German insurance giant Allianz is planning to widen its base in India with a foray into the banking business through its unit Dresdner Bank. This is in addition to expanding its existing non-banking financial services.
Allianz, which currently offers life and general insurance services through its joint ventures with Bajaj Auto, is believed to have approached regulatory authorities for the necessary approvals in order to launch its banking business in the country.
The company is upbeat about starting retail banking business in the country after signing its third JV with the Bajaj Group earlier this month to sell financial products like mutual funds, credit cards and home loans.
An Asia Pacific spokesperson for Allianz said the company was optimistic about India’s economic development and, given its economic outlook, it was natural for it to take a closer look at asset management and banking businesses as well.
“Customers expect their advisors to offer a full range of financial products. Allianz being one of the biggest financial services providers worldwide, offering insurance, asset management and banking products in many countries across the globe, is qualified as virtually no other company to provide this range,” the official said.
Allianz, which posted revenues of more than €101 billion (Rs 5.86 lakh crore) and net income of more than €7 billion in 2006, is currently in talks with various institutions and authorities as part of its plans to enter the banking business in India, he added.
A study conducted by Allianz Group Economics, a research arm of the group, recently stressed that India is on the way to becoming a significant economic power, and risks of investments in the country far outweigh the opportunities it offers.
The company said it has attained a strong foothold in the Indian market through its two JVs—Bajaj Allianz Life and Bajaj Allianz General Insurance—while it has just launched Bajaj Allianz Financial Distributors as a new distribution company.
Asked about the stiff competition in the banking business, the spokesperson said Allianz was well positioned in India with its two insurance ventures. Both companies are second largest in their respective markets and, unlike any other private provider, present across the whole country with 200,000 agents, he said, adding that Allianz feels “well prepared to even strengthen the leadership position that we have attained in India”.
According to the Allianz study, India is moving towards becoming a significant economic power and enjoys the second highest growth potential in the world after China with average economic growth of 7.5-8.5% up to 2015.
The factors that buoyed the upward demographic trend are domestic savings, favourable demographic development, increasing industrial production and the swiftly expanding middle class.
All these factors are conducive for further growth of the banking and asset management businesses.
Robust growth in the manufacturing sector would also help more people from the agricultural sector find employment in industry and construction-related segments, the study suggested.