Mumbai: Stage is set for the entry of State Bank of India into general insurance as the country’s largest lender is expected to finalise the terms for joint venture with Insurance Australia Group (IAG) by next month.
“We are currently working on the structure of the joint venture agreement. We expect to finalise the operating structure by September. Once a mutual agreement is reached, the new company is expected to get operational in the next three to six months,” a senior SBI official told PTI here.
Both parties signed an agreement in May this year to form a new company for the proposed insurance business. Under the pact, State Bank will hold a 74% stake in the entity and the Australian partner the rest 26%.
State Bank officials, however, declined to divulge the financial terms and management structure of the proposed joint venture company.
SBI’s entry into general insurance is expected to pose challenges to existing players. Public sector United India Insurance, New India Assurance, Oriental Insurance and National Insurance hold a major share of the business.
In private sector leading players include Bajaj Allianz, ICICI Lombard, IFFCO-Tokio General Insurance and Reliance General Insurance.
Government-run State Bank has aggressive plans to expand business on various fronts, including custodial business. Though the bank wants to form a JV with French financial-services major Societe Generale, a Finance Ministry official recently said the Government was not in favour of the deal.