BANCASSURANCE: A FINANCIAL STRATEGIC GROWTH MODEL FOR BANKS

ABSTRACT

In the post-recession it is the question for survival and growth for any sector in general and banking sector in particular. Thus Bank Insurance Model (BIM) or Bancassurance is a financial strategy for survival and growth for this sector. In this paper we attempt to explore the scope for Bancassurance models as feasible source of sustainable income to banking sector for their growth and survival strategy. To exploit the synergy for growth in Indian contest it will definitely be a successful strategy for the banking company. As India having the largest banking network on the one hand and lower insurance penetration and insurance density on the other hand, this financial strategy may result good for both the banking and insurance company. While implementing this strategy, the legal issues are also taken into consideration. The role of banking and insurance company regulator will be the deciding factor for successful implementation of this strategy. The concept of Bancassurance would turn out to be a norm for future banking and insurance business in India and it would be a ’win-win situation’ for all the parties involved - the customer, the insurance companies and the banks. Bancassurance - a term coined by combining the two words bank and insurance (in French) -connotes distribution of insurance products through banking channels. Bancassurance encompasses terms such as ’Allianz’ (in German), ’Integrated Financial Ser-vices’ and ’Assure banking’. This concept gained currency in the growing global insurance industry and its search for new channels of distribution. Bancassurance is the process through which insurance products are sold to customers at their local banks. With banking network of 65,000 branches serving more than 300 million retail banking customers, insurance can be available at affordable prices to people even in remote corners of the country. But it is only one part of opportunities of retail banking in India by selling insurance product. For taking challenges we go through by present research of Bancassurance’ Retail Relationship Banking Bancassurance Opportunity’. The financial liberalisation and financial innovations have drawn the worlds of banking and insurance closer together. Therefore, banks dealing in insurance products have increasingly become accepted norm rather than exception in India.

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