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BoB likely to start insurance business by March 2010

New Delhi, May 16, 2009

Country's third largest public sector lender Bank of Baroda said its life insurance venture with the UK-based Legal and General Group is expected to commence operations by the end of March next year.

"We expect to get all the necessary regulatory approvals by the end of this fiscal," Bank of Baroda Chairman and Managing Director M D Mallya told reporters.

The proposed life insurance joint venture, which is expected to underwrite first policy by March next year, is presently seeking R1 (initial regulatory clearance) approval, he said.

The three-way venture formed in November 2007 would have initial paid-up capital of Rs 200 crore.

While the lead partner BoB would have 44 per cent share in the venture, another domestic partner Andhra Bank would hold 30 per cent share. The remaining 26 per cent would be with the British insurance firm.

Talking about recruitment for the venture, Mallya said, the top level management team should be in place in the next couple of months.

The British insurance firm has already announced that it would recruit over 5,000 professionals in India in the next five years.

The two banks have over four crore customers, who could be the captive client for the proposed insurance business.

Together these banks have network of about 4,000 branches across the country.

Given the low penetration of insurance in the country and extensive reach of Bank of Baroda, Mallya said, "there is a huge opportunity in this sector, which we want to tap."

Bank of Baroda’s plans to enter the insurance sector was cleared by its board in September 2006.

There are already around 21 players in the life insurance sector, with the latest being Star Union Dai-ichi Life which started its operations in February this year.

Bank of India, the lead partner of the insurance venture holds 51 per cent stake in the company while Union bank of India and Dai-ichi Mutual Life holds 23 per cent and 26 per cent respectively.

Other banks which are into life insurance includes State Bank of India, Canara Bank, IDBI Bank, and ICICI Bank.

  
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