Bandhan Bank anticipates a potential annual income reduction of approximately ₹200 crore in its third-party business due to proposed insurance distribution reforms introduced by the Insurance Regulatory and Development Authority of India (IRDAI). The Kolkata-headquartered private sector lender currently generates around ₹500 crore to ₹600 crore every year through the distribution of third-party products, making this segment a vital component of its fee-based earnings. Managing Director and Chief Executive Officer Partha Pratim Sengupta highlighted that the regulatory changes would impact the entire banking and insurance industry, acknowledging that Bandhan Bank is not immune to these systemic shifts. In response to the proposed guidelines, the bank has submitted a direct representation to IRDAI, requesting a fair commission framework that adequately reflects and compensates distributors for operating costs, extensive physical networks, and ongoing technological investments required for insurance sales. Despite the immediate financial headwind, Bandhan Bank remains confident in its ability to cushion the impact and recover the lost revenue by strategically adjusting its business model and aggressively expanding other non-insurance fee-generating verticals. To bridge the ₹200-crore shortfall, the lender plans to accelerate its focus on mutual fund distribution, credit cards, foreign exchange services, and trade finance offerings. By diversifying its product suite and deepening customer engagements across these alternative financial channels, Bandhan Bank aims to sustain its overall fee income momentum while adapting smoothly to the evolving regulatory landscape surrounding insurance distribution in India.
