Banks with bad loans exceeding 5% cannot sell insurance products: Cenbank | The Business Standard
Skip to main content
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • Subscribe
    • Get the Paper
    • Epaper
    • GOVT. Ad
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
The Business Standard

Thursday
July 24, 2025

Sign In
Subscribe
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • Subscribe
    • Get the Paper
    • Epaper
    • GOVT. Ad
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
THURSDAY, JULY 24, 2025
Banks with bad loans exceeding 5% cannot sell insurance products: Cenbank

Banking

TBS Report
20 December, 2023, 10:35 pm
Last modified: 20 December, 2023, 10:39 pm

Related News

  • Bangladesh Bank issues clarification regarding dress code advisory
  • US yet to confirm third-round talks as tariff deadline looms
  • BB asks female staff to wear 'modest' attire, discourages short-sleeved or length dresses, leggings
  • Khulna Power to sell second plant to Turkish firm
  • Milestone plane crash: Students were preparing for coaching after class

Banks with bad loans exceeding 5% cannot sell insurance products: Cenbank

Banks must have a viable bancassurance business plan and review mechanism which must be approved by the board of directors concerned

TBS Report
20 December, 2023, 10:35 pm
Last modified: 20 December, 2023, 10:39 pm
File photo of Bangladesh Bank. Photo: Salahuddin Ahmed/TBS
File photo of Bangladesh Bank. Photo: Salahuddin Ahmed/TBS

Highlights

  • Banks must maintain Bangladesh Bank's credit rating
  • They must have a positive net profit over the last three years
  • No customer can be forced to take the service
  • Banks must credit the customers with the agreed-upon amount upon end of terms

Banks with net non-performing loans exceeding 5% and capital risk-weighted asset ratios falling below 12.5% will not be able to sell their insurance products, the Bangladesh Bank has said.

The central bank issued guidelines yesterday regarding bancassurance that outlined the qualifications for such insurance services, contracts, amendments, renewals, and cancellation procedures, as well as eligibility criteria for officers concerned.

The Business Standard Google News Keep updated, follow The Business Standard's Google news channel

The central bank mentioned that to enhance financial inclusion by insuring the uninsured people and boosting their commission-based income banks have been allowed to sell insurance services.

The banks can sell the service through their branches and digitally but no customer can be forced to take the service, the central bank said.

The banks must take prior approval from the central bank to sell insurance services and simultaneously, they will be required to obtain agent licences from the Insurance Development and Regulatory Authority for insurance development and regulation, it said.

Other conditions

The banks must maintain Bangladesh Bank's credit rating and CAMELS grade of minimum 2%. Additionally, they are required to have a positive net profit over the last three years.

Banks must have a viable bancassurance business plan and review mechanism which must be approved by the board of directors concerned. And the banks will require to have competent and suitable manpower to operate a dedicated bancassurance unit.

Common beneficial owners of the banks and insurance companies or related parties will not be eligible for engaging with bancassurance.

The banks will require Bangladesh Bank's approval for any amendment to the contracts with the insurance companies for sale of insurance services.

The boards of directors of the banks have to review the agreements signed with the insurance companies every three years.

If a bank terminates an agreement with an insurance company, it must fulfil the specified services to customers until the agreed-upon term expires.

Insurance beneficiaries will not incur any type of risk. When an insurance customer's specified term ends, the banks will credit the customer with the agreed-upon amount. Any complaints from the customer will be resolved jointly by the bank and the insurance company.

A senior official of Bangladesh Bank told The Business Standard that the financial sectors must be strengthened to develop Bangladesh into a middle-income country. "The insurance sector is very strong in most of the developed countries. The government has initiated bancassurance to spread the financial security of the people of the country. Now, in the beginning financially strong banks will be given the opportunity to sell this insurance service."

There will be changes in the policy from time to time, he added.

According to the latest update on the capital adequacy of banks under Basel-III in a Bangladesh Bank's report, 11 banks have non-performing net loans exceeding 5%. Additionally, 17 banks have lower capital than the prescribed amount. Therefore, these banks will not be able to sell bancassurance products according to the guidelines.

Bancassurance played a great role in increasing insurance penetration in many countries, including neighbouring India, and Bangladesh should not be an exception, BIA Vice President Nasir Uddin Ahmed told TBS.

There are over 11,200 bank branches across Bangladesh, and they can play a vital role in increasing the popularity of insurance in the country, he said.

The insurance penetration in Bangladesh is only 0.40 percent, when in neighbouring India the rate is 4 percent, according to the Swiss Re Institute's 2022 report.

"If the insurance companies were transparent and they could settle the claims of the customers, and the customers were happy with the companies, then there would be no question of needing bancassurance," said Professor Main Uddin of the Department of Banking and Insurance at Dhaka University.

The concept might be new in Bangladesh, but bancassurance appears to have begun in France in the 1970s, according to investopedia.com. Since then, it has been embraced by most countries, particularly those in the Asia-Pacific region.

Top News

Bangladesh Bank / bad loans / insurance / Bangladesh

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • BB asks female staff to wear 'modest' attire, discourages short-sleeved or length dresses, leggings
    BB asks female staff to wear 'modest' attire, discourages short-sleeved or length dresses, leggings
  • Representational image. Photo: Collected
    US yet to confirm third-round talks as tariff deadline looms
  • File photo of BNP Chairperson Khaleda Zia arriving at the Evercare Hospital from her Gulshan residence on 18 June 2025. Photo: UNB
    Khaleda Zia taken to Evercare Hospital for late night medical check-up

MOST VIEWED

  • Photo: Collected
    Bangladeshi man jailed for life in UK for murdering wife in front of their baby
  • Ctg port authority halts contractor recruitment for Kamalapur ICD operations for two months
    Ctg port authority halts contractor recruitment for Kamalapur ICD operations for two months
  • Fire at Cosmo School in Mirpur on 23 July 2025. Photo: TBS
    Fire breaks out at Cosmo School in Mirpur following generator explosion
  • Representational image. File Photo: Rajib Dhar/TBS
    Debate arises as edu adviser says postponed HSC exams of 22 and 24 July will be held on same day
  • The Government Seal of Bangladesh
    Govt mulls allowing trade unions with 20 workers, industry leaders warn of disorder
  • Photo: CA Press Wing
    Stronger stance needed on maintaining law and order: Political parties to CA

Related News

  • Bangladesh Bank issues clarification regarding dress code advisory
  • US yet to confirm third-round talks as tariff deadline looms
  • BB asks female staff to wear 'modest' attire, discourages short-sleeved or length dresses, leggings
  • Khulna Power to sell second plant to Turkish firm
  • Milestone plane crash: Students were preparing for coaching after class

Features

Photo: Collected

24 July: More than 1400 arrested, 3 missing coordinators found

1d | Panorama
Photo: Mehedi Hasan/TBS

Aggrieved nation left with questions as citizens rally to help at burn institute

1d | Panorama
Photo: TBS

Mourning turns into outrage as Milestone students seek truth and justice

1d | Panorama
Illustration: TBS

Uttara, Jatrabari, Savar and more: The killing fields that ran red with July martyrs’ blood

2d | Panorama

More Videos from TBS

ISPR reports 31 dead, official tally 29

ISPR reports 31 dead, official tally 29

3h | TBS Today
13 political parties meet with chief advisor; urge to announce election date

13 political parties meet with chief advisor; urge to announce election date

3h | TBS Today
Bangladesh and Pakistan unite to fight drugs

Bangladesh and Pakistan unite to fight drugs

4h | TBS Today
Case Study of Milestone Tragedy

Case Study of Milestone Tragedy

5h | TBS Today
EMAIL US
contact@tbsnews.net
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Advertisement
  • Privacy Policy
  • Comment Policy
Copyright © 2025
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net