Vijaya Bank may float insurance companies

Vijaya Bank may float insurance companies
Saturday, 18 August , 2007, 10:51

Kolkata: Vijaya Bank is mulling to float life and non-life insurance
companies following the bank's decision to pull out of its insurance
joint venture - PNB Principal Insurance Advisory Company Private Ltd -
with the Punjab National Bank (PNB) and the Principal Financial Group
of the US.

The bank is likely to take a decision in the next three to four months
on the modalities of its proposed insurance foray.

"We have decided to come out of the joint venture, but at the same
time we want to do it gracefully. Setting up an insurance company is
definitely one of the options and we will take a decision once we exit
the joint venture formally in a couple of months," Prakash P. Mallya
told Business Line.

Decision

"Insurance business, both life and non-life, in India is very
remunerative. We have plans for insurance companies both in life and
non-life segments. We will take a decision in the next three to four
months," T. Valliapan, Executive Director, Vijaya Bank, said.

Vijaya Bank had 19-per cent stake in the joint venture broking
arrangement and was also the corporate agent for National Insurance
Company. However, the Insurance Regulatory and Development Authority
(IRDA) had raised objection to the bank's dual presence in the
insurance sector following which the bank decided to pull out of the
joint venture.

Another joint venture

It may be recalled that another south India-based bank, Canara Bank,
has recently floated a life insurance company in joint venture with
the Oriental Bank of Commerce and HSBC Insurance (Asia Pacific)
Holdings Ltd.

According to Valliapan, the bank could either form a similar joint
venture or churn out a subsidiary company for its proposed insurance
business.

"It's a bit early to comment. Both the subsidiary and the joint
venture format have pros and cons. However, I feel that a tie-up will
be easier as forming a subsidiary will require lot of regulatory
approvals," Valliapan said.

The bank plans to raise about Rs 300 crore capital by the end of this
fiscal to fund its expansion plans.