BoI zeroes in on Dai-ichi, Andhra Bank as life partners

Mumbai, July 26 | Updated: Jul 27 2006, 05:30am hrs
State-run lender Bank of India (BoI) has identified Japanese insurer Dai-ichi Mutual Life Insurance Company for a joint venture to foray into the domestic life insurance sector. The third partner in this JV is going to be Andhra Bank. However, no memorandum of understanding has been signed by any of the parties as yet.

Under the regulations, any Indian bank (except State Bank of India) foraying into the life insurance sector is not allowed to hold more than 49% stake in a JV, and the cap on foreign investment is 26%. Hence, Dai-ichi, which will play an important role, can have a maximum stake of 26% under the current regime.

BoI has made a presentation to Andhra Bank and the Hyderabad-based state-run bank is expected to take a decision shortly. Meanwhile, the BoI board is meeting next week to give a formal nod to the venture.

Interestingly, BoI has a bancassurance tie-up with ICICI Prudential Life Insurance Co. In case BoI ties up with the Japanese insurer, it has to call off the agreement with ICICI Prudential. Yes, we have to call off our bancassurnace tie-up after we foray into the life insurance sector. However, it (life sector entry) is still in an initial stage and will take some more time, said M Balachandran, CMD, BoI.

Eyeing huge potential of the untapped Indian insurance market, public sector banks are gearing up to foray into life insurance. Recently, IDBI tied up with Dutch insurance major Fortis and Kochi-based Federal Bank. Other state-run lenders like Bank of Baroda and Bangalore-based Canara Bank have also shown interest in the life insurance sector, which was opened for private sector players in 1999-2000. Both parties are now scouting for foreign partners.

Slice Of Life
Japan's Dai-ichi can have a maximum stake of 26% in the proposed JV under the current regime
BoI already has a bancassurance tie-up with ICICI Prudential Life
PSBs are gearing up to foray into life insurance
IDBI has tied up with Dutch insurance major Fortis and Federal Bank
Bank of Baroda and Canara Bank are also eyeing life insurance sector pie