Fee Based Income – Products
In the present deregulated competitive environment, Banks are facing difficulties in retaining / improving profits since there is pressure on Net Interest Margin (NIM). In order to cope up the demand, Banks are focusing their attention on other services to improve the bottom line. Banks are entering into ancillary services in a big way. To augment other income, our Bank is undertaking five activities viz., Selling of Mutual Funds, AB Arogyadaan, Bancassurance schemes, Sale of Gold Coins and Liability Insurance/Asset Insurance.
Mutual Funds are associations or trusts of public members who wish to make investments in the financial instruments or assets of the business/corporate sector for the mutual benefit of its members. Mutual Funds are launching various schemes with different investment objectives from time to time to suit the requirement of the investors. Mutual Funds are beneficial to their members in reducing risks and maximizing income by proper selection of financial instruments, which will bring income flow in the form of dividends as well as in the form of capital appreciation. Our Bank has entered agreement with Mutual Funds viz., Principal Mutual Fund (PNB), SBI Mutual Fund, TATA Mutual Fund, UTI Mutual Fund, Kotak Mutual Fund, Reliance Mutual Fund, Sundaram BNP Paribas Mutual Fund, LIC Mutual Fund, Birla Sun Life Mutual Fund and Baroda Pioneer Mutual Fund for distribution of their products. It is a win-win situation to the Banks and customers since banks are providing value added services to the customers and it is a source of other income to the Banks.
AB Arogyadaan: It is a group Mediclaim Insurance Scheme, which takes care of the hospitalization expenses, issued as a Floater Policy, in association with M/s. United India Insurance Company Limited. There are two plans viz., Plan-I covers a policy of four (1+3) consisting of Policy Holder, Spouse and 2 dependent children and Plan – II covers a family policy of SIX (1+5) consisting of Policy holder, Spouse, two dependent children and parents (father & mother). Dependent mean “male child – below 26 years and unmarried female child”. It is a Floater Policy, any one member or all the members put together can avail hospitalization benefits (Room, Boarding, Nursing, Surgeon/Consultant fee, Diagnostic charges etc.) during the policy period. M/s. Good Health Plan Limited is acting as Third Party Administrator (TPA) and issue photo identity cards direct to the policy holders in Metro/Urban/Semi-Urban areas and with regard to other centers the cards will be sent to the respective branches. Policy holders are eligible to avail cash less treatment at networked hospitals and incase of non-networked hospitals, they may pay bills first and then claim reimbursement from TPA. The entry age is up to 60 years for fresh proposals and on renewal coverage is up to 80 years. Risk will be covered based on sum assured ranging from one lakh to five lakh. Policy is valid for one year, however 15 days grace period is allowed for payment of premium. The annual premium payable by the customer is depending on the Sum Insured. The premium paid under the Scheme is eligible for IT relief under section 80D. The first 30 days of joining the scheme is treated as waiting period and policy holder is not entitled for reimbursement of hospitalization charges in the said period. However, this condition does not apply in case of accidental hospitalization. The maximum reimbursement will be made to the policy holder is 80% of eligible claim. Bank acts as facilitator only. Settlement of the claims is the sole responsibility of M/s.United India Insurance Company (UIIC). The contract is between the insurer (insurance company) and the insured (individual) and not between the Bank and insured. Further UIIC has extended another benefit i.e. Janata Personal Accident Policy of Rs.1.0 lakh at free of cost, to all the policy holders whose age is 45 years & below as on date of remittance of policy premium. (Cir. No.88 Ref 51/4 dated 28.05.12)
Bancassurance (Life): Andhra Bank is the Corporate Agent for M/s. IndiaFirst Life General Insurance Company Limited and providing various insurance products to the customers of the Bank as well as General Public w.e.f. 01.01.2010.
Bancassurance (Non-Life): Bank is undertaking marketing of non-life policies issued by M/s.United India Insurance Co. Limited to customers as well as general public through selected branches. The important policies are Standard Fire & Special Perils Policy, House Holders Insurance Policy, Shop Keepers Policy, UNI Care Policy, Electronic Equipment Insurance Policy and Contractors All Risk Insurance Policy. Besides the above, branches can also undertake insurance of loan assets (Primary and Collateral securities) with M/s. UII, so that branches can protect the loan assets against risk and earn income through commission. All insurance proposals processed should bear bank Code 920100 to receive eligible commission.
Liability Insurance: Retail loans involve huge sums and remains in existence for longer periods as compared to the other loans. These loans being one of the essential social needs with emotional and psychological attachment, the family need to continue the asset even in case of any unfortunate event to the borrower. Bank is providing cover to Housing / Vehicle / Education loan borrowers in association with India First Life Insurance Corporation (IFLIC) under Group Mortgage Redemption Assurance. Covering the borrowers under this policy helps the bank in reduction of default risk in case of unfortunate event to the borrower. It is also providing a potential avenue for earning fee-based income to the Bank. The scheme is optional to the borrower and the intending borrower need to submit Consent-cum- Authorization and Simple Health Declaration Form.
|Eligibility||Entry age should be between 18 to 69 years and the age at maturity should not cross 75 years. Coverage is available for Joint Borrowers. Age Proof – Copy of Date of Birth Certificate / Passport / Voter’s ID / PAN Card / School Certificate etc. To arrive the correct age for the purpose of calculation of premium, Age as on last birthday should be considered.|
|Maximum||Cover Maximum coverage is available up to Rs.50 crore. However, the policy is covered with the sanctioned limit or the liability as on date, whichever is lower.|
|Death Benefit||The reducing the death benefit will be the loan outstanding as at monthly loan anniversary immediately preceding the date of death of the life assured based on loan schedule calculated at the inception cover.|
|Recovery of short fall amount||In case the amount of claim settled by the insurance company falls short of the liability outstanding in the loan account, the short fall should be paid by the joint borrowers / co-obligants / guarantors / legal heirs of the borrower.|
|Premium||One time Single Premium. The premium will be calculated based on sanctioned limit / liability, age of the borrower and repayment period of the loan. However, in case of existing borrowers, outstanding liability and Residual Repayment Period as on the date of the policy is to be taken into consideration while calculating premium amount.|
|Foreclosure of the Loan||Member will get an option to continue the cover till the end of the term as mentioned in certificate of insurance or member can surrender the cover and get the surrender value.|
|Termination of cover||The insurance coverage will cease at the earliest of – member attaining age of 75 years or demise of the member or termination / discontinuation of the loan or when the policy is surrendered.|
|Cir.no.198 Ref 51/08 dated 12.08.2013|