Archive · 7 Oct 2026
RBI to Share Views on Irdai Insurance Distribution Reforms
Irdai is considering new rules for how insurance is sold and how much sellers can be paid.
These rules could affect banks and NBFCs that earn money by selling insurance.
RBI Governor Sanjay Malhotra said the RBI is studying the possible effects.
He said Irdai is in charge of deciding the rules, and the RBI will share its comments.
The proposals are still a draft, so people and companies can give feedback.
Irdai says the changes are meant to lower costs for customers and reduce mis-selling.
The feedback period ends on 25 October.
RBI Governor Sanjay Malhotra said the central bank is reviewing how Irdai’s proposed insurance-distribution changes could affect banks and NBFCs.
Malhotra said insurance distribution is primarily Irdai’s remit and the RBI has not formed a view but will provide comments.
Irdai’s consultation paper proposes tighter insurer expense limits, product-level commission caps and a simplified distribution framework.
The proposed commission changes could reduce payouts to banks and NBFCs, while a ban on compulsory bundling could affect insurance attachment rates on loans.
The consultation, released on 23 September, is open for feedback until 25 October; Irdai says the proposals aim to reduce consumer costs and mis-selling.
- Who
- The Reserve Bank of India, Governor Sanjay Malhotra, and the Insurance Regulatory and Development Authority of India.
- What
- The RBI is reviewing proposed insurance-distribution reforms and plans to share its comments with Irdai.
- When
- Malhotra spoke at a post-policy press conference; the consultation paper was released on 23 September, with feedback due by 25 October.
- Where
- Mumbai.
- Why
- The proposed changes could affect banks’ and NBFCs’ insurance income; Irdai says its proposals seek to reduce consumer costs and mis-selling.
Consumer protection
Distribution economics
Reducing costs and mis-selling
Consumer protection
Irdai’s stated rationale is to reduce consumer costs and prevent or reduce mis-selling.
Distribution economics
Banks and NBFCs may face lower insurance commission income, particularly from credit-linked products.
Restrictions on loan-linked insurance
Consumer protection
The proposal to prohibit compulsory bundling could help prevent insurance from being made a condition of loans.
Distribution economics
A ban on compulsory bundling could affect insurance attachment rates on loans.
- RBI governor
- Sanjay Malhotra
- Insurance regulator
- Insurance Regulatory and Development Authority of India (Irdai)
- Consultation paper released
- 23 September
- Feedback deadline
- 25 October
- Life insurer EoM targets
- 15% of premium within two years and 12.5% within five years
- General insurer EoM targets
- 25% of premium within two years and 20% within five years
- Proposed first-year commission limits
- 5% to 20%, depending on the product