Insurance Bill 2025: HDFC Bank, ICICI Bank, Axis Bank In Focus On Commission Cap Risk
While large banks dominate in absolute numbers, the dependence on insurance income is significantly higher among several mid-sized banks and small finance banks.
Shares of large private sector banks such as HDFC Bank, ICICI Bank and Axis Bank are in focus on Tuesday as the proposed Insurance Bill 2025 is expected to introduce a cap on insurance commissions.
The move could have implications for banks that derive a meaningful share of profits from bancassurance income, particularly those with strong tie-ups in life and general insurance distribution.
People in the know told NDTV Profit that the proposed Insurance Bill 2025 will empower Insurance Regulatory and Development Authority to cap agent commissions through regulations and also tightening oversight on payouts and disclosures.
In addition, IRDAI will decide commission limits through regulations. It will also prescribe limits on any commission, remuneration or reward payable to agents or intermediaries.
Largest Earners
In the last financial year, HDFC Bank, ICICI Bank and Axis Bank were the largest earners from insurance commissions in absolute terms. HDFC Bank earned Rs 6,308 crore from insurance distribution, accounting for around 7% of its profit before tax.
ICICI Bank reported insurance commission income of Rs 4,474 crore, also equivalent to about 7% of profit before tax. Axis Bank earned Rs 3,174 crore, with insurance income contributing a higher 9% of its profit before tax, making it relatively more sensitive to any regulatory changes in commission structures.
Impact On Mid-Sized Banks
While large banks dominate in absolute numbers, the dependence on insurance income is significantly higher among several mid-sized banks and small finance banks.
Equitas SFB stands out, with insurance fee income of Rs 94 crore forming a steep 47.2% of its profit before tax in fiscal 2025. IndusInd Bank earned Rs 1,268 crore from bancassurance, translating into 35.1% of profit before tax, while RBL Bank’s insurance income of Rs 226 crore accounted for nearly 34% of its profits. DCB Bank also shows elevated exposure, with insurance commissions making up over 20% of profit before tax.
Among other lenders, AU Small Finance Bank earned Rs 368 crore from insurance, contributing 13.2% of profit before tax, while Bandhan Bank reported Rs 374 crore, or 10.3% of profits. City Union Bank, Federal Bank and Kotak Mahindra Bank had more moderate exposure, with insurance income ranging between 3% and 7% of profit before tax.
In contrast, public sector banks appear relatively insulated. SBI’s insurance fee income stood at Rs 2,763 crore, but this was just 2.9% of profit before tax, while Bank of Baroda and PNB derived only 1–2% of profits from insurance commissions.
The proposed Insurance Bill 2025, if it imposes a ceiling on commissions, could compress fee income growth for banks with high reliance on bancassurance.
For large private banks, the impact may be manageable given diversified revenue streams, but it could still weigh on incremental profitability. For smaller banks and SFBs, where insurance income forms a sizeable share of profits, the earnings impact could be more pronounced unless offset by higher loan growth or gains in other fee segments.
