BoI plans to set up JV in Life Insurance

Mumbai, Apr 30 (UNI) Public sector Bank of India (BoI) which has a corporate agency relationship with ICICI Prudential Life Insurance Ltd., will shortly set up a subsidiary to develop its own life insurance business in collaboration with a foreign partner.

The bank is likely to firm up its desire by selecting the foreign partner for equity tie-up in the next couple of months, according to BoI Chairman and Managing Director M Balachandran.

''We are looking for a joint venture with a foreign firm for our life insurance business while our association with ICICI Prudential Life will continue,'' said Mr Balachandran.

Speaking to UNI, He said that the bank is keeping is option ready to grab the opportunities as and when the Government liberalise the cap on equity holding of the foreing firms in domestic insurance business.

The Government has plans to allow the foreign insurance firms to increase their equity holding in Indian joint venture from the current maximum level of 26 per cent to 49 per cent.

Mr Balachandran said, the bank's association with ICICI Prudential would continue even if we go for our own life insurance venture. ''As you know, life insurance business takes a long period of 6-8 years for arrivng at the break-even point...hence we will continue our association (with ICICI Prudential Life)'', he said.

Asked about the foreign partner, he said, the bank is currently engaged in discussions before selecting the partner and the association would be based on the partner's expertise in product development and financial muscle for contribution of capital for the proposed joint venture.

In this context, the chairman indicated that the bank might opt for one more domestic partner preferably a public sector bank and this would be done after the selection of the foreign partner and also the equity structure of the joint venture.

In all probability, the life insurance venture of BoI would be operationalised by second half of 2006-07.

Meanwhile, the Bank of India has identified a bank in Indonesia for acquisition and the funding for the acquisition would be done from the reserves that the bank has in its overseas branches.

The acquisition would help the bank to convert its representative office into a subsidiary in the country.

The bank is also in the process of transforming two of its representative offices into branches at Shanghai and Sanchen in China.

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