The Financial Institutions Division (FID) has urged the regulators of banking and insurance companies to expedite formulating bancassurance guidelines as it wants to introduce the business model in the country's financial market soon.
The bancassurance is a partnership between bank and insurance firms to sell the insurance products to the banks' clients.
The FID under the Ministry of Finance (MoF) held a meeting on the issue on February 03 last, deciding that the Bangladesh Bank or the central bank of Bangladesh will prepare the guideline for the banks while the Insurance Development and Regulatory Authority (IDRA) for the insurers.
The division requested both regulators to submit the final guidelines to the division within April 07 next. They have also been suggested to finalise the guidelines through mobilising opinions from all the stakeholders concerned.
The FID issued the directive on March 08, 2022.
However, the draft guideline prepared for the banks by the central bank, seen by the FE, said the bancassurance model to be followed in the country is a "Corporate model".
To start a bancassurance business, the banks will require necessary permission or approval from the BB and a separate licence will be issued by the insurance regulator.
The banks would require establishing a separate wing to deal with the bancassurance business, according to the draft guideline.
There will be one chief bancassurance officer to lead the business in the bank. He will hold at least a master's degree and at least 12 years' experience either in banking or insurance.
There will be five grades below the CEO of the banks. Under the wing, there will be bancassurance officers in the bank.
The CRAR of the banks concerned should not be less than 10 per cent. The bank must meet the minimum credit rating set by the BB.
The level of net non-performing assets should not be more than 7.0 per cent. The bank should have made a net profit for the last three years in a row.
IDRA also has prepared a separate set of guidelines for the insurers to do the business - the draft was also seen by the FE.
As per the draft, the insurers should have an agreement with the banks for doing such business subject to approval by the Bangladesh Bank.
There will be a charge or fee worth Tk 50,000 for the banks to be paid to the IDRA in this regard.
