New Delhi: Union Home and Cooperation Minister Amit Shah Tuesday informed Parliament that the government is expanding the role of the cooperative sector in the insurance business by enabling cooperative banks to act as ‘corporate agents’ for distributing insurance products. However, he did not confirm whether the Centre plans to set up a new cooperative insurance company, despite indicating earlier that the sector would enter the insurance space through a new entity.
In a written reply to a question by All India Trinamool Congress (AITC) MP Sougata Ray in the Lok Sabha, Shah stated that the Ministry of Cooperation has taken several steps to strengthen cooperative banks and allow them to undertake banking and allied financial activities on par with commercial banks.
“The Ministry of Cooperation has undertaken several initiatives to enable cooperative banks to carry out banking and allied financial activities at par with commercial banks, including acting as ‘Corporate Agents’ for the distribution of insurance products,” Shah said.
According to the government, the move will also improve access to banking and insurance services in rural, semi-urban and underserved areas.
The minister said these measures are aimed at diversifying the business of cooperative banks, improving their financial viability and competitiveness, increasing fee-based income, and promoting financial inclusion.
In his written reply, Shah also said that the Reserve Bank of India (RBI) has removed the Rs 50 crore minimum net-worth requirement for rural cooperative banks to obtain a corporate agent licence.
The government said the decision will allow more cooperative banks to distribute insurance products and improve insurance penetration across the country.
Sougata Ray had sought details on whether the government plans to set up an insurance company, whether a feasibility study has been conducted and whether the proposed entity would be government-owned or a joint venture.
Shah’s latest reply does not directly answer these questions. Instead, it focuses on steps being taken to expand insurance distribution through cooperative institutions.
The reply builds on Shah’s written response to Parliament during the budget session in March, when he outlined the government’s roadmap to expand the role of cooperatives in achieving its ‘Insurance for All by 2047’ vision.
The government had then said more than 150 cooperative banks and societies had been registered as corporate agents to distribute insurance products.
It had also informed Parliament that 52,369 Primary Agricultural Credit Societies (PACS) had been converted into Common Service Centres (CSCs) to provide insurance services at the grassroots level.
Cooperative banks together maintain over 22 crore deposit accounts, while PACS have more than 13 crore farmers as members, giving the sector a strong presence in rural India. The earlier reply had further said that changes to the Insurance Act now allow eligible cooperative societies to establish insurance cooperative societies.
(Edited by Amrtansh Arora)
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