The Corporation Bank (Corp Bank) entered into a strategic alliance with the New India Assurance Company today to distribute latter's insurance products. Both the parties signed a memorandum of understanding (MoU) to the effect in Mumbai today.
According to the MoU, the bank will plan and implement effective cash flow management of the insurance company. The bank is looking for using the premises of the New India Assurance in India as well as abroad to open branches, extension counters, and for placing its automated teller machines (ATMs). The bank may consider permitting the use of its ATMs for premium payment by the New India's policy holders.
K Cherian Varghese, chairman and managing director, Corporation Bank, said, "We have been toying with the idea of entering the insurance sector ever since the Insurance Regulatory and Development Authority (Irda) came out with the norms for private insurance players. However, our internal exercise shows new insurance companies take a long time to reach the break even. That's why we planned to enter the sector through strategic alliance."
The New India Assurance may also consider utilising the services of payment processing centres of the bank for making payments and can even enter into agreement for paying taxes through the Corporation Bank. The insurance company is also looking for routing its foreign exchange business through designated branches of the bank and may enter into a tie up to bid for government securities through CorpBank Securities -- the primary dealer subsidiary of the bank.
KN Bhandari, chairman and managing director, New India Assurance, said, "Corporation Bank with its network will provide greater access to a large number of people across the country. We have recently developed credit insurance product and we feel that our alliance with the bank will add value to it."
The bank is already into a strategic alliance with the Life Insurance Corporation (LIC) for distributing latter's products. It has plan to set up 100 extension counters, 25 branches and 100 ATMs in LIC office premises in a year.
