Bancassurance in Bangladesh: Approvals, Products, Commission and Conduct Rules in 2026

Bancassurance in Bangladesh: how the 2026 framework fits together

Bancassurance in Bangladesh is still a young channel, but it has already changed who can sell insurance and on what terms. Since December 2023, eligible scheduled banks have been able to act as corporate agents of life and non-life insurers, selling policies through their branches to their own account and card holders. The framework is a joint product of two regulators: Bangladesh Bank decides whether a bank is sound enough to sell insurance at all, and the Insurance Development and Regulatory Authority (IDRA) licenses the bank as an agent and governs the insurance side of the relationship.

This guide explains how the regime works in 2026: the Bangladesh Bank guidelines and IDRA's corporate agent rules, the eligibility thresholds and the bar on common ownership, the three-plus-three limit on insurer partners, the narrow list of permitted non-life products, commission and the Insurance Act 2010, the conduct rules designed to prevent mis-selling, customer data and the new personal data protection law, claims and complaints, and the market and reform developments of 2025 and 2026. It closes with a practical compliance checklist for banks and insurers.

Summary: A bank may sell insurance only after obtaining Bangladesh Bank's prior approval and an IDRA corporate agent licence. It must meet prudential thresholds, including a 12.5 per cent capital ratio and net NPLs of no more than 5 per cent, may partner with at most three life and three non-life insurers, may sell only to its account and card holders, and is limited on the non-life side to a short list of products. The insurer carries the risk and pays claims; the bank must not coerce, induce or mislead customers.

Key point: The biggest structural restriction is often overlooked: a bank whose common beneficial owners or related parties overlap with an insurer is not eligible for bancassurance at all. Groups that own both a bank and an insurance company cannot simply route the group insurer's products through the group bank.

At a glance

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Table of Contents

Bancassurance in Bangladesh: how the 2026 framework fits together

The legal basis for bancassurance in Bangladesh has three layers. First, the government declared the sale of insurance a permissible business for bank companies by a gazette notification dated 12 December 2023, under section 7(1) of the Bank Company Act 1991.[1] Second, Bangladesh Bank issued its Bancassurance Guidelines for Banks as BRPD Circular No. 18 on 20 December 2023, using its power under section 45 of the same Act.[1] Third, IDRA issued its Corporate Agent (Bancassurance) Guideline 2023 the same week, setting out how a bank becomes a licensed corporate agent of an insurer.[3]

Underneath all of it sits the Insurance Act 2010, which defines an insurance agent as a person registered under the Act who receives commission for soliciting or procuring insurance business, restricts who may be paid for procuring business and caps commission rates.[5] A bank selling insurance is therefore regulated twice: as a bank, for prudential soundness, conduct and customer protection, and as an insurance agent, for licensing, commission and selling practice.

What bancassurance means under the guidelines

Bangladesh Bank defines bancassurance as an arrangement in which a bank sells an insurer's products to the bank's customers, and the bancassurance agency agreement as the contract under which the bank acts as the insurer's corporate agent.[1] The permitted operating model is the direct sales model: the bank promotes and sells insurance plans through its own staff and branch network.[1] The bank does not underwrite, does not carry risk and does not pay claims. Every arrangement must be built around that allocation.

Who may sell: eligibility and the common-ownership bar

Bangladesh Bank set a deliberately high bar. To be eligible, a bank needs a capital-to-risk-weighted-assets ratio, including the capital conservation buffer, of at least 12.50 per cent; a Bangladesh Bank credit rating of grade 2 or better; a CAMELS rating of 2 or better; net non-performing loans of no more than 5 per cent; positive net profit for the last three consecutive years; a viable, board-approved business plan; and competent staff for a dedicated bancassurance unit, confirmed by a declaration from the managing director.[1] Bangladesh Bank may change these thresholds.[2]

The thresholds in practice

The net NPL test is the one that excludes most banks, and only a minority qualified in the first phase: by April 2025 twelve banks and fifteen insurers had regulatory approval.[6] Development observers have noted that the criteria may also limit participation by smaller and rural banks, which is where insurance penetration is lowest.[8] A bank planning to enter bancassurance in Bangladesh should model its position against each threshold for at least the next three reporting periods, because the guidelines allow Bangladesh Bank to suspend or cancel approval where an arrangement harms depositors or breaches the law.[1]

The bar on related insurers

A bank whose common beneficial owners or related parties, within the meaning of section 26Ga of the Bank Company Act, overlap with those of an insurer is not eligible for bancassurance.[1] This rule matters in Bangladesh, where several business groups hold interests in both banks and insurers. It reflects an obvious concern: a captive channel would let a group push its own insurer's products to depositors without competitive pressure on price or claims service. Groups considering a restructuring to qualify should treat the related-party analysis as a legal exercise, not a shareholding headcount.

Approvals and licensing for bancassurance in Bangladesh

The sequence is fixed: Bangladesh Bank first, IDRA second. Our note on Bangladesh Bank approvals explains the regulator's general approach to applications. A bank must obtain Bangladesh Bank's prior approval before engaging in bancassurance, then apply to IDRA for a corporate agent licence, and send Bangladesh Bank a copy of the licence within 15 days of receiving it.[1] It must continue to comply with IDRA's rules to keep the licence.[2]

The Bangladesh Bank application

The application to Bangladesh Bank must include an extract of the board resolution approving the business, the bank's own board-approved internal bancassurance guidelines, the business plan and implementation process, code of conduct declarations and forms, and a signed agency agreement vetted by the legal retainers of both bank and insurer and covering the contents prescribed in the circular's annex.[1] In practice the agency agreement is the document that attracts the most regulatory questions, because it allocates every conduct and claims obligation between the parties.

The IDRA corporate agent licence

IDRA's guideline requires a fee of Tk 50,000 for the corporate agent licence, which is valid for three years, and an application supported by the draft agreement with the partner insurer, Bangladesh Bank's approval and a payment order for the fee.[3] By February 2024 the first licensed banks included BRAC Bank, Mutual Trust Bank, Dutch-Bangla Bank and City Bank, partnering with insurers such as Guardian Life, MetLife and Green Delta.[4]

Changes during the life of an arrangement

Every amendment to a bancassurance agreement needs Bangladesh Bank's approval, renewals and extensions must be reported within 15 days, and a new insurer partnership needs approval from both regulators.[1] [2] The dual approval track adds time to every product launch and partner change, and has been identified as a cause of delay in market entry.[8] Commercial timetables should allow for it.

Partners, customers and permitted products

The three-plus-three limit

A bank may not maintain agreements with more than three life insurers and three non-life insurers at the same time, and exclusivity clauses are prohibited.[1] On the insurer side, the market works on the basis that an insurer may partner with no more than three banks.[13] The limits have become the main commercial constraint: in 2025 one leading life insurer said it could not take on more banks because it already worked with three, and a proposal to raise the bank-side cap to six in each category was sent to Bangladesh Bank.[6] As of October 2026 the limits remain the subject of industry calls for reconsideration rather than a published change.[13]

Who can be sold to

Products may be offered only to the bank's account or card holders; walk-in customers are excluded. An account or card holder may buy cover for parents, spouse or children, subject to KYC.[1] Corporate customers may be sold group life and group health products.[1]

Which products can be sold

All life products may be sold. On the non-life side, Bangladesh Bank's circular limits sales to motor, travel, agriculture and crop insurance.[1] IDRA's guideline was reported as permitting motor, travel, health and crop.[3] The two lists are not identical, so a bank should treat a product as permitted only where both instruments allow it, with group health for corporate clients resting on the express permission in Bangladesh Bank's circular. Fire and marine insurance, which make up the bulk of the non-life market, are outside the channel, and banks have said this limits their SME and corporate business.[6]

That exclusion has a practical edge. Trade finance and working-capital lending routinely require fire cover on hypothecated stock and marine cover on imports, yet a bank cannot sell those policies as bancassurance. It must also avoid steering a borrower to a particular insurer as a condition of credit, which would sit uneasily with the rule against compelling customers to buy insurance.[1] Our guide to marine insurance claims in Bangladesh explains the separate regime for cargo cover.

Commission and remuneration

Bangladesh Bank leaves commission to the agreement between bank and insurer, which must conform to IDRA's regulations.[1] The statutory ceiling comes from the Insurance Act 2010. Section 58(1) prohibits paying any remuneration or reward for soliciting or procuring insurance business to anyone other than an insurance agent, an employer of agents or a broker, and section 58(3) caps life agent commission at 35 per cent of the first-year premium, 10 per cent of the second-year renewal premium and 5 per cent of later renewal premiums.[5]

Rebates and inducements

Section 60 of the Act prohibits offering any rebate of commission or premium as an inducement to take out, renew or continue a policy, other than rebates in the insurer's published prospectuses or tables.[5] Bangladesh Bank's guidelines go further for banks: no extra discounts, cashbacks, fee waivers or interest waivers beyond the insurer's own pricing, and no rates, benefits or terms other than those the insurer offers.[1] A bank cannot, for example, offer a lower loan rate or a fee waiver to a customer who buys a partner insurer's policy.

The 2026 non-life commission shift

From 1 January 2026, IDRA suspended all individual non-life agent licences and, citing section 58(1), concluded that insurers had no legal scope to pay non-life commission to anyone other than a licensed agent or broker. The same circular restricted premium-linked pay for insurers' development officers, but expressly excluded banks operating bancassurance and insurtech operators from those restrictions.[9] The move was criticised as inconsistent with the Insurance Act and the agent licensing regulations.[14] Its effect is to make banks one of the few remaining paid distribution channels for non-life cover, which raises both the commercial value of a licence and the regulatory attention it attracts.

Staffing, governance and disclosure

Every bank offering bancassurance in Bangladesh must establish a separate, dedicated bancassurance unit.[1] The chief bancassurance officer must hold a master's degree or equivalent, have at least twelve years' experience in banking or insurance, sit within five grades of the managing director and complete IDRA's required training or certification; bancassurance managers and officers must be graduates with the IDRA training or certification.[1]

Only bancassurance managers or officers may sell insurance.[1] This is a significant control in practice: a teller or relationship manager who is not a certified bancassurance officer should not be soliciting policies, even informally. Observers have noted that there is no external mechanism monitoring training quality on an ongoing basis, which places the burden on each bank's own compliance function.[8]

Banks must disclose bancassurance financials separately in their annual and periodic statements, and the bank's risk management unit must monitor service levels set by Bangladesh Bank.[1] Boards should receive regular reporting on sales volumes, cancellations, complaints and claims outcomes, because those are the indicators regulators will ask about first. Our guide to banking regulations in Bangladesh sets out the wider governance framework.

Mis-selling protections and conduct rules

The conduct rules are the heart of bancassurance in Bangladesh, because the channel's appeal, the trust customers place in their bank, is also its main risk. Under the guidelines a bank must avoid ambiguous or misleading information, give adequate advice before and after sale, assist insureds and nominees with claims, state explicitly that the bank bears no insurance risk and does not act as insurer, and must not compel any client to buy insurance.[1]

Suitability and needs analysis

For bundled products the bank must be transparent about features and costs, let the client decide whether to buy, assess the customer's needs and check that the product suits the client, and it must keep customer need analysis reports for periodic submission.[1] The needs analysis is the bank's primary defence if a customer later alleges mis-selling, so it should be completed at the point of sale, signed and retained with the proposal form.

Why mis-selling risk is real

Savings-linked life products dominate the Bangladeshi market, accounting for about 73.5 per cent of premiums, and commission-driven mis-selling has been identified as a key risk for the bancassurance channel.[8] The classic problem is a depositor who believes a long-term endowment policy is a deposit product with guaranteed liquidity. The bank's statement that it carries no insurance risk, the product's surrender terms and the premium commitment should all be explained in plain Bangla, and the explanation recorded.

Payments and account debits

A bank may not debit a client's account for premiums without the client's prior written authorisation or consent.[1] Standing instructions should be separately signed, dated and linked to the specific policy, and a customer's cancellation of the instruction should be processed promptly.

Customer data and confidentiality

Bangladesh Bank's guidelines allow customer data to be shared with the insurer only as needed to issue the policy, require client data to be kept confidential and require the bank to protect client data and privacy.[1] Unclear data-sharing protocols between banks and insurers have been identified as a barrier in practice, with calls to harmonise KYC, grievance and reporting formats.[8]

The general data protection regime now adds a further layer. The Personal Data Protection Ordinance, as amended by an ordinance gazetted on 5 February 2026, is consent-centric, gives data subjects rights to access, amend and erase their data and treats financial, biometric and genetic information among its sensitive categories.[11] The amendment replaced prison terms for company officers with financial penalties of up to 5 per cent of annual turnover and limited data localisation to critical sectors such as banking and healthcare.[11]

Bancassurance in Bangladesh sits squarely within that regime: it involves a bank transferring financial data to an insurer that will often collect health data as well. Consent wording, data-sharing clauses in the agency agreement and retention policies should be reviewed against the ordinance and its implementing rules as they are issued.

Claims, complaints and disputes

Claims

The insurer settles claims directly with the insured or nominee and informs the bank; the bank acts as facilitator, explains how to claim and helps collect documents when the insurer asks.[1] That is the legal position, but customers rarely see it that way. When a claim stalls, the customer goes back to the branch that sold the policy. Claims performance across the sector is a genuine concern: IDRA data for July to September 2025 showed life insurers settling about 36 per cent of claims by value and non-life insurers under 8 per cent, with more than Tk 72 billion outstanding.[10] IDRA has signalled that it may resist wider bancassurance approvals unless insurers improve claims settlement and service.[7]

For any bank engaged in bancassurance in Bangladesh, the choice of insurer partner is therefore a reputational decision as much as a commercial one. Due diligence should cover the insurer's claims settlement ratio, solvency position, complaint history and servicing capacity, and the agency agreement should set service levels for claims turnaround with reporting and termination rights if they are missed.

Complaints

Banks must have a complaint resolution mechanism for bancassurance customers.[1] Grievance systems in the wider market remain underdeveloped, which has undermined trust, particularly among rural and low-income customers.[8] A well-run bank should log every bancassurance complaint separately, route claim complaints to the insurer with a deadline, escalate unresolved matters internally and keep the customer informed. A customer who is not satisfied can escalate to the insurer, to IDRA as insurance regulator and, for the bank's own conduct, to Bangladesh Bank.

Who is liable for what

Disputes generally fall into three categories. A dispute about whether a loss is covered is a claim against the insurer on the policy. A dispute about what the customer was told at the point of sale, or about an unauthorised debit, raises the bank's own conduct as agent under the guidelines. A dispute between bank and insurer about commission, data, service levels or termination is a contractual matter under the agency agreement, which should contain a clear dispute resolution clause. Our insurance claims and reinsurance practice handles disputes on all three fronts, and our overview of insurance law in Bangladesh covers the policyholder's position in more detail.

Termination and continuity

If an arrangement ends, the bank must notify Bangladesh Bank with reasons, inform its staff and remove the terminated products from its systems. Existing policyholders must continue to be serviced, maturity payments must go to the customer's bank account, renewal commission continues to the bank, and complaints are resolved by mutual consent.[1] Exit provisions in the agency agreement should implement these rules in detail, including data transfer, servicing responsibilities and the treatment of claims in progress.

Who does what

The channel involves several bodies with distinct roles.

Launching a bancassurance business: step by step

The following sequence reflects how a bank and its insurer partners typically move from board decision to first sale. Most delay arises from the agency agreement and the dual approvals, so those workstreams should start early.

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Compliance checklist for banks and insurers

Once the business is running, compliance for bancassurance in Bangladesh is a matter of continuous discipline. The points below are the ones regulators and customers test most often.

For banks

• Eligibility monitoring: track capital, NPL, profitability and ratings against the thresholds every quarter.[1]
• Partner limits: no more than three life and three non-life insurers, and no exclusivity.[1]
• Customer scope: account and card holders and their parents, spouse or children only, with KYC.[1]
• Product scope: life products and only the permitted non-life lines; no fire or marine.
• Sales staff: only certified bancassurance managers and officers sell.
• Point of sale: needs analysis, plain disclosure, no-risk statement and no tying or inducements.
• Debits and data: written authority for premium debits and data shared only as needed.
• Reporting: separate disclosure in accounts, filing of amendments and renewals within 15 days.[1]

For insurers

• Licensing: confirm each partner bank's Bangladesh Bank approval and IDRA licence are current.
• Commission: pay only within the Insurance Act and IDRA limits, and never through rebates.[5]
• Product design: keep products simple enough to explain at a branch counter.
• Claims: set and meet claims turnaround commitments in the agency agreement.
• Training: support IDRA certification for bank staff and refresh it regularly.
• Data: collect health and personal data with consent compliant with the data protection ordinance.

Bank-led and traditional agency distribution compared

The table below compares the bancassurance channel with the traditional individual agent and broker channels. On a phone, scroll it sideways.

Market growth and reform: bancassurance in Bangladesh in 2026

Growth of bancassurance in Bangladesh has been real but modest. IDRA data showed 8,413 policies sold through bank branches by December 2024, of which 6,544 were life and 1,869 non-life.[6] By August 2026, more than 25,400 policies had been sold through the channel.[13] Only about 7 per cent of bancassurance policies were sold in rural areas, according to a 2025 study, which shows how far the channel remains from its financial inclusion objective.[8]

Three reform questions are open. First, the partnership limits on both sides, which industry participants argue suited the launch phase but now constrain growth.[13] Second, agent banking: it is not explicitly recognised as a bancassurance distribution channel, though it is the obvious route to rural customers.[13] Third, the statute itself: in July 2026 IDRA postponed its draft amendments to the Insurance Act 2010 and the IDRA Act 2010, together with a draft Insurers' Resolution Ordinance 2026, for further review, and asked the Financial Institutions Division to take no action until further instructions.[12] Any change to the agent and commission provisions of the Act will feed directly into the economics of the channel.

For banks, the opportunity is fee income without capital commitment, but the guidelines are designed so that the bank's reputation, not just its balance sheet, is at stake. For insurers, the channel is a low-cost route to customers, but only for those whose claims service can withstand the scrutiny of a bank that will hear every complaint. Our insurance law and regulation practice and insurance transactions and regulatory structuring team advise banks and insurers on approvals, agency agreements, conduct reviews and disputes. To discuss a bancassurance arrangement, contact TRW.

Frequently asked questions

Is bancassurance legal in Bangladesh?

Yes. The sale of insurance became a permissible bank business by a gazette notification of 12 December 2023, and Bangladesh Bank issued its bancassurance guidelines as BRPD Circular No. 18 on 20 December 2023.[1]

Which approvals does a bank need to sell insurance?

Prior approval from Bangladesh Bank and then a corporate agent licence from IDRA. A copy of the IDRA licence must be sent to Bangladesh Bank within 15 days of receipt.[1]

What are the eligibility criteria for banks?

A capital ratio of at least 12.5 per cent including the conservation buffer, net NPLs of no more than 5 per cent, three consecutive years of profit, credit and CAMELS ratings of 2 or better, a board-approved business plan and a dedicated, competent unit.[1]

How many insurers can a bank partner with?

No more than three life insurers and three non-life insurers at the same time, and the agreements may not be exclusive.[1]

Which insurance products can banks sell?

All life products, group life and group health for corporate clients, and on the non-life side only motor, travel, agriculture and crop insurance under Bangladesh Bank's circular. Fire and marine are excluded.[1] [6]

Can a bank sell insurance to walk-in customers?

No. Products may be offered only to the bank's account or card holders, who may also buy cover for their parents, spouse or children subject to KYC.[1]

Is there a cap on bancassurance commission?

Commission is agreed between bank and insurer within IDRA's rules. The Insurance Act 2010 caps life agent commission at 35 per cent of first-year premium, 10 per cent in the second year and 5 per cent thereafter.[1] [5]

Can a bank require a borrower to buy insurance from its partner?

The guidelines prohibit compelling clients to buy insurance and offering inducements such as fee or interest waivers beyond the insurer's pricing. Tying a loan to a partner insurer's policy is therefore high risk.[1]

Who pays a claim on a policy sold by a bank?

The insurer. The bank only facilitates, by explaining the process and helping collect documents; the insurer pays the insured or nominee and informs the bank.[1]

Can a group that owns a bank and an insurer use bancassurance?

Not between those two companies. A bank whose common beneficial owners or related parties overlap with an insurer is ineligible for bancassurance under Bangladesh Bank's guidelines.[1]