Private sector IndusInd Bank Ltd will make its entry into value-added banking services by offering wealth and portfolio management services through a wealth management subsidiary that it intends to set up before the end of the current fiscal.
The establishment of the subsidiary will depend on necessary approvals from
the Reserve Bank of India (RBI).
Seizing opportunities: The bank is keen to enter the life insurance business in partnership with a domestic or foreign company, but is likely to get into insurance products’ broking prior to the move.
The bank, headquartered in Mumbai, also is keen to enter the life insurance business in partnership with a domestic or foreign company, but is likely to get into insurance products broking prior to the move. The broking business of IndusInd would also be conducted through a subsidiary , managing director and chief executive officer Bhaskar Ghose said. The bank’s entry into the insurance business will be contingent upon clearances and approvals from the Insurance Regulatory and Development Authority (IRDA) and the bank’s stake in any such partnership will depend on RBI’s decision, he added. A number of Indian banks, especially the public sector lenders, have entered into partnerships with a number of insurance companies, both domestic and foreign in the last couple of years.
While public sector banks, in some cases, have formed consortiums to enter into the insurance business, Ghose said this would in the long run lead to conflict of interest situations over the eventual ownership of the customer base.
Indian banks currently have relationships with insurance companies where they distribute insurance products to its customers through the branch network.
IndusInd, meanwhile, will also seek to grow by tapping the non-resident Indian (NRI) population in South East Asia and Europe (the UK, Spain), which has large population of Sindhi businessmen, who form a big chunk of the bank’s customers. IndusInd hopes to achieve this from tie-ups with mid-sized banks in those countries by offering these banks access to its customers and earning a fee-based income on transactions .
IndusInd already has such arrangements in Abu Dhabi with Union National Bank, Ghose said, adding that IndusInd has a footprint in all 37 branches of the Arab bank through which it sells its products to the expatriate Indian population, especially the Sindhis. For Union National, this arrangement translates into being able to access the Indian bank’s branch network in India and explore business opportunities here.
For the Indian population in Abu Dhabi, the arrangement means better interest rates and other benefits because the Indian bank negotiates bulk rates with the foreign bank, in return for giving it business, Ghosh said.
InduaInd, which completed its first Global Depository Receipt (GDR) issue towards the end of last year, also is likely to raise a further Rs250-350 crore in tier-II capital next year, Ghose added. IndusInd’s net worth currently stands at over Rs1,000 crore, he said.