Canara Bank, United sign MoU

Canara Bank signed a memorandum of understanding with United India Insurance Company on Thursday to distribute the insurer's general insurance products through the bank's branches. The bank also has a tie up with a private life insurer, Aviva Life Insurance, to distribute life insurance products.

"We now have to apply to the Insurance Regulatory Development Authority for a licence to market United Insurance's products, which should take about 10 days. After that, we will market all their non life products through our branches," K Rangaraya, a general manager, heading the bank's retail operations, said.

With credit and interest spreads under pressure, one of the things banks are doing to increase profitability, is to try and boost their fee-based income, including fees for acting as corporate partners for marketing insurance products.

The route is attractive as such partnerships don't require banks to enter into risk sharing arrangements.

"Our tie up with Aviva is also new... This year we expect to earn between Rs 1.25 crore and Rs 1.5 crore from selling their life insurance products. With the new tie up, we will now be marketing non-life products too. For fiscal 2005, we aim to earn a total of Rs 15 crore to Rs 16 crore in fees for marketing products of both Aviva and United Insurance," Rangaraya said.