HSBC in life insurance foray with Canara, OBC

Europe's largest banking group HSBC is entering India's fast-expanding life insurance market, in a partnership with public sector banks Canara Bank and Oriental Bank of Commerce (OBC).

Canara Bank will hold a majority 51 per cent stake in the venture, OBC, 23 per cent, and HSBC, 26 per cent, the maximum foreign direct investment permitted in insurance.

The country already has 15 private life insurance players, in addition to government-owned Life Insurance Corporation (LIC). Several others like Principal PNB Life Insurance Company and IDBI Fortis Life Insurance Company have already announced launches.

HSBC will pay a premium of Rs 125 crore for its stake, which would be used to meet initial administrative and other operational expenditure. The company will have a paid-up capital of Rs 200 crore contributed by the three partners in accordance with the shareholding.

The two Indian banks will make available their combined network of 3,600 branches and a customer base of 40 million, said K N Prithviraj, chairman and managing director of New Delhi-based OBC.

HSBC is the first large foreign bank to enter India's insurance market.

The other foreign bank present in life insurance is Europe's ING, through ING Vysya Life Insurance. The 16 life insurance companies have been reporting new business premium income growth of over 100 per cent for the last couple of years.

HSBC will provide a range of management services, including executives for senior roles, in the proposed joint venture, said M B N Rao, chairman and managing director of Bangalore-based Canara Bank.

The joint venture partners would soon approach the Insurance Regulatory and Development Authority for a licence. The company is expected to commence business this calendar year.