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March 05, 2007 12:45 IST
Two public sector banks - Canara Bank and Oriental Bank of Commerce � on Monday joined hands with the insurance arm of HSBC to set up a life insurance venture.
The proposed insurance joint venture would be controlled by Canara Bank with 51 per cent stake, while OBC would hold 23 per cent stake and HSBC the remaining 26 per cent - the maximum permissible limit for foreign partner under the present regulatory system.
"Eighty per cent of Indians do not have any access to insurance products - home, fire, riot or theft. In fact, insurance products are unknown to millions of people in the country," Finance Minister P Chidambaram said while speaking on the occasion.
He said, the new venture will go a long way in increasing the insurance penetration in the country. It would obtain regulatory approval in next few months and start operations soon.
The new life insurance company will have a paid up capital of Rs 325 crore (Rs 3.25 billion) of which HSBC will contribute Rs 170 crore (Rs 1.70 billion) which includes premium for accessing the vast branch network of public sector banks.
Canara Bank will invest Rs 102 crore (Rs 1.02 billion) and contribution to the JV will be Rs 46 crore (Rs 460 million) by the OBC.
Speaking on the occasion, Canara Bank chairman and managing director MBN Rao said: "The new company will have exclusive access to customer bases of both the state-owned banks Canara Bank and OBC and HSBC in India."This comprises of more than 40 million people and a nation-wide network of 3,600 branches, he added.
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