Insurance distribution boosts fee income at most public sector banks in FY26

New Delhi: Public sector banks earned higher commissions from selling insurance products in FY26, with most lenders reporting growth through this activity.

However, income from mutual fund distributions was mixed, with some banks reporting higher earnings while others saw declines.

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An analysis of annual reports of banks by PTI showed that the country's largest lender, State Bank of India (SBI), continued to dominate the segment, earning Rs 2,795.01 crore in insurance commission during FY26, up 19.26 percent from Rs 2,345.36 crore in the previous financial year.

Commission income from mutual fund distribution at SBI also rose 7.05 percent to Rs 1,617.52 crore from Rs 1,511.06 crore in FY25.

Of the Rs 2,795.01 crore in insurance commissions booked by SBI, a bulk Rs 2,384.63 crore or 85 percent came from distributing policies of its life insurance subsidiary SBI Life.

Similarly, SBI Mutual Fund contributed Rs 1,209.33 crore, or nearly three-fourths of the bank's total mutual fund distribution income for the country's largest lender, which has over 22,000 branches.

The growth in the commission income came even as the finance ministry has asked banks to avoid misselling and focus on their core activity of accepting deposits and giving credit.

Banks also sold government insurance products such as Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY), according to the analysis.

Among other large state-owned lenders, Canara Bank registered one of the strongest performances, with insurance commission rising 15.67 percent to Rs 566.36 crore in FY26 from Rs 489.64 crore a year earlier. Its mutual fund commission also increased 8.41 percent to Rs 72.84 crore.

Bank of Baroda reported a 3.76 percent increase in insurance commission to Rs 368.93 crore, although commission from mutual fund distribution declined marginally by 0.82 percent to Rs 142.52 crore.

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Punjab National Bank, however, witnessed declines in its income from both segments.

PNB's insurance commission fell 8.61 percent to Rs 438.67 crore, while mutual fund commission dropped 13.14 percent to Rs 163.41 crore during the year.

Union Bank of India also reported a 10.77 percent decline in insurance commission to Rs 475.45 crore, but its mutual fund commission increased 7.93 percent to Rs 29.66 crore.

Among mid-sized public sector lenders, Indian Bank's insurance commission increased by 8.21 percent to Rs 190.65 crore, while income from mutual fund distribution rose by 7.73 percent to Rs 4.74 crore.

UCO Bank posted a 6.53 percent increase in insurance commission to Rs 66.08 crore, and mutual fund commission increased sharply by 42.04 percent to Rs 2.23 crore.

Central Bank of India reported an insurance commission of Rs 160.90 crore in FY26, up 13.57 percent from the previous year. Punjab & Sind Bank bucked the trend among smaller lenders, registering a 17.92 percent rise in insurance commission at Rs 31.98 crore.

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