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Mumbai, June 15: Though Bank of Baroda (BoB) has entered into a bancassurance arrangement with private sector life insurer HDFC Standard Life Insurance (HDFC SL) on Thursday bank’s chairman and managing director Dr AK Khandelwal has said that the bank’s plans to float a life insurance joint venture still on.
“Our long-term ambition is to have a JV for life insurance business and it may take another two years to launch such an initiative”, Dr Khandelwal said.
BoB’s talks with Fortis Insurance International NV for a proposed JV had failed and now we have to look for new partner which may take some more time.
In addition, we have to search for a local partner too, as the regulations do not allow more than 49% stake by the bank and 26% by a foreign entity, sources informed. The third partner has also been a bone of contention for the proposed JV.
Earlier BoB was in talks with Oriental Bank of Commerce (OBC) as the third partner but Delhi-based bank backed out at the last moment.
As a result, Fortis jumped the gun by joining with IDBI Ltd, sources reveal. It is also learnt that Fortis was not comfortable with the idea that state-run banks to have a controlling stake in the JV.
Meanwhile Deepak Satwalekar, MD & CEO of HDFC SL said,”Since the equity markets have started falling we have noticed highest number of switches, which is about 70% in the equity funds. This negates the fear of ULIP would not perform well in the falling market.” He also said that the company plans to breakeven by mid next year and targets to be among top three. Further he said that their contribution from bancassurance would go up to 50% from the existing 43%.
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