State-owned Dena Bank on Thursday sought bids from corporate agencies to increase its portfolio of providers of health, general and life insurance products through the bancassurance channel, weeks after the Reserve Bank of India (RBI) asked the bank to stop fresh lending.
A senior executive at the bank told FE that the move was aimed at increasing third-party income. “We already have certain arrangements on this front. The IRDA (Insurance Regulatory and Development Authority) also allows us to add more partners. So we are looking at that possibility to augment our third-party income,” the banker said.
At present, the bank counts as its partners Life Insurance Corporation of India (LIC) for life covers, United India Insurance Company and Chola MS General Insurance Company for general insurance and Apollo Munich Health Insurance Company for health covers.
On May 11, Dena Bank had said in a notification to the stock exchanges that RBI had restricted it from assuming fresh credit exposure and recruitment of staff. The bank, which has been headless since January, will now have to look for ways of boosting non-interest income in the absence of income from new loans. Businesses such as bancassurance, which make no demands on a bank’s capital base, are ideal for generating such revenue.
The bank earned Rs 323.3 crore in non-interest income during the March quarter, a little over Rs 314.97 crore earned during the same period a year ago.
For Q4FY18, Dena Bank posted a net loss of Rs 1,225.42 crore, wider than the Rs 575.26-crore loss it saw in Q4FY17 as provisions more than doubled year-on-year (y-o-y) to Rs 1,991.3 crore.
RBI had first brought Dena Bank under its prompt corrective action (PCA) framework in June 2017 in view of its high net non-performing asset (NPA) ratio and negative return on asset (RoA).