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Our Bureau

To hold majority stake; third partner not finalised

Mumbai , Aug. 28

Bank of India is moving into life insurance by tying up with Japan's Dai-Ichi Mutual Life Insurance and another Indian partner, according to a notice to the Bombay Stock Exchange.

The bank will have majority stake in the joint venture, which isyet to be decided, a bank official said. "It could be anywhere between 30 and 51 per cent," he added.

Dai-Ichi Mutual Life Insurance Company is the second largest life insurance company of Japan and sixth largest in the global life insurance industry by written premium, the BSE notice said.

Bank of India had earlier said Andhra Bank would be the third alliance partner. However, the official said on Monday that the partner had not been finalised.

The venture would require an investment of around Rs 70 crore in the first year, he said.

Indian banks are increasingly entering life insurance as it is largely untapped and is a source of fee-based income. The bancassurance model of cross-selling has been a win-win situation for State Bank of India, ICICI and HDFC Bank.

Among other nationalised banks that are looking to enter the life insurance business is Punjab National Bank, with a 26 per cent stake in a venture with Principal Insurance, Vijaya Bank and UK Paints (formerly Berger Paints).

The venture is awaiting approval from the Insurance Regulatory Development Authority.

IDBI Ltd, Fortis and Federal Bank too have signed a memorandum of understanding to set up a joint venture for life insurance.

IDBI will have majority stake of 48 per cent while Fortis and Federal Bank will have 26 per cent each.

Another tie-up that has been announced is a non-life insurance venture by Allahabad Bank with Sompo of Japan, Indian Overseas Bank, Karnataka Bank and the Dabur group as partners. However, this venture has come under a cloud as the overseas partner (Sompo of Japan) has been served a business suspension order by the Japanese regulator.

Canara Bank has also expressed its interest in entering the life insurance business and is currently holding talks with a few overseas life insurance players for holding 26 per cent stake in the company.

More Stories on : Public Sector Banks | Life Insurance | Alliances & Joint Ventures

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