Top Indian Banks Earn ₹21,773 Crore in Insurance Commissions

India’s 15 major banks collectively earned ₹21,773 crore in commissions during FY24, primarily from distributing life insurance, mutual funds, and related financial products. HDFC Bank topped the list with ₹6,467 crore, followed by SBI (₹3,893 crore) and Axis Bank (₹3,320 crore). 

Other significant contributors included Kotak Mahindra Bank (₹1,633 crore), IndusInd Bank (₹1,298 crore), and ICICI Bank (₹984 crore), while Yes Bank reported (₹873 crore) in commission income, outperforming Punjab National Bank (₹ 666 crore) and Bank of Baroda (₹775 crore).

The report by 1 Finance noted that many of these products originated from the banks’ own affiliated companies, indicating a strong internal referral trend. 

Alarming Signs of Mis-selling and Affiliation Bias

A concerning revelation from the report is that 7 out of 10 surveyed banks earned over 50% of their insurance commissions from their own group companies. For instance, Kotak Mahindra Bank earned all its life insurance commissions through Kotak Life, while Canara Bank received nearly all mutual fund commissions from Canara Robeco. 

Regulatory Concerns and Impact on Policyholders

The Reserve Bank of India (RBI) has voiced worries about the rising trend of mis-selling insurance by banks, suggesting potential future regulatory action. The persistency rate for affiliated insurers stands at 51% over 5 years, indicating that nearly half the policies lapse within that period. 43.3% of all benefit payouts by top insurers relate to surrendered, lapsed, or discontinued policies, suggesting poor customer experience. 

Additionally, a majority (57%) of surveyed bank relationship managers admitted they were directed to sell products regardless of customer needs. While SEBI has restricted upfront commissions in mutual funds since 2018, the IRDAI continues to allow high first-year commission, up to 65%, on traditional insurance policies, further fuelling this trend.

Read more: Best Investments for Monthly Income in India for June 2025!

Conclusion 

The sharp rise in commissions, especially from affiliated insurers, alongside low policy retention and regulatory gaps, highlights a growing mis-selling issue that may soon prompt stricter oversight.

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