New Delhi: Looking to derive strength from their huge customer base and branch network, two PSU lenders Canara Bank and Oriental Bank of Commerce, along with the insurance arm of UK-based HSBC Group, are likely to start a life insurance venture in the next four months.
The venture will have an initial paid-up capital of Rs200 crore, besides Rs125 crore of premium that HSBC Insurance (Asia-Pacific) will pay.
“The R1 (preliminary approval) stage from IRDA is clear. IRDA is currently looking at the R2 application. I think by May-June the joint venture will be able to launch its first policy,” said Allen C A Pereira, executive director, OBC.
The new life insurance entity will have exclusive access to customer bases of both the state-owned banks and HSBC in India, thus, giving them a headstart in targeting potential customers.
At present, Canara Bank and OBC have over 40 million customers and a nation-wide network of 3,600 branches.
However, to start with the JV will sell its products through selected branches, Pereira said, adding partners are currently identifying and working out the strategy for the launch.
In the three-way JV, HSBC’s stake would be 26%, which is the maximum permissible limit for FDI in the sector, under the current regulation.
HSBC will contribute over Rs170 crore, which includes premium for accessing the vast branch network of both the PSU banks.
While the majority stake holder Canara Bank, with 51% share, invest Rs102 crore, OBC will contribute Rs46 crore to the JV.