What changed
Earlier, only scheduled UCBs with a minimum net worth of Rs 50 crore could act as corporate agents for insurance. Now, all UCBs (scheduled or not) registered in states that have signed an MoU with RBI or under the Multi-State Co-operative Societies Act, 2002 can do so with a net worth of just Rs 10 crore, provided they are not Grade III or IV. Banks in non-MoU states continue under the old norms.
What it means for you
This opens a fee-based income stream for a much larger set of UCBs, especially smaller ones in compliant states. Banks can now earn commission without taking any insurance risk, which helps diversify revenue beyond lending. However, the benefit is conditional on the state's regulatory cooperation with RBI.
What you must do
- Check if your UCB is registered in a state that has signed an MoU with RBI or under the Multi-State Act.
- Ensure your net worth is at least Rs 10 crore and you are not classified as Grade III or IV.
- Review and update your insurance agency policy to comply with the new corporate agent norms without risk participation.
- Acknowledge receipt of this circular to your respective Regional Office.
Who it affects
All Primary (Urban) Co-operative Banks, UCBs registered in MoU-signed states, Multi-State Co-operative Banks, UCBs with net worth between Rs 10 crore and Rs 50 crore
Can a UCB with net worth below Rs 10 crore now sell insurance as a corporate agent?
No. The minimum net worth requirement is Rs 10 crore. Banks below this threshold can only undertake insurance business on a referral basis, as before.
What happens if my UCB is in a state that hasn't signed an MoU with RBI?
Existing norms continue to apply for such banks. That means only scheduled UCBs with Rs 50 crore net worth can act as corporate agents; others can only do referral business.
Does this circular allow risk participation in insurance?
No. The permission is specifically for insurance agency business as corporate agents without risk participation. Banks cannot underwrite insurance risk.