Shares of IndusInd Bank fell 2% on Tuesday as the Insurance Regulatory and Development Authority of India (IRDAI) unveiled a draft that could slash commission payouts, eroding the bank’s high 79.3% share of FY26 profit before tax from bancassurance.
IIFL Research notes that, while IndusInd tops the chart, other lenders are not immune: Bandhan Bank’s bancassurance income is 30.8% of FY26 PBT, RBL Bank 28.5%, and Yes Bank 19.3%.
The draft introduces a five‑year glide path to cut insurers’ expenses of management, targeting 15% for life insurers within two years and 12.5% by year five; general insurers face a decline to 25% and 20% respectively.
It also proposes re‑instating segment‑specific commission caps, linking lower limits to open distribution channels—banks, brokers, web aggregators—while allowing higher caps for individual agents, and mandates commission disclosure in policy documents.
Analysts from IIFL say the new cap could compress net commissions by up to 10‑15%, forcing banks to revisit their insurance‑related fee structures; the 2% slide reflects growing uncertainty.
Guidelines are open for comment until Oct‑25‑26 and likely to be finalized early 2027, after which banks will need to adjust pricing models. Investors may see a 3‑6 month lag before earnings reflect the new cost structure, and stock valuations could tighten if margin erosion materialises.