PNB's life insurance foray next year

Punjab National Bank, the country's second-largest public sector bank, is hoping to start its life insurance venture next year after the capital rejig. It is also contemplating diluting stake further in PNB Gilts Ltd.

S C Gupta, chairman and managing director, PNB, told reporters here that the bank was expecting approval from the Insurance Regulatory and Development Authority (Irda) by March 31 regarding the insurance venture.

Other partners in this venture are PNB, UK Paints, Vijaya Bank and the Principal group.

Gupta was in the city for an interactive session with the members of Ficci. Commenting on its subsidiaries, Gupta said PNB would take a final decision about divesting its stake further in PNB Gilts by the end of this fiscal. The bank now holds 74 per cent in the outfit.

However, he made it clear that there is no possibility of diluting stake in PNB Housing Finance or merge it with the itself. "We do not feel any necessity for that," he said. Earlier, talking on real estate funding he said it was no longer the priority area of the bank.

"We shall reduce our exposure in real estate funding like shopping mall multiplex etc. But individual home finance will continue. Our major thrust will be on infrastructure like power, roads, airport infrastructure etc," he added.

According to Gupta, PNB was targeting to achieve Rs 4 lakh crore business in the next four years.

"So far we have achieved a total business of Rs 2.25 crore in the current fiscal and hoping to finish the year at Rs 2.35 lakh crore," he added.

Commenting on the liquidity situation of the economy he said that it was quiet comfortable and an additional one per cent reduction in cash reserve ratio (CRR) would infuse Rs 23,000 crore into the banking system.

"Now close to Rs 1.15 lakh crore is lying with RBI as CRR. An one per cent reduction means Rs 23,000 crore fund infusion into the system," he added.