An Analysis on Contribution of Bancassurance on Financial Performance of Bank of India

Abstract

The Indian banking sector contributes the most to the economy. The contribution of the banking sector in Indian GDP has increased a lot in the last few years. In the current scenario, competition is stiff & to cope up with this competition & maintain percentage of GDP, banks are trying to adopt different measures that can maintain their fee based income & level of GDP. “Bancassurance” is one of the major channels that banks have adopted.

Bank Insurance Model (BIM) also known as, BANCASSURANCE, is an association between a bank & an insurance company where, insurance company uses bank’s canal to sell its insurance products.  By selling insurance policies bank earns a revenue stream apart from interest. It is called as fee-based income. This income is purely risk free for the bank since the bank simply plays the role of an intermediary for sourcing business to the insurance company.The paper wants to study the impact of bancassurance on performance of banks & also wants to find the motivation behind adoption of bancassurance by banks, as a major channel for maintaining fee-based income. For this, the researcher has compared the fee-based income of selected bank prior & post to adoption of bancassurance. For this, CAMEL MODEL has been used as a tool of analysis.

Key Words: Bancassurance, Indian Banking sector, Insurance Sector, Fee based income, GDP, etc.,