has forced the operators to enter into fierce competition. The insurance companies are looking for novel ways to capture the market and bancassurance has emerged as an effective distribution channel for the insurance products. The insurance companies are either selling their products through banking network or the banks have initiated steps to develop and sell insurance products.

Bancassurance is nothing but an alliance between a bank and an insurance-provider. It is a kind of service that fulfils the need of banking as well as insurance. Bancassurance has envisaged a phenomenal growth in India. The burgeoning middle-class segment has an immense potential for the growth of the finance sector, specifically the insurance industry.Indian banks have more than 22 crore account holders. It is estimated that through bancassurance, banks will earn a fee-based income somewhere in the vicinity of Rs. 22,000 cr. It is also true that Indian public sector banks have more than 90% share in banking network with around 45,000 branches across the country.

Banks are also looking for opportunities to increase their revenue. Banks and financial institutions have collaborated with foreign insurance companies. SBI Life, a joint venture between State Bank of India and Cardiff of France, is a prominent operator in banc assurance. The joint venture partners of Bajaj Allianz operates in more than 70 countries and serves around 65 million customers through its international subsidiary network. Other operators in Indian insurance industry are ICICI Prudential, HDFC Standard Life, Metlife India, Aviva, Birla Sunlife, ING Vysya, etc. Today, India, with a vast uninsured population, is the focus of many insurance companies of the globe and bancassurance seems to be a prominent way of capturing the market.

Professional Banker Magazine, Bancassurance, Liberalization, Privatization, Globalization, LPG, Reserve Bank of India, Indian Insurance Industry, ICICI Prudential, HDFC Standard Life, Metlife India, Aviva, Birla Sunlife, ING Vysya, Business Environment, Financial Services Market.