AllBank meet on non-life foray today

Allahabad Bank will hold a meeting with potential partners for its non-life insurance foray today. This was in accordance with the recommendation made by the Reserve Bank of India (RBI) to keep the bank's stake in the insurance venture below 50 per cent.

"RBI had suggested to keep the stake of public sector banks in the insurance ventures below 50 per cent owing to high risks associated with it. The regulators have suggested to keep private players' stake above 51 per cent in the company. Following their suggestion, the bank has decided to hold a meeting with potential players for strategic tie up," said a senior bank official.

The meeting would be held between the bank and potential partners from private domestic banking and insurance sectors as well as overseas insurance players, he said.

The bank would be entering the insurance sector through its wholly-owned subsidiary, AllBank Finance. Sources further confirmed that the selection of the partner would be finalised shortly. Operations were likely to start within December 2005, he added.

Meanwhile, the bank was all set to have its first overseas branch in Hong Kong, informed O N Singh, chairman and managing director, Allahabad Bank.

"The bank is expecting to receive the licence for overseas operations by November 2005. Ernst & Young is going through the certification procedure. The branch will be set up by December 2005," Singh said.

The bank would also be opening its representative office at Shenzen, China by the same time, he added. The bank has appointed XLRI for working a human resource policy for the bank.

"Currently, the net attrition rate was around 5 per cent owing to 20 per cent retirement rate. The bank has appointed XLRI to work on an HR policy, thereby, reshuffling the remuneration package and recruitment policy," he added.

Further, the bank would be investing around Rs 300 crore for technological upgradation, he added.

"Once the core banking solution is in place, the transaction cost would come down significantly to Rs 100 per Rs 10,000 business done from the corresponding current figure of Rs 160," Singh added.

The bank was likely to implement core banking solution in nearly 900 branches over three years. There was no need to raise further capital currently, Singh added.