INSURANCE
Irdai issues guidelines to protect interest of policyholders of merged PSBs
Jan-30-2020

The Insurance Regulatory and Development Authority of India (IRDAI) has come up with guidelines to protect the interests of group insurance policyholders of merging state-run banks. The circular said that group health insurance policies of customers of the public sector banks slated to be merged with other PSBs will continue to be serviced by insurer companies till the end of the policy period.

The government has announced to merge 10 public sector banks (PSBs) into 4 with an aim to have fewer but bigger banks from April 2021. The insurance companies shall make suitable arrangements with the acquiring banks in this regard. The Insurance regulator said the guidelines have been issues in order to protect the interests of the group insurance policyholders of the merged banks. Further, at the end of the current policy period of the group insurance policy of the merged bank, the acquiring bank at its option can continue with the same group insurance policy with the same insurance firm, for the customers of the merged bank. Also, the acquiring bank can simultaneously continue to have insurance coverage for its customers with its existing insurance company. The acquiring bank can also offer this insurance coverage to the customers of the merged bank with the consent of its insurer, IRDAI added.

As per the government’s merger plan, United Bank of India and Oriental Bank of Commerce will be merged with Punjab National Bank; Syndicate Bank will be merged with Canara Bank; Allahabad Bank will be amalgamated with Indian Bank; and Andhra Bank and Corporation Bank will be consolidated with Union Bank of India.

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