Andhra Bank makes life insurance foray

Andhra Bank has signed an MoU with Legal and General Group Plc of UK and Bank of Baroda to form a joint venture (JV) for life insurance business.

The bank will hold a 30 per cent stake in the JV, while the UK firm and Bank of Baroda will have 26 per cent and 44 per cent stake, respectively. The JV involves an initial capital investment of about Rs 200 crore. The partners would initiate various steps to operationalise the JV in due course.

"We will put everything together in 3-4 weeks. The next step is applying to the Insurance Regulatory and Development Authority," chairman and managing director of Andhra Bank, K Ramakrishnan, said.

Bank of Baroda is very strong in the western part of the country and Uttar Pradesh while Andhra Bank is strong in south India. The two banks combined have nearly 4,000 branches.

This apart, Ramakrishnan had told Business Standard earlier that the insurance initiative was aimed at improving the bank's profitability, particularly at a time when profit margins were thin. The net interest margin of Andhra Bank had declined from 3.7 per cent in 2004 to 3.2 per cent at present.