IRDAI Issues Guidelines To Protect Interest Of Policyholders Of Merged Banks
Group health insurance policies of customers of the public sector banks slated to be merged with other public sector banks will continue to be serviced by insurer companies till the end of the policy period, Insurance Regulatory and Development Authority of India said on Tuesday.
The government has announced to merge 10 public sector banks into four with an aim to have fewer but bigger banks from April 2021.
"Upon merger of these PSBs, the underlying group health insurance policies of the customers of the merged banks shall continue to be serviced by the respective insurance companies which issued the policies till the end of the policy period," the insurance regulator said in a circular.
The insurance companies shall make suitable arrangements with the acquiring banks in this regard, it added.
IRDAI said the guidelines have been issues in order to protect the interests of the group insurance policyholders of the merged banks.
Further, at the end of the current policy period of the group insurance policy of the merged bank, the acquiring bank at its option can continue with the same group insurance policy with the same insurance company, for the customers of the merged bank.
Also, the acquiring bank can simultaneously continue to have insurance coverage for its customers with its existing insurance company.
The acquiring bank can also offer this insurance coverage to the customers of the merged bank with the consent of its insurer, IRDAI added.
In the biggest consolidation exercise in the banking space, the government in August 2019 had announced four major mergers of public sector banks, bringing down their total number to 12 from 27 in 2017, a move aimed at making state-owned lenders global sized banks.
United Bank of India and Oriental Bank of Commerce will be merged with Punjab National Bank; Syndicate Bank will be merged with Canara Bank; Allahabad Bank will be amalgamated with Indian Bank; and Andhra Bank and Corporation Bank will be consolidated with Union Bank of India.