PNB awaits RBI nod for insurance foray

Punjab National Bank (PNB) is awaiting the Reserve Bank of India's (RBI) permission to foray into the life insurance business.

After securing the RBI's approval, the bank will seek the Insurance Regulatory Development Authority's nod for the venture.

PNB executive director K C Chakrabarty said in Ahmedabad last week that while the bank will hold a 30 per cent stake in the venture, the US based Principal Financial Inc will hold 24 per cent, and Vijaya Bank and Berger Paints will hold the remaining stakes in the company.

Chakrabarty said in two months PNB will launch a new company which will be a principal planner.

"The company is likely to be called PNB Principal Financial Planner and it will sell mutual funds of all banks and non-banking companies. It will be a distribution company with PNB and Principal holding stakes. PNB will have a 30 per cent stake in the company, with Vijaya Bank and Principal holding the remaining stakes along with Andhra Bank," said Chakrabarty.

On the delay in launching the life insurance firm, Chakrabarty said, "There could be several reasons. The RBI is going through the application and perhaps PNB did not try hard enough for an early clearance."

Meanwhile, the bank is selling mutual funds through its association with Principal Financial Inc, through the bank's branches.

Chakrabarty said the bank, in a bid to provide a whole range of services, plans a broking company, but this proposal is still in the planning stage. "It will take a while before details of this are worked out, but the bank will get into broking as well."

On its plan to merge with another bank, Chakrabarty said while mergers and consolidation in the Indian banking industry is inevitable, it is the government that will take a decision in this regard.

"The government will have to take a decision on this, after which stakeholders' approval will be sought. But an attempt is definitely being made from all quarters to create an atmosphere, where consolidation in the banking industry can be facilitated," he said.