The Insurance Regulatory and Development Authority (Irda), which has allowed banks to act as licensed insurance brokers, has underlined the need for them to get prior approval from the Reserve Bank of India (RBI).
The initiative would open up distribution possibilities for non-bank promoted insurers that until now had no tie-ups with banks under the banassurance model.
Existing rules allowed each bank to distribute only one life insurance, one general insurance and health insurance company products.
The latest move will pave the way for banks to sell multiple company products.
Tata AIA, Aviva and Reliance Life have been in favour of the move as it is expected to increase insurance penetration in the country but they want it to be made mandatory.
Banks would be required to have a principal officer to act as an insurance broker.
Irda said that broking banks cannot have more than 50% of the premium from one client and must maintain separate accounts for the business. And, the insurance regulator can check the books of accounts.