Public sector Indian Bank plans to venture into life insurance. It is looking at floating a consortium with domestic and foreign partners, for which it has already initiated talks. Besides, it would also appoint a consultant to advise it on re-entry into the mutual fund industry.
Speaking to Business Standard, Chairman and Managing Director T M Bhasin said Indian Bank was a bancassurance partner for HDFC Life Insurance and the agreement would mature in March. Last year, the bank earned a commission of Rs 26 crore through the tie-up and was targetting Rs 40 crore this year.
“We are now planning to float a new life insurance company on our own,” he said.
It may be noted that Bhasin was involved in Canara HSBC Oriental Bank of Commerce Life Insurance co, a joint venture (JV) between two of the largest public sector banks — Canara Bank and Oriental Bank of Commerce — and HSBC Insurance (Asia Pacific) Holdings. Bhasin represented Oriental Bank.
He said the bank had invited an expression of interest (EoI) from consultancy services to advise it on its proposed investment, which would either be a JV or based on equity participation.
The new company would take another six months to materialise and would be through a consortium, wherein Indian Bank and the domestic partner would have the majority stake and the foreign partner would hold 26 per cent, he said.
“We have got a few offers from both domestic and foreign firms. They are offering us equity at concessional rates. By charging on a monthly, per branch basis, we would use our branch networks effectively,” he said.
The 104-year Chennai-based Bank has more than 1,800 branches and over 19,000 staff. It has a customer base of around 200 crore. As on date, total business amounts to Rs 1.70 lakh crore.
“This foray will further strengthen our brand and the equity will also get appreciated in the long-term”.
The bank would also hire consultancy services for its proposed foray into mutual funds on a JV basis. It was planning to rope in a suitable partner for the same, said Bhasin.
Indian Bank is one of the pioneers in the mutual fund industry. It set up its mutual fund business in 1989, which became of the top performing mutual funds in the nineties. But in 2001, the bank transferred its schemes to Tata Mutual Fund.
