IRDA scrutinises bank stakes in Indian insurers

Equity tie-ups between Indian insurers and their bancassurance partners are coming under scrutiny from India’s insurance regulator.

As reported by online news source, Daily News and Analysis, the Insurance Regulatory and Development Authority's chairman J Harinarayan expressed concerns about banks diluting the shareholding of insurance companies at a recent Insurance Institute of India seminar.

"We are happy about the consolidation happening in the insurance space. But whenever there is a substantial increase or acquisition of shareholding in an insurance company, it can occur only with the prior approval of the regulator. Every such deal should also meet the accounting standards of the country," Harinarayan said, according to the publication.

Harinrayan told Daily News and Analysis that the regulator was retrospectively reviewing equity tie-ups that had already taken place.

Deals between insurance companies and banks have increased in popularity in recent months, as insurers seek to take advantage of the alternative distribution channel to get their products into the market.

One of the deals the IRDA is said to be looking into is the Punjab National Bank's acquisition of a 30% stake of MetLife India Insurance Co which was announced last June.