The Tamil Nadu government has decided to explore the possibility of state co-operative banks entering the insurance sector.
There are over 4800 co-operative banks operating in the state.
Explaining the rationale behind the move, S Ramakrishnan, the secretary (co-operation, food and consumer protection), Government of Tamil Nadu, said: "The reach of these co-operative banks is tremendous as they are the main lenders to the agriculture sector.
Since many of these banks are also in the business of providing housing and vehicle loans, insurance would help them tap the potential of this consumer base effectively."
Ramakrishnan said the manpower with these banks can also be used for this new branch of business.
Both Reserve Bank of India and Insurance Regulatory Authority of India have given clearance for state level co-operative banks to enter the insurance business.
The state government is yet to decide on the details of the co-operative banks entering the insurance business. "We are yet to decide whether we would partner with any insurance company for domain knowledge or form a special purpose vehicle for this," said Ramakrishnan.
He also added that no decision has been taken on whether to enter life insurance or not.