Insurance Intermediaries can maintain current accounts in appropriate number of banks: Irdai

Regulator Irdai on Wednesday said insurance intermediaries, including entities sponsored by them, can maintain current accounts in appropriate number of banks for the purpose of meeting regulatory requirements and reinsurance business.

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In August 2020, the Reserve Bank of India (RBI) had instructed banks not to open current accounts for customers who have availed credit facilities in the form of cash credit or overdraft from the banking system.

Later, on a review, the RBI permitted banks to open specific accounts that are stipulated under various statutes and instructions of other regulators/ regulatory departments, without any restrictions placed in terms of its August 2020 circular.

In a circular, the Insurance Regulatory and Development Authority of India (Irdai) said it has been observed that the insurance intermediaries maintain multiple current accounts with banks at different operational levels (branch offices, and corporate offices, among others), for regulatory and other purposes.

"...It is clarified that the respective insurance intermediaries including entities sponsored by them may maintain current accounts in appropriate number of banks for the purpose of meeting regulatory requirements, reinsurance business, etc that are in line with conditions given in regulations, guidelines, circulars issued by the Authority," Irdai said.

The regulator had received representations from the intermediaries in regards to maintaining current accounts with banks. The ciruclar has been issued to avoid hardships, if any, faced by the insurance intermediaries.

Irdai, however, asked the insurance intermediaries to review annually the need for having multiple current accounts and rationalisation.