The Impact of Banking Insurance and Mutual Fund Business on Financial Inclusion and Awareness

Abstract

Insurance and Mutual Fund was not the core business of banking Industry a few years back. Now a numbers of banks are engaged in this business. The main objectives are to increase risk free income. Banks are conducting insurance and mutual fund business with indigenous or foreign companies. These sectors are still untapped. To utilize these huge potentials, banks are doing business under cross selling. Banks are having both advantages and disadvantages in doing insurance and mutual fund business. The challenges for bank are to reach to new clients other than their own customers. 15 Micro Insurance, 2 Re-insurance, 24 Life Insurance & 34 General Insurance companies are engaged in insurance business. 46 Mutual Fund houses or Asset Management Companies are providing their services. Up to December, 2018, Assets Under Management is Rs.24,08,538 crores. Investment in good times in insurance policies helps insured in bad times. FDI in insurance sector has been hiked from 26% to 49%. Powers of IRDA has been strengthened. It enhances the financial literacy, awareness among customers and non customer’s. Foreign Companies are taking lot of interests. Insurance by bankers are known as bancassurance. Customers are offered Mutual Fund as Dual Advantage Fund (DAF) to make it more attractive. Collected amount from these businesses are used to develop the infrastructure of the country.