Bank-Promoted Insurance Companies After The 2025 Legal Reforms: Corporate Control, Board Independence and Regulatory Coordination

Abstract

Banks which own insurance companies operate in the interface of two regulatory systems, and the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 modifies the conditions of such an interface. In this paper, I attempt to explore the manner in which the Act modifies the relationship between the bank promoters and the control of the insurance affiliates they have, whether the independence of the boards is sufficient in dealing with the problems of bancassurance, and how effectively the Reserve Bank of India (RBI) and the Insurance Regulatory and Development Authority of India (IRDAI) coordinate. This study analyzes the modified insurance laws along with the banking, company, and securities laws. I argue that, by the enactment of this Act, the scope for foreign investment is expanded and the independent-board requirement is dispensed with for insurers having substantial foreign investment while the sole provision seeking to address the problems of overlapping of boards of insurers and banks, Section 32A, has not been notified. The statutes also fail to allocate supervisory responsibilities among RBI and IRDAI.