Bandhan Bank to face a Rs 200 crore hit from insurance norm change
Facing an anticipated Rs 200 crore dip in income from proposed cuts to insurance commissions, Bandhan Bank's managing director, Partha Pratim Sengupta, warns of potential ripple effects across the banking industry. To counter these challenges, the bank is set to reshape its business model and focus…
Kolkata: Bandhan Bank is likely to face a Rs 200 crore hit in its annual income if the proposed lower commissions on insurance distribution comes to effect, while the bank is shifting its business strategies to compensate for the loss. The proposal will affect the entire banking industry as Bandhan Bank is not isolated, managing director Partha Pratim Sengupta said, responding to media queries after announcing the quarterly earnings. He said that the bank is making changes in the business model and will shift focus on mutual fund distribution.
We have several levers to mitigate the loss. Weare introducing new areas in our product suit, he said. The Insurance Regulatory & Development Authority proposed a change in third-party product distribution which would lower commission income for banks.
Banks have reached out to IRDA on this. The Kolkata-based lender netted Rs 156 crore from distributing third-party products in the second quarter with a majority of its coming from insurance sales. Separately, on the drought in Karnataka and Maharashtra, Sengupta said that the risk is manageable as the bank has negligible exposure in these two states.
About 1% of its unsecured emerging enterprise business comes from Karnataka and 2.6% from Maharashtra. There is no substantial impact likely, the MD said.
Source: ET Banking & Finance
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