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Berger Group to pick up 32% stake in life risk venture

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Freny Patel Mumbai
The Berger Group will pick up an additional 7 per cent stake in the four-way life insurance partnership of the US-based Principal group.
 
This follows the Reserve Bank of India (RBI) capping Punjab National Bank's (PNB) stake in the life insurance outfit at 30 per cent.
 
Earlier PNB was to hold 37 per cent, Vijaya Bank 12 per cent, Berger group 25 per cent and the foreign partner Principal 26 per cent. Berger, which is largely into the paint business, will thus pick up 32 per cent in the life insurance venture.
 
The fresh shareholding pattern has yet to seek RBI approval, said senior executives from the proposed life insurance entity.
 
Following RBI's approval, an application will be made to the Insurance Regulatory and Development Authority (IRDA) for a licence to undertake life insurance business, he added.
 
As per the Banking Regulation Act, a bank cannot hold more than 30 per cent in a company. RBI however, made an exception in the case of State Bank of India (SBI) which holds 74 per cent stake in SBI Life.
 
The Jammu & Kashmir Bank holds 25 per cent stake in MetLife Insurance Company. In the case of private sector banks, however, this rule is not enforced with ICICI Bank, HDFC Bank and ING Vysya each holding majority stake in their respective life insurance ventures.
 
Meanwhile, the IRDA has asked PNB and Vijaya Bank to surrender their respective corporate agency licences. This is one of the pre-conditions set by the regulator prior to getting a licence.
 
Both these public sector banks already have a joint venture with Principal in the mutual fund business "" Principal PNB Asset Management Company. Principal holds 65 per cent, PNB has a 30 per cent stake and Vijaya Bank 5 per cent in the AMC.
 
The entity has assets under management in excess of Rs 6,000 crore and has a 5 per cent market share in the Indian Rs 100,000 crore mutual fund industry.

 
 

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First Published: Jan 18 2005 | 12:00 AM IST

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