CHAPTER: 1 MEANING OF BANK

Meaning Bank is a lawful organisation, which accepts deposits that can be withdrawn on demand. It also lends money to individuals and business houses that need it. Banks also render many other useful services like collection of bills, payment of foreign bills,safe-keeping of jewellery and other valuable items, certifying the credit-worthiness of business,and so on. Banks accept deposits from the general public as well as from the business community. Any one who saves money for future can deposit his savings in a bank. Businessmen have income from sales out of which they have to make payment for expenses. They can keep their earnings from sales safely deposited in banks to meet their expenses from time to time. Banks give two assurances to the depositors a) b) Safety of deposit, and Withdrawal of deposit, whenever needed

On deposits, banks give interest, which adds to the original amount of deposit. It is a great incentive to the depositor. It promotes saving habits among the public. On the basis of deposits banks also grant loans and advances to farmers, traders and businessmen for productive purposes. Thereby banks contribute to the economic development of the country and well being of the people in general. Banks also charge interest on loans. The rate of interest is generally higher than the rate of interest allowed on deposits. Banks also charge fees for the various other services, which they render to the business community and public in
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general. Interest received on loans and fees charged for services which exceed the interest allowed on deposits are the main sources of income for banks from which they meet their administrative expenses. The activities carried on by banks are called banking activity. Banking as an activity involves acceptance of deposits and lending or investment of money. It facilitates business activities by providing money and certain services that help in exchange of goods and services. Therefore, banking is an important auxiliary to trade. It not only provides money for the production of goods and services but also facilitates their exchange between the buyer and seller. You may be aware that there are laws which regulate the banking activities in our country. Depositing money in banks and borrowing from banks are legal transactions. Banks are also under the control of government. Hence they enjoy the trust and confidence of people. Also banks depend a great deal on public confidence. Without public confidence banks cannot survive. Role of Banking Banks provide funds for business as well as personal needs of individuals. They play a significant role in the economy of a nation. Let us know about the role of banking. It encourages savings habit amongst people and thereby makes funds available for productive use. It acts as an intermediary between people having surplus money and those requiring money for various business activities. It facilitates business transactions through receipts and payments by cheques instead of currency.

 It provides loans and advances to businessmen for short term and longterm purposes. It also facilitates import export transactions. It helps in national development by providing credit to farmers, small scale industries and self-employed people as well as to large business houses which lead to balanced economic development in the country. It helps in raising the standard of living of people in general by providing loans for purchase of consumer durable goods, houses, automobiles, etc. Functions of Commercial Bank (A) Primary functions; and (B) Secondary functions. (A) The primary functions of a commercial bank include: a) Accepting deposits; and b) Granting loans and advances. a) Accepting deposits The most important activity of a commercial bank is to mobilise deposits from the public. People who have surplus income and savings find it convenient to deposit the amounts with banks. Depending upon the nature of deposits, funds deposited with bank also earn interest. Thus, deposits with the bank grow along with the interest earned. If the rate of interest is higher, public are motivated to deposit more funds with the bank. There is also safety of funds deposited with the bank.

b) Grant of loans and advances The second important function of a commercial bank is to grant loans and advances. Such loans and advances are given to members of the public and to the business community at a higher rate of interest than allowed by banks on various deposit accounts. The rate of interest charged on loans and advances varies according to the purpose and period of loan and also the mode of repayment. i) Loans A loan is granted for a specific time period. Generally commercial banks provide short-term loans. But term loans, i.e., loans for more than a year may also be granted. The borrower may be given the entire amount in lump sum or in instalments. Loans are generally granted against the security of certain assets. A loan is normally repaid in instalments. However, it may also be repaid in lump sum. ii) Advances An advance is a credit facility provided by the bank to its customers. It differs from loan in the sense that loans may be granted for longer period, but advances are normally granted for a short period of time. Further the purpose of granting advances is to meet the day-to-day requirements of business. The rate of interest charged on advances varies from bank to bank. ii) Secondary functions In addition to the primary functions of accepting deposits and lending money, banks perform a number of other functions, which are called secondary functions. These are as follows.

1) 2)

Issuing letters of credit, travellers cheque, etc. Undertaking safe custody of valuables, important document and

securities by providing safe deposit vaults or lockers. 3) 4) Providing customers with facilities of foreign exchange dealings. Transferring money from one account to another; and from one

branch to another branch of the bank through cheque, pay order, demand draft. 5) Standing guarantee on behalf of its customers, for making payment

for purchase of goods, machinery, vehicles etc. 6) 7) 8) Collecting and supplying business information. Providing reports on the credit worthiness of customers. Providing consumer finance for individuals by way of loans on

easy terms for purchase of consumer durables like televisions, refrigerators, etc. 9) Educational loans to students at reasonable rate of interest for

higher studies, especially for professional courses.

The following types of deposits are usually received by banks i) Current deposit ii) Saving deposit iii) Fixed deposit iv) Recurring deposit v) Miscellaneous deposits i) Current Deposit

Also called demand deposit, current deposit can be withdrawn by the depositor at any time by cheques. Businessmen generally open current accounts with banks. Current accounts do not carry any interest as the amount deposited in these accounts is repayable on demand without any restriction. The Reserve bank of India prohibits payment of interest on current accounts or on deposits upto 14 Days or less except where prior sanction has been obtained. Banks usually charge a small amount known as incidental charges on current deposit accounts depending on the number of transaction. ii) Savings deposit/Savings Bank Accounts

Savings deposit account is meant for individuals who wish to deposit small amounts out of their current income. It helps in safe guarding their future and also earning interest on the savings. A saving account can be opened with or without cheque book facility. There are restrictions on the withdrawls from this account. Savings account holders are also allowed to deposit cheques, drafts, dividend warrants, etc. drawn in their favour for collection by the bank. To open a savings account, it is necessary for

the depositor to be introduced by a person having a current or savings account with the same bank. iii) Fixed deposit

The term Fixed deposit means deposit repayable after the expiry of a specified period. Since it is repayable only after a fixed period of time, which is to be determined at the time of opening of the account, it is also known as time deposit. Fixed deposits are most useful for a commercial bank. Since they are repayable only after a fixed period, the bank may invest these funds more profitably by lending at higher rates of interest and for relatively longer periods. The rate of interest on fixed deposits depends upon the period of deposits. The longer the period, the higher is the rate of interest offered. The rate of interest to be allowed on fixed deposits is governed by rules laid down by the Reserve Bank of India. iv) Recurring Deposits

Recurring Deposits are gaining wide popularity these days. Under this type of deposit, the depositor is required to deposit a fixed amount of money every month for a specific period of time. Each instalment may vary from Rs.5/- to Rs.500/- or more per month and the period of account may vary from 12 months to 10 years. After the completion of the specified period, the customer gets back all his deposits along with the cumulative interest accrued on the deposits. v) Miscellaneous Deposits

Banks have introduced several deposit schemes to attract deposits from different types of people, like Home Construction deposit scheme, Sickness Benefit deposit scheme, Children Gift plan, Old age pension scheme, Mini deposit scheme, etc.
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Types of Banks There are various types of banks which operate in our country to meet the financial requirements of different categories of people engaged in agriculture, business, profession, etc. On the basis of functions, the banking institutions in India may be divided into the following types: A. Central Bank

A bank which is entrusted with the functions of guiding and regulating the banking system of a country is known as its Central bank. Such a bank does not deal with the general public. It acts essentially as Governments banker, maintain deposit accounts of all other banks and advances money to other banks, when needed. The Central Bank provides guidance to other banks whenever they face any problem. It is therefore known as the bankers bank. The Reserve Bank of India is the central bank of our country. The Central Bank maintains record of Government revenue and expenditure under various heads. It also advises the Government on monetary and credit policies and decides on the interest rates for bank deposits and bank loans. In addition, foreign exchange rates are also determined by the central bank. Another important function of the Central Bank is the issuance of currency notes, regulating their circulation in the country by different methods. No other bank than the Central Bank can issue currency. B. Commercial Banks

Commercial Banks are banking institutions that accept deposits and grant short-term loans and advances to their customers. In addition to giving short-term loans, commercial banks also give medium-term and longterm loan to business enterprises. Now-a-days some of the commercial
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banks are also providing housing loan on a long-term basis to individuals. There are also many other functions of commercial banks, which are discussed later in this lesson. Types of Commercial banks: Commercial banks are of three types i.e. , Public sector banks, Private sector banks and Foreign banks. (i) Public Sector Banks: These are banks where majority stake is

held by the Government of India or Reserve Bank of India. Examples of public sector banks are: State Bank of India, Corporation Bank, Bank of Boroda and Dena Bank, etc. (ii) Private Sectors Banks: In case of private sector banks majority of

share capital of the bank is held by private individuals. These banks are registered as companies with limited liability. For example: The Jammu and Kashmir Bank Ltd., Bank of Rajasthan Ltd., Development Credit Bank Ltd, Lord Krishna Bank Ltd., Bharat Overseas Bank Ltd., Global Trust Bank, Vysya Bank, etc. (iii) Foreign Banks: These banks are registered and have their

headquarters in a foreign country but operate their branches in our country. Some of the foreign banks operating in our country are Hong Kong and Shanghai Banking Corporation (HSBC), Citibank, American Express Bank, Standard & Chartered Bank, Grindlays Bank, etc. The number of foreign banks operating in our country has increased since the financial sector reforms of 1991.

a)

Development Banks Business often requires medium and long-term capital for purchase of machinery and equipment, for using latest technology, or for expansion and modernization. Such financial assistance is provided by Development Banks. They also undertake other development measures likesubscribing to the shares and debentures issued by companies, in case of under subscription of the issue by the public. Industrial Finance Corporation of India (IFCI) and State Financial Corporations (SFCs) are examples of development banks in India.

b)

Co-operative Banks People who come together to jointly serve their common interest often form a co-operativesociety under the Co-operative Societies Act. When a co-operative society engages itself inbanking business it is called a Co-operative Bank. The society has to obtain a licence from the Reserve Bank of India before starting banking business. Any co-operative bank as a society is to function under the overall supervision of the Registrar, Cooperative Societies of the State. As regards banking business, the society must follow the guidelines set and issued by the Reserve Bank of India.

Types of Co-operative Banks There are three types of co-operative banks operating in our country. They are primary credit societies, central co-operative banks and state cooperative banks. These banks are organized at three levels, village or town level, district level and state level.

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(i)

Primary Credit Societies: These are formed at the village or

town level with borrower and non-borrower members residing in one locality. The operations of each society are restricted to a small area so that the members know each other and are able to watch over the activities of all members to prevent frauds. (ii) Central Co-operative Banks: These banks operate at the

district level having some of the primary credit societies belonging to the same district as their members. These banks provide loans to their members (i.e., primary credit societies) and function as a link between the primary credit societies and state co-operative banks (iii) State Co-operative Banks: These are the apex (highest level) co-

operative banks in all the states of the country. They mobilise funds and help in its proper channelisation among various sectors. The money reaches the individual borrowers from the state co-operative banks through the central co-operative banks and the primary credit societies. c) Specialised Banks There are some banks, which cater to the requirements and provide overall support for setting up business in specific areas of activity. EXIM Bank, SIDBI and NABARD are examples of such banks. They engage themselves in some specific area or activity and thus, are called specialised banks. Let us know about them. i. Export Import Bank of India (EXIM Bank):

If you want to set up a business for exporting products abroad or importing products from foreign countries for sale in our country, EXIM bank can provide you the required support and assistance. The bank grants loans to exporters and importers and also provides information
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about the international market. It gives guidance about the opportunities for export or import, the risks involved in it and the competition to be faced, etc. ii. Small Industries Development Bank of India (SIDBI):

If you want to establish a small-scale business unit or industry, loan on easy terms can be available through SIDBI. It also finances modernisation of small-scale industrial units, use of new technology and market activities. The aim and focus of SIDBI is to promote, finance and develop small-scale industries. iii. National Bank for Agricultural and Rural Development

(NABARD): It is a central or apex institution for financing agricultural and rural sectors. If a person is engaged in agriculture or other activities like handloom weaving, fishing, etc. NABARD can provide credit, both shortterm and long-term, through regional rural banks. It provides financial assistance, especially, to co-operative credit, in the field of agriculture, small-scale industries, cottage and village industries handicrafts and allied economic activities in rural areas.

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History Of Bank
The first banks were the merchants of the ancient world that made loans to farmers and traders that carried goods between cities. The first records of such activity dates back to around 2000 BC in Assyria and Babylonia. Later in ancient Greece and during the Roman Empire lenders based in temples would make loans but also added two important innovations: accepted deposits and changing money. During this period there is similar evidence of the independent development of lending of money in ancient China and separately in ancient India. From the ancient times in India, an indigenous banking system has prevailed. The businessmen called Shroffs, Seths, Sahukars, Mahajans, Chettis etc. had been carrying on the business of banking since ancient times. These indigenous bankers included very small money lenders to shroffs with huge businesses, who carried on the large and specialized business even greater than the business of banks. The origin of western type commercial Banking in India dates back to the 18th century. The story of banking starts from Bank of Hindusthan established in 1779 and it was first bank at Calcutta under European management. In 1786 General Bank of India was set up. Since Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, it became a banking center. Three Presidency banks were set up under charters from the British East India Company- Bank of Calcutta, Bank of Bombay and the Bank of Madras. These worked as quasi central banks in India for many years.

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The Bank of Calcutta established in 1806 immediately became Bank of Bengal. In 1921 these 3 banks merged with each other and Imperial Bank of India got birth. It is todays State Bank of India. The name was changed after Indias Independence in 1955. So State bank of India is the oldest Bank of India. In 1839, there was a fruitless effort by Indian merchants to establish a Bank called Union Bank. It failed within a decade. Next came Allahabad Bank which was established in 1865 and working even today. The oldest Public Sector Bank in India having branches all over India and serving the customers for the last 145 years is Allahabad Bank. Allahabad bank is also known as one of Indias Oldest Joint Stock Bank. The Oldest Joint Stock bank of India was Bank of Upper India established in 1863 and failed in 1913. The first Bank of India with Limited Liability to be managed by Indian Board was Oudh Commercial Bank. It was established in 1881 at Faizabad. This bank failed in 1958. The first bank purely managed by Indian was Punjab National Bank, established in Lahore in 1895. The Punjab national Bank has not only survived till date but also is one of the largest banks in India.

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However, the first Indian commercial bank which was wholly owned and managed by Indians was Central Bank of India which was established in 1911. So this bank is called Indias First Truly Swadeshi bank. Central Bank of India was dreams come true of Sir Sorabji Pochkhanawala, founder of the Bank. Sir Pherozesha Mehta was the first Chairman of this Bank. Many more Indian banks were established between 1906-1911. This was the era of the Swadeshi Movement in India. Some of the banks are Bank of India, CorporationBank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India. Bank of India was the first Indian bank to open a branch outside India in London in 1946 and the first to open a branch in continental Europe at Paris in 1974. The Bank was founded in September 1906 as a private entity and was nationalized in July 1969. Since the logo of this Bank is a star, its head office in Mumbai is located in Star House, Bandra East, Mumbai. There was a district in Todays Karnataka state called South Canara under the Britishempire. It was bifurcated in 1859 from Canara district, thus making Dakshina Kannada and Udupi district. It was the undivided Dakshina Kannada district. It was renamed as Dakshina Kannada in 1947. Four banks started operation during the period of Swadeshi Movement and so this was known as Cradle of Indian Banking.

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This was the first phase of Indian banking which was a very slow in development. This era saw many ups and downs in the banking scenario of the country. The Second Phase starts from 1935 when Reserve bank of India was established. Between the period of 1911-1948, there were more than 1000 banks in India, almost all small banks. The Reserve Bank of India was constituted in 1934 as an apex Bank, However without major government ownership. Government of India came up with the Banking Companies Act 1949.This act was later changed to Banking Regulation (Amendment) Act 1949.

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CHAPTER : 2 MEANING OF INSURANCE

Meaning Insurance is a cover used for protecting oneself from the risk of a financial loss. It is important to understand that risk is a part of any persons life and that it increases as a person increases in age, responsibility and wealth. Insurance is risk coverage against financial losses and should not be taken as an investment instrument. There are mainly two parties involved in this the insurer and the insured. The insurer is the insurance company who will provide the cover to the insured against any financial losses. The insured may be an individual person or a group of people like an employer, members of a society, etc. Definition: The Dictionary of Business & Finance has defined Insurance as a

form of contract or agreement under which one party agrees in return for consideration to pay an agreed amount of money to another party to make good a loss, damage, or injury to something of value, as a result of some uncertain event in which the insured has pecuniary interest. Insurance is Protection against loss for which you pay a certain

sum periodically in exchange for a guarantee that you'll be compensated under stipulated conditions for any specified loss by fire, accident, death, etc.

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Insurance is a promise of reimbursement in the case of loss; paid to

people or companies so concerned about hazards that they have made prepayments to an insurance company. Insurance is an a contract (policy) in which an individual or entity

receives financial protection, or reimbursement, against losses from an insurance company, which pools client's risks to make payments more affordable, in exchange for a premium.

History of Insurance
The beginning of insurance is traced to the city of London. It started with the Marine business. Marine traders, who used to gather at Lloyds Coffee House in London, agreed to share losses to goods during transportation by ship. The first insurance policy was issued in England in 1583. The earliest traced of insurance in the ancient world are found in the form of marine trade loans or carriers contract that included an element of ins urance. In Rigveda, the most scared book of India, references were made to the concept of Yogakshema more or less akin to the well-being & security of the people. The Insurance sector in India dates back to 1818 when the first insurance company was established, i.e. the Oriental Insurance Company at Calcutta. This was followed by the establishment of Bombay Life Assurance Company in 1823 & Madras Equitable Life Insurance Society in 1829.The first attempt to regulate the insurance business in India was through the Indian Life Assurance Companies Act in 1912.

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Classification of Insurance: There are mainly two broad classes of Insurance Life and Non Life. Life insurance products include Term Life policies, which give

pure risk coverage of only the death benefit, whereas endowment or money back policies have a risk as well as savings component i.e. death as well as maturity benefit. Also coming under the life insurance umbrella are the Unit Linked Policies in which there is a risk component and a savings component, which is invested in equity, debt or gilt funds, depending on the insurance company. Non Life insurance products include property or casualty, health

insurance or house, fire, marine insurance etc. This insurance class deals with all the non-life aspects of an insured like his/her house, health, land, office, cargo, etc which might bring financial loss. Different forms of insurance can be discussed as under: 1. Marine Insurance:

Insurance was introduced to the world by the concept of Marine Insurance. In the earlier centuries the seafarers were exposed to the worst kind of dangers & unknown risks such as sea conditions, pirates, war, weather, disease, perils of sea, etc.the marine policies of the presents from were sold in the beginning of the fourteenth century by the BRUGIANS but in a different form. 2. Fire Insurance:

First insurance is one of the oldest forms of insurance as far back as Marine Insurance. It had been observed in Anglo-Section Guild form for the first time where the victims of the fire hazards were given personal
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assistance by providing them the necessities of life. It originated in Germany in the beginning of the sixteenth century. In the year 1666, a great fire broke out in England, the losses were tremendous, about 85 per cent were burnt to ashes & property worth ten crores sterling were completely burnt off. It is here that the Fire Insurance got momentum & Fire Insurance office was established in 1681 in England. 3. Life Insurance:

Life insurance appeared first in England in the 16th century when a policy on the Life of William Gybbous was issued on 18th June, 1653.For most people, the purpose of life insurance should be to replace the financial contribution made by a family member. Life insurance can be pure insurance, which pays only on the death of the insured, or cash value insurance, which also has a savings vehicle. Most people who need. 4. Health Insurance:

Health insurance comes in three types, through many policies mix & match traits of the three. Fee for services, the most expensive, allows you to go to almost any provider & covers almost anything that is medically necessary. You dont have primary care physician who has to approve visit to specialists. Preferred provider options (PPOs) allow you to self refer to any provider in the PPOs list & generally cover a wide variety of services recommended by those providers. Some PPOs cover other providers, but with a larger co-payment. Health maintenance organization (HMOs) is the least costly, but the most restrictive. They assign you (or let you select) a primary care physician. They physician acts as a gatekeeper in that (s) he decides what is medically necessary & when you may see a specialist. Often the HMO itself has to treatment is too costly.

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5.

Miscellaneous Insurance:

In the later half of the 19th century with the Industrial revolution in England Miscellaneous Insurance gained momentum. Accident insurance, fidelity insurance, liability insurance & theft insurance were the important forms of insurance at that time. With the advancement of society the scope of general insurance is increasing. 6. General Insurance:

The general insurance includes property insurance, liability insurance & other forms of insurance. Marine Insurance & Fire Insurance are called property insurance whereas motor, theft, fidelity & machine insurances are included in liability insurance to a certain extent. The General

Insurance could not progress much due to the slow growth of Joint Stock Enterprises & Mechanized Production.

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CHAPTER: 3 INTRODUCTION OF BANCASSURANCE

Introduction As per the investigation made by Graham Morris the opening of insurance industry to private sector participation in December1990 has led to the entry of 20 new players, with 12 in life Insurance Sector & 8 in the non-life insurance sector. Almost without exception these companies are seeking to utilize multiple distribution channels such as 1) Traditional Agencies 2) Bancassurance 3) Brokers & 4) Direct Marketing Bancassurance is seen by many to be a significant or even the primary channel. The banking & Insurance industry have charged rapidly in the changing and challenging economic environment through out the globe. In the competitive & open environment each & every one wants to do better than others. And they know that if they are not able to provide better service the won't survive in Industry. Insurance companies are also to be competitive by cutting cost & serving in the better way to customers. Now the time has come to choose and adopt appropriate distribution channel. The insurance Industry has indeed awakened to deregulated environment in which several private companies have partnered with multinational
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insurance companies. Despite a billion of population, India still has a low insurance percentage of 1.95 and it is in 51st position in world. Despite of the fact that India boosts a saving rate around 25%, less than 5% is spending on insurance. (Sources). To streamline the saving in to insurance Bancassurance is the best channel to tackle four challenges facing the insurance industry, * Product innovation * Distribution * Customer Service & * Investments Definition The Bancassurance is the distribution of insurance products through the bank's distribution channels. It is a phenomenon where in insurance products are offered through the distribution channels of the banking services along with a complete range of banking & investment products & services. In simple term we can say Bancassurance tries to exploit synergies between both the insurance companies & banks. In the simple term of insurance there are only two parties. 1) The Bank 2) The Insurer & customer.

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Bancassurance in India:

Bancassurance in India is a very new concept, but if past gaining ground. In our country the banking & insurance sectors are regulated by two different entries. They are: * Banking is fully governed by RBI & * Insurance sector is by IRDA And bank assurance being the combination of two sectors comes under the purview of both the regulators. Each of the regulators has given out detailed. Guidelines given by RBI:

The Reserve Bank of India has given certain guidelines for banks entering into the insurance sector. They are as follows: 1. Any commercial bank will be allowed to undertake insurance business as the agent of insurance companies & this will be on fee basis with norisk participation. 2. The second guideline given by the RBI is that the joint ventures will be allowed for financial strong banks wishing to undertake insurance business with risk participation. 3. The third guideline is for banks which are not eligible for this joint venture option, an investment option of guidelines for banks getting into insurance sector. (1) (2) Up to 10% of the net worth of the bank or Rs. 50 crores. Whichever is lower is available.

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The bank that wants to enter in participates in the Insurance industry they have to follow the above guidelines given by the Reserve Bank of India. Guidelines given by IRDA:

The Insurance regulatory development & Authority has given certain guidelines for the Bancassurance they are as follows: 1) Chief Insurance Executive: Each bank that sells insurance must have a chief Insurance Executive to handle all the insurance matters & activities. 2) Mandatory Training: All the people involved in selling the insurance should under-go mandatory training at an institute determined (authorized) by IRDA & pass the examination conducted by the authority. 3) Corporate agents: Commercial banks, including co-operative banks and RRBs may become corporate agents for one insurance company. 4) Banks cannot become insurance brokers. Issues for regulation: regulatory barriers have slowed the development of

Certain

Bancassurance in India down. Which have only recently been cleared with the passage of the insurance (amendment) Act 2002? Prior it was clearly an impractical necessity and had held up the implementation of Bancassurance in the country. As the current legislation places the: (1) Training and examination requirements : upon the corporate insurance executive within the corporate agency, this barrier has effectively been removed. Another regulatory change is published in recent publication of IRDA regulation relating to the (2) Licensing of Corporate agents

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(3) Specified person to satisfy the training & examination : According to new regulation of IRDA only the specific persons have to satisfy the training & examination requirement as insurance agent. Exception: A noticeable exception is that for the individuals who processing the Certified Associate ship of Indian Institute of Banks (CAIIB) only 50 hours training rather than 100 hours. Restrictive feature:

A restrictive feature of Bancassurance regulation is that: (1) They appear to constrain the corporate agents to receive only commission, the profit sharing arrangements would seen to be ruled out. (2) The products sold through bank channels / networks can be highly profitable and so such agreement with banks is highly beneficial for banks only.

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CHAPTER : 4 BENEFITS OF BANCASSURANCE

Insurance companies see Bancassurance as a tool for increasing their market penetration & premium turnover. The customer sees

Bancassurance as a bonanza in terms of reduced price, high quality product & delivery at doorsteps. Banks & Insurance companies have complementary strengths. In their natural & traditional roles & with their current skills, neither banks nor insurance companies could effectively mount a Bancassurance start-up alone. Collaboration is a key to making this new channel work. This is due to the following the benefits of Bancassurance are:1. Expenses ratio in insurance activities through Bancassurance is

very low. 2. Banks & the insurance companies benefit from the same

distribution channels & people. 3. Above all a back-of-the-envelope calculation taking into account

only the existing customer base shows that banks could collectively be looking at a fee-based income of anywhere between Rs. 16,500 crores & Rs. 22,000 crores over the next five years. 4. Banks are thus looking tie-ups with insurance companies to boost

their non-interest income. 5. In turn. Insurance companies are keenly the spread of branches &

the potential to 18 crores customer accounts.

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6.

SBI Life Insurance Company. A predominant player in

Bancassurance is positive about the channel bringing about a transformation in the way insurance has been sold so far. 7. Company is banking heavily on Bancassurance & pans to explore

the potential of State Bank of Indias 9,000 plus branches spread across the country & also its 4,000 plus associate banks. 8. The company is targeting around 10% of the business during its

start-up phase. 9. Bancassurance makes use of verities distribution channels like

salaried agents, bank employees, brokerage firms, direct response, internet etc. insurance companies have complementary strengths. 10. In their natural & traditional roles Bancassurance if of great

benefit to the customers. It leads to the creation of one-shop where a customer can apply for mortgages, pensions, saving & insurance products. 11. 12. The customer gains from both sides as costs get reduced. Bancassurance for the customer is a bonanza in terms of reduced

premium charges, a high quality product & delivery at the doorstep.

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LIST OF COMPANIES WORKING IN BANCASSURANCE Table No. : 4.1 Bancassurance Tie ups in India:Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Bank Barclays DBS Bank Karur Vysys Bank Lord Krishna Bank ABN - Amro Canara Bank Lakshmi Vilas Bank Insurance Company

Met Life India. Tata AIG. Bajaj Allianz. Bajaj Allianz. Bajaj Allianz. Bajaj Allianz. Aviva Life Insurance Company. Punjab & Sind Bank Aviva Life Insurance Company. American Expres Aviva Life Insurance Company. SBI The SBI Life Insurance Co.Ltd. Bank of Rajasthan Birla Sun Life Insurance Co. Ltd. Bank of Muscat Birla Sun Life Insurance Co. Ltd. Andra Bank Birla Sun Life Insurance Co. Ltd. Development Credit Bank Birla Sun Life Insurance Co. Ltd. Dutch Bank & Birla Sun Life Insurance Co. Ltd. Catholic Sariyan Bank Birla Sun Life Insurance Co. Ltd. Allahabad Bank National Insurance Co. LIC of India. Central Bank of India New India Assurance. J & K Cooperative Bank ICICI Lombard. Vishweshwar Sahakari Bank Max New York Life. Ltd AXIX Bank Met Life India. Corporation Bank LIC Of India. Indian Overseas Bank LIC Of India.
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24 25 26 27 28 29

Centurion Bank Sahara District Central Co-op Bank Janta Urban Co-operative Bank Yeotmal Mahila Sahakari Bank Vijaya Bank Oriental Bank of Commerce

LIC Of India. LIC Of India. LIC Of LIC Of LIC Of LIC Of India. India. India. India.

There is certain tie-up between the Insurance Company & banks are given at present days these tie-up are going well, running well & past in the field of Bancassurance. (1) LIC: The insurance company LIC of India have tie up with the following bank for Bancassurance. They are: (A) Corporation Bank (B) Indian Overseas Bank (C) Centurion Bank (D) Sahara District Central Co-operative bank (E) Janta Urban Co-operative bank (F) Yeotmal Mahila Sahakari Bank (G) Vijaya Bank & (H) Oriental Bank of Commerce (2) SBI Life Insurance Co: The SBI life Insurance Co Ltd is starting & Running its Insurance business with the help of S.B.I. (3) Bajaj Allianz general Insurance Co. Ltd: In the field of general Insurance the Bajaj Allianz General Insurance Co Ltd., has tie-up with Karur Vysys Bank & Lord Krishna Bank.
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(4) Birla Sun life Insurance Co. Ltd: The Birla Sun life Insurance Company has a tie-up with the following bank for the insurance purpose:(a) Bank of Rajasthan (b) Andhra Bank (c) Bank of Muscat (d) Development Credit Bank (e) Dutch Bank & (f) Catholic Syrian Bank Inspite of above mentioned tie-up with banks. There are many tie-ups for the purpose of Bancassurance. Insurance Co-Ltd. & so on. Conclusion: In this chapter, world bacassurance, the study is based on a collection of annual research about the current and planned insurance activities of U.S. banks. It is designed as a management tool for executives who want to understand how the bank-insurance industry is developing, what strategies banks are pursuing, and what practices or approaches are producing successful bank-insurance programs. Bancassurance in India simply means selling of insurance products by banks. In this arrangement, insurance companies and banks undergo a tie-up, thereby allowing banks to sell the insurance products to its customers. Like ICICI Prudential, United India

31

Issues to be kept in mind while tie-up:

The followings are certain issues that we have to keep in mind while tieup with bank for Bancassurance purpose. (1) Do not depend upon traditional Method: The tie-up needs to develop innovative products and services rather than depends upon the traditional tracks. The kind of products. The bank would be allowed to sell are another major issue. For example: - a complex unit-linked life insurance product is better sold through brokers & agents, while a standard term product or simple products like auto Insurance, home loan and accident Insurance cover can be handled by bank branches. (2) Clarity on operational activities: There is need to be clarifying on the operational activities of Bancassurance that:(a) Who will do branding? (b) Will the Insurance Company prefer to place a person at the branch of the bank? Or(c) Will the bank branch train and keep its own people? (d) Who will pay remuneration of abovementioned people bank or Insurance Company or both in some ratio? (3) Required Good Training: Even though the banks are in personal contact with its client, a high degree of active marketing skill is required to sell the insurance products. These can be possible through proper training only.

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CHAPTER : 5 PRODUCTS OF BANCASSURANCE

Bancassurance products 1. Funded product Treasury product Investment product Fix Income product Funded Products :

Working Capital: Working capital solutions are based on the financial and qualitative evaluation of business and working capital needs. Company structure working capital finance either though cash credit or through loans. Key Features Customized solution based on your needs Avail of finance through cash credit or loans.

Structured Products: Company provides solutions for the efficient management of cash flows, bridge cash flow mismatches and ensures enhanced returns/cost savings for the corporation. Company provides structure tailor-made solutions around specific cash flow streams and cash accruing assets to meet individual financial requirements.

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2. a.

Treasury Products: Foreign Exchange:

The dealing room handles inter-bank transactions and corporate foreign exchange flows generated by the various branches. Key Features days) Forward foreign exchange transactions (for value greater than two A state-of-the-art dealing room Wide rage of products and services Products Spot foreign exchange transactions (for value up to two business

business days) Inward/outward remittances Derivatives such as Options, Currency Swaps, etc. Services Active dealings in the inter-bank market for major currencies, spot

and forwards Quick and competitive dealing in prices in major currencies Customized solutions for specific client exposures Trading recommendations based on technical analysis Regular fundamental analysis Established correspondent banking relationships.

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b. Money Market: Companys money Market and Fixed Income Desk is an active player in the Rupee markets and caters to the treasury requirements of clients across the Inter-Bank, Co-operative bank, Corporate, Pension Fund and Trust sectors. Key Features They cater to the treasury requirements of clients across the Inter-

Bank, Co-operative bank, Corporate, Pension Fund and Trust sectors. They also offer the entire spectrum of services involved in the

origination and placement of corporate debt. Fixed Income Solutions Short Term Needs: Purchase/ Sale of Treasury Bills, Commercial

Paper, Certificate of Deposits Debt Distribution Needs: Placement of Debt Issues Depository Needs: Constituent SGL Facility Retail Needs: Purchase/Sale of instruments in smaller lots is also Long Term Needs: Purchase/ Sale of Government and Corporate

offered

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Derivative Solutions Hedging Needs: Market Maker in the Rupee interest Rate swap

market in tenors up to 5 years. c. Benchmark PLR: The 'Benchmark PLR' of the Bank has been revised from 15.75% to 15.50%, which will be effective from August 1st, 2009. 3. a. Investment Products : Term Deposit: Investing customer money in a Term Deposit is a

safe, stress-free way to make it grow. A host of features make Term Deposits an excellent investment opportunity. Key Features Safe and stress-free way to make your money grow Loan facility to the extent of 85% of principal on a deposit term Attractive interest rates

Features & Benefits: Automatic rollover you can choose to roll over only the principal

amount that you deposit or principal plus interest earned (i.e. re-invest the interest). Automatic rollover will be for the same period, at an interest rate applicable on the maturity date When you reinvest the interest, you get compound interest on the

total amount, i.e. rollover of principal plus interest, at the end of the period (quarter or half-yearly) You can specify, on or before the maturity date, changes in deposit

tenure, maturity instructions, payment instructions, principal amount and rollover mode (from principal to principal plus interest or vice versa)
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Loan facility is available to the extent of 85% of principal on a

deposit term, with a period of minimum of 1 year (as per Kotak Mahindra Bank's conditions). b. Mutual Funds: Company work closely with their clients to help them establish a robust framework for treasury solutions and laying down parameters for investment products within the risk/return parameters laid down by the each treasury. They offer this service to all our customers including Banks, Financial Institutions, Insurance Companies, Large & Mid-size Corporate. Investment products include Mutual Funds, Bank Certificates of deposits, Bonds & debentures, Government securities amongst others. Identifying investment opportunities involves working closely with our clients to identify their goals and to analyze their investment needs by understanding their risk profiles, liquidity and tax requirements, investment horizons and expectations of returns. Our experienced research team analyses and researches the various Mutual Funds available in the market, helping clients make more informed decisions. Our recommendations take into account all relevant factors including the investment philosophy of the Asset Management Company, portfolio quality, risk-adjusted returns and market insights. Key Features Assistance at every step of the investment process An experienced research team to analyze and research the Mutual

Funds available in the market Portfolio assistance Services

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Daily NAV updates Fund Performance Analysis Monthly Portfolio Analysis Client Portfolio Monitoring Debt / Equity Research Regular News updates Client Portfolio Monitoring.

c. Bancassurance: Banks are working as leaders in insurance sector. This allows banks to offer customized and carefully selected life insurance solutions for corporate and institutional clients. Key Features Carefully selected insurance policies to suit your needs Experts to help you analyze your insurance needs and develop the

solution that works best for you. Examples Life Insurance in the form of an 'Employer - Employee' scheme for

the employees of your company: This allows the company to claim deductions on the premiums paid, while the employees get completely tax-free maturities along with valuable risk cover. A Group Life Insurance Plan for employees - This could be a plan

of a pre- determined fixed amount for all employees or can vary depending on the level of the employee. It can also equal any outstanding loan amount borrowed by the employee from the employer.
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Management of Gratuity and Superannuating funds in a transparent

and efficient manner. Individual life insurance solutions for employees - This is in the

form of 'Worksite Marketing' where our life insurance experts will customize individual policies for each employee depending on his /her specific needs. 4. Fixed Income Products:

Sales and Distribution A range of debt and fixed income products. Company experienced Debt Sales team services investors across the country including Provident & Gratuity Funds, Commercial Banks, Cooperative Banks, Regional Rural Banks, Corporate, Financial Institutions, Mutual Funds, Religious and Charitable Trusts and Insurance Companies. Key Features An experienced Debt Sales team One of the largest distributors of fixed income products in India.

Conclusion: In this chapter, conclude that the Working of Bancassurance i.e. rules, regulations, issues of Bancassurance. RBI & IRDA guidelines related to the Bancassurance, SWOT analysis & measures to improvement on Bancassurance. In short Working of Bancassurance i.e. successful the Bancassurance.

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CHAPTER: 6 BANCASSURANCE IN INDIA

After First Narasimham Committee report, Indian banking system gone through huge reforms like merchant banking, lease and term finance, capital market / equity market related activities, hire purchase, real estate finance and so on. Few years back banks of India entered into another financial instrument thats Insurance. Lets have a quick look on Indian insurance market as at end -March 2006, among the life insurers, there were 15 companies in private sector and Life Insurance Corporation of India (LIC) was the solitary public sector company. Among non-life insurers, 9 companies were in private sector and 4 companies were in public sector as regarding the present size of the insurance market in India, it is stated that India accounts not even 1% of the global insurance market. According to various studies, in India LIC done exceptionally very good job but its able to insured 25-26% of insurable population. Thus in a country with more than 1.2 billion population, the penetration ratio was 4.8% by end of march-2006 which was far less than worlds penetration ratio (7.5%). It also indicates that a vast majority of population remain outside the reach of the insurance, especially in rural and semi-urban areas, in the context of the absence of social security schemes. In year 2004, due to these vulnerable statistics, IRDA introduced an additional channel of distribution in way long traditional distribution model of Insurance industry called Bancassurance.
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The prospects of bancassurance in India is really bright because of following reasons: India. BASEL NORM-II (2009) Indian economy is growing with 9% of growth rate. Increasing PPP (purchasing power parity). Huge inflow of FDI. Expansion of middle income class Indians. Huge banking infrastructure across urban, semi urban & rural

Another reasons are:

In 2007, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that is with the government of India holding a stake), 29 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. Altogether they (banks) have a combined network of over 53,000 branches and reach in urban, semi urban & rural areas of nation. There are 70324 bank offices are there in India and around 16000 people are served by each
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bank office. Its a huge banking infrastructure and among best banking network in world. Bancassurance- an overview Innovation is a baby child of three things- free thought, work pressure and necessity. Worlds banking system is changing or in other words upgrading every quarter with various innovative schemes, policies. Today with financial innovations and financial liberalization has drawn the world of banking sector very close to new avenues. In these set of avenues most upcoming and growing combination is bancassurance. In Bancassurance, i.e., banc + assurance, refers banks and insurance company tied up for selling insurance products. The concept of Bancassurance first appeared in France in 1980, to define the sale of insurance products through banks distribution channels. Banks are being used as an effective alternate channel to distribute insurance products either as stand -alone insurance products or add-ons to the bank products by way of combining the insurance with typical banking products/services. Banks deals in both type of insurance policies i.e. life term and non-life type (general).

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Reasons for growing phenomena of Bank assurance: The opening up of the insurance industry to private sector participation in December 1999 has led to the entry of 20 new players, with 12 in the life insurance sector and eight in the non-life insurance sector. Almost without exception these companies are seeking to utilize multiple distribution channels such as traditional agency, Bank Assurance, brokers and direct marketing. Bank assurance is seen by many to be a significant or even the primary channel (the latter being the case for at least SBI Life). In other Asian markets we have seen bank assurance make significant headway in recent times. For example, bank assurance accounted for 24% of new life insurance sales by weighted premium income in Singapore in 2002. This is a significant increase on the equivalent 2001 statistic of 15% and is as a result of growth in significant bank-centric bank assurance operations. In Hong Kong the figure for 2002 is expected to be at the 20% level for the same basic reasons. Life insurance premium represents 55% of the world insurance

premium, and as the life insurance is basically a saving market. So it is one of the methods to increase deposits of banks. In non-life insurance business banks are looking to provide

additional flow of revenues from the same customers through the same channel of distribution and with the same people. Insurers have been turning in ever-greater numbers to alternative

modes of distribution because of the high costs they have paid for agent services. These costs became too much of a burden for many insurers compared to the returns they generated. Insurers operate through banc assurance own and control
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relationships with customers. Insurers found that direct relationships with customers gave them greater control of their business at a lower cost. Insurers who operate through the agency relationship are hardly having any control on their relationship with their clients. The ratio of expenses to premiums, an important efficiency factor,

it is noticed very well that expenses ratio in insurance activities through banc assurance is extremely low. This is because the bank and the insurance company is benefiting from the same distribution channels and people. It is believed that the prospects for increased consolidation between

banking and insurance is more likely dominated and derived by the marketing innovations that are likely to follow from financial service modernization. Such innovations would include cross selling of banking, insurance, and brokerage products and services. One of the most important reason of considering Banc assurance by

Banks is increased return on assets (ROA). One of the best ways to increase ROA, assuming a constant asset base, is through fee income. Banks that build fee income can cover more of their operating expenses, and one way to build fee income is through the sale of insurance products. Banks that effectively cross-sell financial products can leverage their distribution and processing capabilities for profitable operating expense ratios. By leveraging their strengths and finding ways to overcome their

weaknesses, banks could change the face of insurance distribution. Sale of personal line insurance products through banks meets an important set of consumer needs. Most large retail banks engender a great deal of trust in broad segments of consumers, which they can leverage in selling them

44

personal line insurance products. In addition, a banks branch network allows the face-to-face contact that is so important in the sale of personal insurance. Another advantage banks have over traditional insurance

distributors is the lower cost per sales lead made possible by their sizable, loyal customer base. Banks also enjoy significant brand awareness within their geographic regions, again providing for a lower per-lead cost when advertising through print, radio and/or television. Banks that make the most of these advantages are able to penetrate their customer base and markets for above-average market share. Other bank strengths are their marketing and pr ocessing

capabilities. Banks have extensive experience in marketing to both existing customers (for retention and cross selling) and non-customers (for acquisition and awareness). They also have access to multiple communications channels, such as statement inserts, direct mail, ATMs, telemarketing, etc.

reputation and distribution systems. (branch, phone, and mail) to make appointments, and utilizing sales techniques. and products tailored to the middle market, European banks have more than doubled the conversion rates of insurance leads into sales and have increased sales productivity to a ratio which is more than enough to make banc assurance a highly profitable proposition. Insurers have much to gain from marketing through banks.

Personal-lines carriers have found it difficult to grow using traditional agency systems because price competition has driven down margins and increased the compensation demands of successful agents. Middle45

income consumers, who comprise the bulk of bank customers, get little attention from most life agents. Most insurers that have tried to penetrate middle -income markets

through alternative channels such as direct mail have not done well. Clearly, a change in approach is necessary. As with any initiative, success requires a clear understanding of what must be done, how it will be done and by whom. The place to begin is to segment the strengths that the bank and insurer bring to the business opportunity.

Bank assurance in india A SWOT Analysis

Bancassurance as a means of distribution of insurance products is already in force in some form or the other. Banks are selling Personal Accident and Baggage Insurance directly to their Credit Card members as a value addition to their products. Banks also participate in the distribution of mortgage linked insurance products like fire, motor or cattle insurance to their customers. Banks can straightaway leverage their existing capabilities in terms of database and face to face contact to market insurance products to generate some income for themselves which hitherto was not thought of Huge capital investment will be required to create infrastructure particularly in IT and telecommunications, a call center will have to be created, top professionals of both industries will have to be hired, an R & D cell will need to be created to generate new ideas and products. It is therefore essential to have a SWOT analysis done in the context of Bancassurance experiment in India.

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A SWOT ANALYSIS IN: BANCASSURANCE IN INDIA ARE

FOLLOWING THE INSURANCE PURPOSE: STRENGTH WEAKNESS OPPORTUNITIES THREATS

1.

STRENGTH

Bancassurance can be a sure of fire way to reach a wider customer base, provide it is made use of sensibly. In India there is an extensive bank network established over the years. Insurance companies will have to take advantage of the customers longstanding trust & relationships with Banks. This is mutually beneficial situation as Bank can expand the range of their products on offer to customers & earn more, while the insurance company profits from the exposure at the bank branches, & the security of receiving timely payments. 2. WEAKNESS

The success of Bancassurance calls for a paradigm shift in the behavior of the banks, which have to develop marketing skills. Most of the banks lack adequate marketing skills to perform these additional responsibilities. At the same time, there is a need for banks to be sensitive to customers of performances.

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3.

OPPORTUNITIES

Banks database is enormous & they have a wide branch network. Millions of customers become accessible to insurance companies through bank branches. This database has to be dissected variously & various homogeneous groups are to be churned in order to position the bank assurance products. 4. THREATS

Even Insurers & Banks that seem ideally suited for a bank assurance partnership can run into problems during implementation. Success of a Bancassurance venture requires changes in approach, thinking & work culture on the part of everybody involved. Advantages of Bancassurance

Bancassurance is a tool, which is beneficial to bank, customer & Insurer at a time. There are certain benefits of Bancassurance are given. (I) from the banks point of view: (A) By selling the insurance product by their own channel the banker can increase their income. (B) Banks have face-to-face contract with their customers. They can directly ask them to take a policy. And the banks need not to go any where for customers. (C) The Bankers have extensive experience in marketing. They can easily attract customers & non-customers because the customer & noncustomers also bank on banks.

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(D) Banks are using different value added services life-E. Banking tele banking, direct mail & so on they can also use all the above-mentioned facility for Bancassurance purpose with customers & non-customers. (II) From the Insurer Point of view: (A) The Insurance Company can increase their business through the banking distribution channels because the banks have so many customers. (B) By cutting cost Insurers can serve better to customers in terms lower premium rate and better risk coverage through product diversification. (III) From the customers' point of view: (A) Product innovation and distribution activities are directed towards the satisfaction of needs of the customer. Bancassurance model assists

customers in terms of reduction price, diversified product quality in time and at their doorstep service by banks.

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CHAPTER: 7 DATA ANALYSIS

ANALYSIS OF DATA COLLECTED FROM COMPANY A. SBI LIFE INSURANCE LTD. 1.Insurance Coverage : SBI Life Insurance Company Ltd Insurance Insurance Coverage 1 Lac-10 Lac 11 Lac-20 Lac 21 Lac-30 Lac Total Percents (%) 60% 26.67% 13.33% 100

Chart No. 7.1 Insurance Coverage: SBI Life Insurance Ltd.

70% 60% 50% 40% 30% 20% 10% 0%

Percents (%)

1 Lac-10 Lac 11 Lac-20 Lac 21 Lac-30 Lac Explanation:The above chart shows that from SBI Life Insurance Ltd. 60 % respondent were taken insurance coverage of Maximum 1 Lac 10 Lac
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& Minimum 13.33% of respondent covered under SBI Life Insurance Ltd.had only 21 Lac 30 Lac insurance coverage in Bancassurance. 2. Premium Wise : SBI Life Insurance Company Ltd. Premium 5000 - 24000 25000 - 44000 45000 - 64000 65000 - 84000 85000 - 104000 105000 - 124000 Total Percents (%) 33.33% 6.67% 33.33% 20% 0.00% 6.67% 100

Chart No. 7.2 Premium Wise : SBI Life Insurance Ltd. 0% 7% 20% 33% 5000 - 24000 25000 - 44000 45000 - 64000 65000 - 84000 33% 7%

85000 - 104000
105000 - 124000

Explanation:The above chart shows that Maximum respondent i.e. 33.33% paying premium Rs. 45000 64000 Per annum & it was also observed that some of the customers paying premium in a range of 105000 124000 per annum.
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3. Plan Wise: SBI Life Insurance Company Ltd. Plans Investment Plan Family Future Plan Endowment Total Percents (%) 26.67% 20% 53.33% 100

Chart No. 7.3 Plan Wise : SBI Life Insurance Ltd.

27% 53% 20%

Investment Plan Family Future Plan Endowment

Explanation:Plan Wise Distribution of respondent shows that maximum respondent were interested in Endowment Plan & 2nd number they were more interested in Investment Plan than the Family Future Plan of SBI Life Insurance Ltd. in Bancassurance.

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B. ICICI PRUDENTIAL LIFE INSURANCE LTD. 4. Insurance Coverage : ICICI Prudential Ltd. Insurance Coverage 1 Lac - 2 Lac 2 Lac - 3 Lac 3 Lac - 4 Lac Total Percents (%) 13.33% 40% 46.67% 100

Chart No. 7.4 Insurance Coverage : ICICI Prudential Life Insurance Ltd.
50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 1 Lac - 2 Lac 2 Lac - 3 Lac 3 Lac - 4 Lac

Percents (%)

Explanation:The above chart shows that from ICICI Prudential Life Insurance Ltd. 40 % respondent were taken insurance coverage of Maximum 3 Lac 4 Lac & Minimum 13.33% of respondent covered under ICICI Prudential Life Insurance Ltd.had only 1 Lac 2 Lac insurance coverage in Bancassurance.

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5. Plan Wise : ICICI Prudential Ltd. Plan Investment Plan Family Covered Plan Endowment Plan Children Plan Education Plan Total Percents (%) 13.33% 13.33% 13.33% 26.68% 33.33% 100

Chart No. 7.5 Plan Wise : ICICI Prudential Life Insurance Ltd.
50.00%

0.00%

Percents (%)

Explanation:Plan Wise Distribution of respondent shows that Maximum respondent were interested in Education Plan & 2nd number they were more interested in Children Plan than the other Traditional Plan of ICICI Prudential Life Insurance Ltd in Bancassurance.

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6. Premium Wise: ICICI Prudential Ltd. Premium 5000 9000 10000 14000 15000 19000 20000 - 24000 Total Percents (%) 13.33% 26.67% 40% 20% 100

Chart No. 7.6 Premium Wise : ICICI Prudential Life Insurance Ltd.

20% 13% 27% 40%

5000 - 9000 10000 - 14000 15000 - 19000 20000 - 24000

Explanation:The above chart shows that Maximum respondent i.e. 40% paying premium Rs. 15000 19000 Per annum & it was also observed that some of the customers paying premium in a range of 20000 24000 per annum.

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ANALYSIS OF DATA COLLECTED FROM CUSTOMERS 7. Age Wise Age 20 - 24 25 - 29 30 - 34 35 - 39 40 - 44 Total Percents (%) 10% 36.66% 36.66% 13.33% 3.33% 100

Chart No. 7.7 Age Wise

40% 30% 20% 10% 0%

Percents (%)

20-24 25-29 30-34 35-39 40-44

Explanation:The above chart is of Age Wise Distribution of customers. It shows that Age Group 25 29 & 30 34 were the highest percentage of Life Insurance Policy takers i.e. 36.66% & lowest percentage is of Age Group 401 44 i.e. 3.33%. It indicates that young generation is more aware about investment in Life Insurance Sector of Bancassurance.

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8. Occupation Wise Occupation Service Business Teachers Total Percents (%) 70% 23.33% 6.67% 100

Chart no. 7.8 Occupation Wise

7%
Service Business 70% Teachers

23%

Explanation:The above chart shows that our 70% respondent are from Service Sector, 23.33% from Business Sector & 6.67% were Teachers. So, 76.67% respondent are Service Sector has taken Life Insurance Coverage. Businessman were less interest rates in Life Insurance Policies in Bancassurance.

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9. Qualification Wise Percents Qualification Below Graduation Graduation Post Graduation Total 20% 50% 30% 100 25% 50% 25% 100 (%) No. of respondent not taken

Insurance Policy (%)

Chart No. 7.9

Qualification Wise
50% 40% 30% 20% 10% 0% Below Graduation Graduation Post Graduation

Percents (%) No. of Respondent not taken Insurance Policy

Explanation:Qualification Wise Distribution of respondent shows that 20% were of Below Graduation taken as Bancassurance policies but out of 25% number of respondent not taken the insurance policies, 50% respondent were Graduate who opted Bancassurance policy but Similar number of respondent not taken the insurance policy & 30% were Post Graduated opted for Bancassurance policy but out of 25% number of respondent not taken the insurance policies in Bancassurance.
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10. Marital Status Marital Status Married Unmarried Total Percents (%) 63.33% 36.67% 100

Chart No. 7.10 Marital Status

37% 63%

Married Unmarried

Expanation:The above chart shows that highest percentage of Married Group i.e. 63% were taken as Bancassurance policies but lowest percentage of Unmarried Group i.e. 37% were taken as Bancassurance policies.

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11.Gender Wise Gender Male Female Total Percents (%) 53.33% 46.67% 100

Chart No. 7.11 Gender Wise

47% 53%

Male Female

Explanation:The above chart shows that highest percentage of Malei.e. 53% were taken as Bancassurance policies but lowest percentage of Female i.e. 47% were taken as Bancassurance policies.

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12. Income Wise Income 1 Lac-2 Lac 2 Lac-3 Lac 3 Lac-4 Lac 4 Lac-5 Lac 5 Lac-6 Lac Total Percents (%) 20% 40% 30% 3.33% 6.67% 100

Chart No. 7.12 Income Wise

40% 30% 20% 10% 0%

Percents (%)

1 Lac-2 2 Lac-3 3 Lac-4 4 Lac-5 5 Lac-6 Lac Lac Lac Lac Lac

Explanation:The above chart is of Income Wise Distribution of customers. It shows that Income Group 2 Lac 3 Lac were the highest percentage of Life Insurance Policy takers i.e. 40% & lowest percentage is of Age Group 4 Lac 5 Lac i.e. 3.33%. It indicates that young generation is more aware about investment in Life Insurance Sector of Bancassurance.

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13. Reason Wise Reasons Tax Benefits, Income Benefits Family Future Protection Long Life Protection Education Purpose Child Future Protection Total Percents (%) 20% 16.67% 33.33% 16.67% 13.33% 100

Chart No. 7.13 Reason Wise

35% 30% 25% 20% 15% 10% 5% 0%

Percents (%)

Explanation:Reason Wise Distribution of respondent shows that Maximum respondent i.e. 33.33% reason of Long Life Protection then 2nd number they were more interested in reason of Tax benefit, Income Benefit & 3rd number they were interested in Family Future Protection as well as Education purpose than the Child Future Protection in Bancassurance policies.

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14. Customer Satisfaction about Services Customer Service Yes No Total Percents (%) 100% 0 100

Chart No. 7.14 Customer Services 0%

Yes No 100%

Explanation:The above chart shows that 100% of customers are satisfied about their services in Bancassurance.

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15. Awareness of Bancassurance Awareness Yes No Total Percents (%) 50% 50% 100

Chart No. 7.15 Awareness About Bancassurance

50%

50%

Yes No

Explanation:From the above chart, shows that 50 % of customers are knows that awareness of bancassurance but under 50% of customers are unaware of bancassurance.

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16. Insurance covered Insurance covered Yes No Total Percents (%) 75% 25% 100

Chart No. 7.16

Insurance Covered

25%

Yes No 75%

Explanation:The above chart shows that highest percentage i.e. 75% of customers is satisfied about their Bancassurance polices but lowest percentage i.e. 25% of customers is not satisfied with these Bancassurance policies. Conclusion: In this chapter, data collected from the SBI Life Insurance Ltd. & ICICI Prudential Life Insurance Ltd. The data analysis is based on customers of the SBI Life Insurance Ltd. & ICICI Prudential Life insurance Ltd. Such as customers age, occupation, qualification, marital status.etc.

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CHAPTER: 8 FINDINGS, SUGGESTIONS & CONCLUSION

FINDINGS: 1. It is a combination of Traditional Loan & Saving bank product with such assurance products as life assurance & pensions. 2. Bancassurance in its simplest form is the distribution of insurance product through bank distribution channels. 3. The motive behind Bancassurance varies: a) b) for Banks : Product diversification & source of additional income. for Insurance companies : A tool of increasing there market

penetration, premium turnover. c) for customer : Reduced price, high quality product, delivery at

doorsteps. 4. Bancassurance takes various forms in various countries depends upon the demography, economic & legislative climate of that country. 5. Bancassurance main advantage is as a bonanza in terms of reduce price, high quality product & delivery doorstep for benefited to the customers. 6. The SBI Life Insurance Ltd. & ICICI Prudential Life Insurance Ltd. are pre-dominant players in Bancassurance is positive about the channels bringing about a transformation in the way insurance has been sold so far.

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7. Bancassurance sectors are regulator by two different entries. They are:a) b) Banking is fully governed by RBI & Insurance sectors is by IRDA.

8. Out of respondent only 50% were aware about Bancassurance. Rest of taken the policies by Bancassurance but not aware that the purchase it through Bancassurance. 9. Qualification wise distribution shows that graduate people are move aware about Bancassurance i.e. 50% of graduate purchase policies through Bancassurance. 10. Most people are interested in education plan of ICICI i.e. 33% & endowment plan of SBI i.e. 53%. 11. Most of the respondent purchases the policies for long life

protection i.e. 33% & very few were interest rate in child future protection policy. 12. All the respondents said that they are satisfied with the services provided by both the Bancassurance companies. 13. Service sector people are more interested in purchase of Bancassurance policies than the business people. Out of our sample survey only 23% businessmen were taken Bancassurance.

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SUGGESTIONS: 1. Bancassurance provides the combination of Traditional loan & Savings banks products is spreading worldwide. 2. Bancassurance increasing their market penetration & premium turnover. 3. In Bancassurance SBI Life Insurance Ltd. reduced their premium rate & insurance coverage amount as benefited to the customers. 4. In Bancassurance, the customer is unaware about Bancassurance policy. If suggest that 100% of customers are also aware about the Bancassurance policy. 5. Awareness about Bancassurance among all the strata should be done by the Bancassurance companies by way of proper marketing, advertising & providing the information about benefits of Bancassurance. 6. Even the respondent awareness about Bancassurance most of them purchase the policies just a fewer back. So, just premium payment period is going on. So, about services also Bancassurance Company must work. 7. Bancassurance is not that much famous in rural area as told by the insurance agent. Therefore, they must tapped thy must ignore market. This is very much possible SBI Life Insurance Ltd. Because SBI Life Insurance Ltd. Is branch network is already spread all over India. 8. Bancassurance companies should reduce premium rate.

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CONCLUSION: Bancassurance in India simply means selling of insurance products by banks. In this arrangement, insurance companies and banks undergo a tieup, thereby allowing banks to sell the insurance products to its customers. SBI Life Insurance Ltd. & ICICI Prudential Life Insurance Ltd. Are produced new plans such as SBI Life Smart ULIP & ICICI Prudential Pinnacle? Bancassurance provides many products Such as funded product, treasury product, investment product & fixed income product. These products are also benefited to the customers & enjoy their confidence. Actually everybody is a winner.

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CHAPTER 9 RECOMMENDATIONS

Measures to Improve Bancassurance in India:

Factors that are critical for success include strategies consistent with Banks vision, knowledge of target customers needs, defined sales process for introducing insurance services, simple yet complete product offerings, strong service delivery mechanism, quality administration, synchronized planning, all business line & subsidiaries, complete integration of insurance with other business products & services, expensive & high-quality training of sales personnel. Another critical point to be tackled is customer service (CRM). Bank should implement Customer Relationship Management (CRM) strategies to handle the customers tactfully. Banks & insurance company should work jointly towards model global retail financial institution offerings a wide array of products which leads to creation of one-stop for mortgages, pensions, savings & insurance products. Major success factors for bancassurance: Favorable legal system in country Strong banking infrastructure coupled with strong banking culture Cross selling of products Concept of relationship banking Fiscal factors like tax incentives
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The given above are foundation stone for bancassurance in any country. In 1980s European banking system was at the stage of maturity and diversifying their activity and optimizing the products. Bancassurance sizably contributed in banks revenue. It also helped banks to retain its customers loyalty by providing them right investment option at right time.

If we look at the figures given above and compare the countries in terms of insurance penetration ratio(defined as ratio of insurance premium to GDP), a key indicator of the spread of insurance coverage and insurance culture, India compares poorly by international standards. The penetration ratio was less than one per cent in 1990s and it improved to 4.8% by endMarch 2006. As against this, a Survey Report of Swiss Re revealed that the penetration ratio as at end-March 2006, in respect of some of the
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European countries, viz., UK and Switzerland at 16.5% and 11.0%. In Asia, Taiwan and South Korea had registered their respective ratio of as high as 14.5% and 11.1%. Insurance Penetration ratio for the World was placed at 7.5% far greater than that of India. According to survey we can say that there is huge opportunity for bancassurance in our country because India have huge banking infrastructure and satisfied other factors too which helped for success of bancassurance.

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