State Bank of India on Tuesday announced a general insurance joint venture with Australia’s Insurance Australia Group (IAG) and plans to commence the business in the current financial year.

State Bank (SBI) proposes to hold a 74 per cent stake in the joint venture with IAG the remaining 26 per cent, subject to regulatory approvals, a press release issued in Mumbai stated.

State-owned SBI is India’s premier bank while IAG is a well-known international insurance major.

Both the parties have signed a Memorandum of Understanding (MoU) for the purpose and both would now jointly work towards finalising a shareholders’ agreement before approaching the regulatory authorities for their approval.

“Establishing a general insurance joint venture is a key element of SBI’s strategy to pursue emerging, high-growth opportunities to build on our position as the pre-eminent financial services group in India,” State Bank’s Deputy Managing Director (Corporate Strategy & New Businesses), Deepak Chawla, said.

“IAG’s proven capabilities in technical and underwriting expertise, pricing and risk management, and its track-record in working successfully with other partners in the Asian region, makes IAG an ideal partner. We look forward to working together to grow a successful general insurance business,” Chawla said.

While SBI has over 100-million customers and 10,000-plus branches pan-India, IAG underwrites more than AUD 7.5-billion of premium per annum.

IAG has operations in Australia, New Zealand, Thailand, Malaysia, China, Singapore and the UK through various brands, the release said.

It employs more than 16,000 people of which around 11,000 are in Australia and has a good presence in major segments of the general insurance market such as auto insurance, property and casualty and commercial business.

It sells insurance under many leading brands including NRMA Insurance, CGU, SGIO, SGIC and Swann (Australia), NZI and State (New Zealand), Equity Red Star and Hastings Direct (UK) and NZI and Safety (Thailand).

One of the key strengths of IAG is that it is an exclusive general insurance player.