Banks vs Insurance Co. 2003

8/3/2019 Banks vs Insurance Co. 2003

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Which brand is bigger?


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Introduction

BANKS INSURANCE COMPANIES

y Corporate Entity

y Registered with the RBIy Accepts deposits and gives

loan on interest.

y Financial Institution

y Sells Insurance against assets.y Insurance, is a form of risk

management.


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H

istory of Bankingy 1786- 1st banks in India

y 1806- Bank ofCalcutta

y 1921 Bank ofCalcutta , Bank of Bombay and Bank ofMadras formed the Imperial Bank of India.

y 1947- Imperial Bank of India was renamed as SBI.

y 1949- RBI was nationalised.

y 1991-Liberalisation.


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Evolution of Insurance in India

y 1818- 1st Insurance Company.

y 1870-1st Life Insurance Company.

y

1912- 1st Law to

Regulate the Life Insurance Business.y 1928- The Indian Insurance Companies Act

y 1938: Amendment of the Insurance Acty 1956:245 Indian&foreign insurers &provident

societies are taken over by the central government &

nationalized.y LIC formed by the LIC Act, 1956, with a capital

contribution of Rs. 5 crore from the GovernmentofIndia.


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Scenario of banking

BANKS

Non-ScheduleSchedule

Commercial Co-operative

Nationalised SBI &groupbanks

Regional &Rural Banks Pvt. Sector

banks


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13 Private players in the market today:

6 Bank owned insurers- HDFC Standard Life, ICICIPrudential, ING Vysya, Metlife, OM Kotak, SBI Life

7 Independent Insurers- Bajaj Allianz , Birla Sun Life, Aviva,Max New York Life, Tata AIG, Reliance Life and Sahara Life

LIC The state Insurer is the dominant player with over 70%

of the market share

Total Life Market Size at Rs. 250 billion (USD 5.5. Bn)

Insurance Industry in India


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1.

Benefits to IndianE

conomyBanks Insurance companies

y Credit creation.

y Flow of money.

y Cash rich

y Purchase of governmentbonds.

y This money is used by the

government f

or devel

opment.


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PublicPublic $$

BankBank

Credit CreationCredit Creation

Rs200Rs200

Rs150Rs150

Rs112.5Rs112.5

Rs150Rs150Rs112.5Rs112.5

Rs84.4Rs84.4


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2.InterdependenceBanks Insurance Companies

y All bank a/c are insured uptothe extent of Rs. 1 lac. WithDICGC.

y Banks require assets of thefinanced by them insured

with the ins.Co

y Ins. Co. need bankingfacilities for smoothfunctioning.

y Insurance claim is paid bybanking services.


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3.

S

erv

ices and productsBanks Insurance Companies

y Along with their own

services , banks also providewith other insuranceproducts.

y InsuranceCompanies

Provide their own insuranceproducts such as lifeinsurance , insurance againstassets etc.


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SERVICES BYBANKS

ACCEPTINGDEPOSITS

GRANTINGLOANS

SECONDARYFUNTIONS

VAULTSAND

LOCKERS

LETTER OFCREDITCURRENT

CASHCREDIT

LOANSADVANCESBILLS

DISCOUNTINGG

SAVINGS FIXEDRECURRING

OVERDRAFT

FOREIGNEXCHANGE


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Types of Insurance

Life insurance

Non - Life Insurance

(general insurance)

Property (eg.Builders risk insurance)

Aviation(eg . Private aircraft insurance)

Marine (eg. Marine hull insurance)

Miscellaneous (eg. Purchase insurance)


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Bancassurance

y Banks & Insurers across the World have realizedBancassurance is the distribution channel, which

would help them achieve economies of scale andboost their revenues in the 21stCentury

y Bancassurance is the selling of insurance andbanking products through the same channel, most

commonly through bank branches selling insurance.


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4.Benefits to organizations.

Banks Insurance companies

y Without banks it would be

very difficult to transfer fundsand undertake tradetransactions.

y Thus, the majorityof thepopulation today has bank

a/c.

It helps the business

organization to reduce thelosses as they can insure theirinventory and other assets.


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5. Additional services provided

Banks Insurance Companies

y

Investment banking,merchant banking, assistancein mergers and acquisitions

yInsurance companies do notprovide any such services.


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6.SafetyBanks Insurance Companies

y People save their money in

banks and they receive areasonably good amount ofinterest.

y They provide protection

against life and assets.


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7. Benefits to family.Banks Insurance Companies

y Banks are used to transfer

funds to

their relatives andchildren for payment of fess ,etc

y The nominee of a life

insurance po

licy is entitled to

receive the amount after thedeath of the assured.


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Banks are a better brand

becausey Banks offer safety and reasonably good interst on the

savings

y

Banks provide credit for the economy.y Even insurance co's need banking services;

y Banks also sell insurance products.

y Banks also provide various other services such as

investmentbanking, raising money from publicthrough IPO's.


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Bibliographyy http://en.wikipedia.org/wiki/History_of_banking

y http://www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo4&mid=2

y http://en.wikipedia.org/wiki/Investment_banking

y http://en.wikipedia.org/wiki/Savings_bank

y http://en.wikipedia.org/wiki/Merchant_banking.

y http://www.financialcrisis2009.org/forum/Insurance/How

-does-insurance-affect-our-economy-235984.htmy http://www.jstor.org/pss/1991084

y http://moneyterms.co.uk/bancassurance/

y http://en.wikipedia.org/wiki/Bancassurance

Documents

Banks vs Insurance Co. 2003