New RBI norms may trim banks' fee income

MIS-SELLING GUIDELINES, BROKER FUNDING CURBS EXPECTED TO WEIGH ON BANK REVENUES

- CHRISTINA TITUS

THE RESERVE BANK of India’s (RBI) new guidelines on mis-selling of financial products and broker funding are expected to hit banks’ fee income, said bankers and analysts.

Bancassurance is a widely used model where banks partner with insurance firms to distribute insurance products, earning significant fee income in the process.

For instance, HDFC Bank, India’s largest private sector lender, generated %6,308 crore in fee income from insurance sales in FY25, accounting for 13.8% of its other income. The share of selling third-party products, including mutual funds, constitutes 24.7% of the total fee income in FY25 compared to 22% in FY24.

At the same time, Axis Bank earned %3,174 crore from selling insurance policies in FY25, representing 12.5% of its other income. State Bank of India generated 2,766.83 crore from its insurance business, accounting for 4.5% of other income.