Most of the Indian banks in collaboration with foreign players are planning to make venture in the non-life insurance business. The public sector banks UCO Bank, Union Bank of India and Corporation Bank have announced their plans of setting up non-life insurance companies. According to industry consultants at present this is a trend among the state-controlled as well as private banks to expand their business in this area.
SK Goel, Chairman and Managing Director, UCO Bank stated, “We will hold a 26 per cent stake in a consortium of five players. Six foreign players and four to five domestic banks have evinced an interest in tying up with us. By month end we will finalize the domestic partners and next month call for bidding from the foreign players.”
As per the information given by the sources close to the development, besides other companies Travelers of United States, Liberty Mutual of Boston (which ranks 86th in the Fortune 500 titans list in the US), Berkshire Hathaway (the holding company of legendary investor Warren Buffet), Royal Bank of Scotland and Credit Agricole, might be invited for the bid.
In this business banks are aided by prospects of high valuation whereas the investment is relatively low.
“The order of capital is not as substantial as required in a life insurance business,” informed an industry analyst. He told that ICICI Lombard required only Rs. 300 crore over an eight-year period, while ICICI Prudential Life required Rs. 5,000 crore.
Private sector ICICI Bank, HDFC and Karnataka bank are already ventured in non-life insurance biz, as do public sector State Bank of India and Allahabad Bank.
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