IRDA proposes outsourcing norms, SBI approves swap ratio for merger of associate banks
Q. IRDA has proposed outsourcing norms for insurance companies. In what areas can they take services of individuals?- Published on 22 Aug 16
a. Medical Examination
b. Claim Investigation
d. All of the above
ANSWER: All of the above
Regulator Insurance Regulatory and Development Authority of India on 18th August 2016 proposed outsourcing norms for insurance companies under which service of individuals can be taken for medical examination, claim investigation and recovery.
- Every insurer should also have in place a comprehensive board approved outsourcing policy
- In considering or renewing an outsourcing arrangement insurer should subject the agency to due diligence according to the proposed proposed IRDAI (Outsourcing of Activities by Indian Insurers) Regulations, 2016.
- The insurer shall satisfy itself that the outsourcing agency’s security policies, procedures and controls will enable the insurer to protect confidentiality and security of policyholder information,” according to the draft.
- Meanwhile, in other banking and insurance news, SBI market share rose from 17 to 23 percent.
- Board of State Bank of India approved a swap ratio for merger of three listed associate banks and Bharathiya Mahila Bank
- Deal involves allowing 28 SBI shares of INR 1 each for every 10 shares in the State Bank of Bikaner and Jaipur (INR 10 each) and 22 shares of SBI for every 10 shares held in State Bank of Mysore and State Bank of Travancore.
- The other two associate banks, that is, State Bank of Hyderabad and State Bank of Patiala, are unlisted entities, which are fully owned by the SBI.
- For Bharathiya Mahila Bank, which is also an unlisted entity but owned by the government, SBI fixed the swap ratio at 4.42 crore shares of SBI for every 100 crore share of BMB.
- Barring State Bank of Mysore shareholders, the share allotment ratio is broadly even for all the holders. In our view, even if the allotment ratio is favourable / unfavourable for shareholders of associate banks, it is unlikely to make any difference since SBI holds 75-90% in these banks
- The merged entity will have a business of around Rs.40 lakh crore, and SBI will aspire to be in the top 50 global banks, going ahead.
- Meanwhile India Post Payments Bank has received the certificate of incorporation from the Registrar of Companies, paving the way for the postal department’s bank to begin operations in 2017 as announced.
- This will be the first public sector undertaking under the Department of Posts.
- The Department of Posts is expected to complete the roll out of its branches all over the country by September 2017. The government said this could be the fastest roll out for a bank anywhere in the world.
- The Union Cabinet, chaired by Prime Minister Narendra Modi, had in January approved the proposal to set up IPPB with total project cost of Rs.800 crore.
- The new bank is expected to commence operations by March 2017 and will set up 650 branches and 5000 ATMs across the country.