Two PSBs

New Delhi, Dec 21 (UNI) Two Public Sector Banks-- Bank of India (BoI) and Union Bank of India-- and the Dal-Ichi Mutual Life Insurance Company, a leading Japanese company in the Life Insuarnce business, today joined hands for setting up of a Life Insurance Joint Venture company.

The arrangement was formalised with the signing of an MoU among the three partners here in the presence of Union Finance Minister P Chidambaram.

The MoU envisages a capital stake of 51 per cent by BoI, 26 per cent by Dai-ichi and 23 per cent by Union Bank.

Sources said the initial seed capital of the new company would be Rs 150 crore and its equity would go up to Rs 450 crore in a few years.

Speaking on the occassion, Mr Chidambaram welcomed the setting up of the joint venture soon after Prime Minister Manmohan Singh's visit to Japan and stated that this was a harbinger of things to come.

The Finance Minister said India was a grossly underinsured country, which was growing at an annual average rate of nine per cent, and thus there was considerable scope for new companies to come in.

He said inusrance activity was only 2.3 per cent of the GDP, which needs to be stepped up to 4.33 per cent.

The Finance Minister described the setting up of the Joint Venture as a small step in the direction of expanding insurance business and expressed the hope that the future will see much bigger movements in this regard.

Talking about amendment of various laws relating to Insurance Sector being referred to a GoM, Mr Chidambaram said he aims to bring the changed laws to the Parliament as soon as possible. He said the existing legal structure relating to the Insuarnce Sector was antiquated.

The Finance Minister was of the view that the growth rate could be stepped up from nine per cent to a higher level.

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