HDFC Bank, IDFC First Bank, and Stock Holding Securities IFSC Ltd (SSIL) have been granted permission to act as corporate agents for insurance in GIFT City, India’s premier International Financial Services Centre (IFSC). This move enables them to sell insurance products to over 35 million Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) globally, under provisions of Insurance Act.
Key Highlights
Corporate Agent Designation:
- HDFC Bank, IDFC First Bank (IFSC unit), and SSIL are among first entities at GIFT City to be designated as corporate agents.
- As insurance intermediaries, these institutions now have capacity to market and sell insurance products alongside their own financial offerings.
Insurance Offerings & Target Audience:
- Products Offered: Tailored life, health, and general insurance policies designed for NRIs and PIOs.
- Coverage: Over 35 million Indians abroad—with a breakdown of 15.85 million NRIs and 19.57 million PIOs.
- Competitive Advantage: Insurance products purchased through GIFT City follow Indian law (e.g., Indian Succession Act), which benefits NRIs by ensuring that the nomination and succession processes are governed by Indian legislation rather than foreign laws.
Cost Reduction & Indigenous Sourcing:
- The new licenses facilitate the use of domestically sourced materials in manufacturing drone cameras and ISR equipment, paralleling the broader strategy of lowering operational costs.
- While traditionally these insurance products might be imported with high costs, the corporate agents at GIFT City will help reduce this financial burden while enhancing accessibility.
Regulatory Framework:
- Regulator: International Financial Services Centres Authority (IFSCA) oversees the implementation and regulation of services within GIFT City.
- Banks in the IFSC are in the process of becoming corporate agents under the Insurance Act. HDFC Bank, IDFC First Bank, and SSIL have already been issued the necessary licenses.
- A Standing Committee on Insurance has been constituted by IFSCA to further enhance GIFT City’s status as a global insurance hub. This committee is tasked with strategic insights on regulatory matters, benchmarking with other IFSCs, and recommending improvements in insurance and reinsurance regulation.
About GIFT City
GIFT City (Gujarat International Finance Tech-City) is India’s first operational IFSC and a smart city, designed to be a global financial and IT services hub offering unique regulatory and tax incentives.
Location:
Located on the banks of Sabarmati River, between Ahmedabad and Gandhinagar in Gujarat, it spans 886 acres and boasts high-rise buildings, smart offices, and integrated civic amenities.
Functionality:
- GIFT City allows various financial institutions to set up offices called IFSC Banking Units (IBUs). IBUs cater to both domestic and international clients and now increasingly caters to insurance and (re)insurance sectors.
- The city is fostering a diverse ecosystem, integrating financial services with advanced technology and streamlined regulatory benefits.
What This Means for NRIs/PIOs?
- Legal Clarity: Insurance policies sold via GIFT City will follow Indian Succession Law, not foreign laws (e.g., Sharia law in the Middle East).
- Simplified Process: NRIs/PIOs can open bank accounts and buy insurance in one place, reducing the need to interact with multiple institutions.
- Trust Factor: Banks are often first point of contact; customers get insurance advice from trusted financial partners.
Indian Regulation Advantage: Insurance products aligned with Indian legal frameworks offer greater familiarity and protection for policyholders and nominees.