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  • 8/8/2019 Project - Nupur Sharma


  • 8/8/2019 Project - Nupur Sharma



    I Nupur Sharma Roll No. MO8052, Class - MBA, student of Amity School of

    Insurance And Actuarial Science here by declare that the project entitled

    Bancassurance is an original work and the same has not been submitted to any other

    institute for the award of any degree. The interim report was presented to the Supervisor

    on Mrs. Komal Kapoor.

    Signature of the Candidate

    Signature of the Supervisor

    Director/ of the Institute

  • 8/8/2019 Project - Nupur Sharma



    In this present world of competition there is a race of existence in which those who are

    having will to come forward will succeed. Project is a bridge between practical and

    theoretical working, with this will I have joined the project. I really wish to express my

    gratitude towards all those people who have helped me.

    I really indebted to Dr.R.K.Grover, Director ASIAS, for this kind hearted approach. His

    timely guidance, supervision & encouragement have helped me to get this golden


    My project guide Mrs. Komal Kapoor lecturer of ASIAS Noida, who provided me her

    expert advise, inspiration & moral support in spite of her busy schedule & assignments,

    has mainly provided my understanding of this project. I am very grateful to his

    kindhearted approach & encouragement, which helped me immensely in completion of

    this project report.

    Last , but not the least, I say only this much that all are not to be mentioned but none is

    forgotten and I will like to extend my special thanks and gratitude to my parents who

    always encourage me in pursuit of excellence.


  • 8/8/2019 Project - Nupur Sharma


    Chapter 1

    History of Banking in India.

    1. Definition

    2. History

    History of Insurance in India

    1. Definition

    2. History

  • 8/8/2019 Project - Nupur Sharma


    Introduction to Banking

    Banking as per the Banking Regulation Act, Banking is defined as: -

    Accepting for the purpose of lending of deposits of money from

    the public for the purpose of lending or investment, repayable on demand

    through Cheques, drafts or order.

    A sound and effective banking system is necessary for a healthy

    economy. The banking system of India should not only be hassle free but it

    should be able to meet new challenges posed by the technology and any

    other external and internal factors. Many new things have come up in the

    banking sector in the recent years. Banks have adopted the new technology

    because banking has not remained up to accepting and lending but now it is

    all about satisfying the needs of the customers.

    The development of the Indian banking sector has been accompanied

    by the introduction of new norms. New services are the order of the day, in

    order to stay ahead in the rat race. Banks are now foraying into net banking,

    securities, and consumer finance, housing finance, treasury market,

    merchant banking etc. They are trying to provide every kind of servicewhich can satisfy or rather we should say that it can delight the customers.

    Entry of private and foreign banks in the segment has provided

    healthy competition and is likely to bring more operational efficiency into

    the sector. Banks are also coping and adapting with time and are trying to

    become one-stop financial supermarkets. The market focus is shifting from

    mass banking products to class banking with the introduction of value added

    and customized products.

  • 8/8/2019 Project - Nupur Sharma


    Introduction to Insurance Sector

    Insurance may be defined as: -

    It is a contract between two parties where by one party

    undertakes to compensate the party for the loss arising due to an uncertain

    events for which another party agrees to pay a certain amount regularly.

    In India, insurance has a deep-rooted history. Insurance in India has

    evolved over time heavily drawing from other countries, England in

    particular.The insurance sector in India has a full circle from being an open

    competitive market to nationalization and back to a liberalized market again.

    The business of life insurance in India in its existing form started in India inthe year 1818 with the establishment of the Oriental Life Insurance

    Company in Calcutta.

    The Insurance Act, 1938 was the first legislation governing all

    forms of insurance to provide strict state control over insurance

    business.Today there are 14 general insurance companies and 14 life

    insurance companies operating in the country. But today also the insurance

    companies are trying to capture Indian markets as not many people areaware of it.

    The insurance sector is a colossal one and is growing at a speedy

    rate of 15-20%. Together with banking services, insurance services add

    about 7% to the countrys GDP. A well-developed and evolved insurance

    sector is a boon for economic development as it provides long- term funds

    for infrastructure development at the same time strengthening the risk taking

    ability of the country.

  • 8/8/2019 Project - Nupur Sharma


    Chapter 2

    About Bancassurance

    1. Meaning

    2. Origin

  • 8/8/2019 Project - Nupur Sharma



    With the opening up of the insurance sector and with so many players

    entering the Indian insurance industry, it is required by the insurance

    companies to come up with innovative products, create more consumerawareness about their products and offer them at a competitive price. Since

    the banking services, insurance and fund management are all interrelated

    activities and have inherent synergies, selling of insurance by banks would

    be mutually beneficial for banks and insurance companies. With these

    developments and increased pressures in combating competition, companies

    are forced to come up with innovative techniques to market their products

    and services. At this juncture, banking sector with it's far and wide reach,

    was thought of as a potential distribution channel, useful for the insurance

    companies. This union of the two sectors is what is known asBancassurance.


    Bancassurance is the distribution of insurance products through the

    bank's distribution channel. It is a phenomenon wherein insurance products

    are offered through the distribution channels of the banking services along

    with a complete range of banking and investment products and services. To

    put it simply, Bancassurance, tries to exploit synergies between both the

    insurance companies and banks.

    Bancassurance can be important source of revenue. With the increased

    competition and squeezing of interest rates spread, profits are likely to be

    under pressure. Fee based income can be increased through hawking of risk

    products like insurance.

    Bancassurance if taken in right spirit and implemented properly can be win-win situation for the all the participants' viz., banks, insurers and the


  • 8/8/2019 Project - Nupur Sharma



    The banks taking over insurance is particularly well-documented with

    reference to the experience in Europe. Across Europe in countries like Spain

    and UK, banks started the process of selling life insurance decades ago andcustomers found the concept appealing for various reasons.

    Germany took the lead and it was called ALLFINANZ. The system of

    bancassurance was well received in Europe. France taking the lead,

    followed by Germany, UK, Spain etc. In USA the practice was late to start

    (in 90s). It is also developing in Canada, Mexico, and Australia.

    In India, the concept of Bancassurance is very new. With the liberalization

    and deregulation of the insurance industry, bancassurance evolved in India

    around 2002.

  • 8/8/2019 Project - Nupur Sharma


    Chapter 3

    Utilities of Bancassurance

    1. For Banks:

    i. As a source of fee based income

    ii. Product diversification

    iii. Building close relations with the customers

    2. For Insurance Companies

    i. Stiff competition

    ii. High cost of agents

    iii. Rural penetration

    iv. Multi-channel distribution

  • 8/8/2019 Project - Nupur Sharma


    As a source of fee income

    Banks traditional sources of fee income have been the fixed charges levied

    on loans and advances, credit cards, merchant fee on point of sale

    transactions for debit and credit cards, letter of credits and other operations.This kind of revenue stream has been more or less steady over a period of

    time and growth has been fairly predictable. However shrinking interest rate,

    growing competition and increased horizontal mobility of customers have

    forced bankers to look elsewhere to compensate for the declining profit

    margins and Bancassurance has come in handy for them. Fee income from

    the distribution of insurance products has opened new horizons for the banks

    and they seem to love it.

    From the banks point of view, opportunities and

    possibilities to earn fee income via Bancassurance route are endless. Atypical commercial bank has the potential of maximizing fee income from

    Bancassurance up to 50% of their total fee income from all sources

    combined. Fee Income from Banca