SBI Life eyes Rs 600 cr premium income

SBI Life is targeting Rs 600 crore premium income this financial year compared with Rs 225 crore last year. It is also planning to hike its paid up capital to Rs 350 crore by the end of this financial year from the current 175 crore.

"The promoters of the 74:26 joint venture, State Bank of India, and the minor partner, Cardif SA, a leading French life insurer, will maintain the ratio for the capital infusion. Equity capital of Rs 75 crore will be infused this month," S Muralidharan, chief marketing officer, SBI Life said on the sidelines of the launch of Horizon, the insurer's unit-linked plan.

In case the FDI limit is hiked beyond 26 per cent, the ratio could differ. Yesterday, A K Purwar, chairman of SBI, had said that an additional Rs 100 crore of capital would be added before the end of March this year.

SBI Life expected additional capital requirement of Rs 500 crore next year keeping in mind its business growth. Our Banking Bureau, Mumbai adds: Meanwhile, Cardif SA, the foreign promoter of SBI Life Insurance Company, is interested to increase its stake in the Indian joint venture to 49 per cent, once regulations permit.

Pier-Paolo Dipaola, Cardif savings director, told Business Standard when a company is run well and has a good management, obviously one would like to increase one's holding, regulations permitting.

It might be recalled that State Bank of India (SBI) chairman A K Purwar had stated that the bank had no intention to offload additional stake to the foreign promoter.

He was reported to have stated that preference in terms of diluting SBI's current 74 per cent holding would be given to the general public rather than to the joint venture partner.

Cardif essentially operates on a balanced ownership structure across the globe. When asked if the Memorandum of Understanding (MoU) signed between Cardif and SBI included a clause that allowed for an increase in foreign holding in SBI Life when regulations permit, Dipaola declined to respond.

MoUs signed between partners of many insurance joint ventures include this clause. However, the same does not hold true for SBI Life.

"Our agreement with Cardif does not provide any automatic increase in the stake holding of our partner. These are issues subject to discussion between Cardif and SBI," said S Krishnamurthy, chairman, SBI Life.

"Regulations should be clarified and both partners should be placed on a level playing field," said Dipaola.

He was referring to the fact that foreign direct investment (FDI) today is capped at 26 per cent, though there is a proposal to hike this to 49 per cent.

Further as per the Insurance Act, the Indian partner needs to dilute his holding to 26 per cent over a period of 10 years. If foreign partners are allowed to increase their holding at this juncture, and necessary amendment to the act is not made, the Indian promoter would end up with a minority holding by the 10th year.