PUNE\CHENNAI: Bank of Maharashtra (BoM) is eyeing a 15% stake in the non-life venture promoted by Chennai-based Shriram group and Sanlam of South Africa. The proposed joint venture is awaiting the Insurance Regulatory Development Authority’s (IRDAs) nod. The Pune-based bank has proposed to chip in with around Rs 15 crore towards the Rs 100 crore equity of the insurance JV, said MD Mallya, chairman & managing director, BoM. The Shriram group through its holding company would hold a majority stake, with Sanlam picking up 26%. “We are still reviewing the Shriram Group’s application for its non-life venture due-diligence needs to be done by the regulators. As far as BoM’s participation is concerned, it is for RBI to take a decision,” IRDA chairman CS Rao told ET. Shriram Group chairman R Thyagarajan said the company was hopeful of getting a response within the next 15-20 days. “The delay in issuing a licence is not unusual in our case, as there are different regulators involved.” He said that the group considered a couple of banks for joining the venture and finally opted for BoM as a partner. The new venture will be based in Jaipur. The minimum capital requirement in a non-life venture is Rs 100 crore. Under the existing regulations, a foreign partner can hold up to 26% equity stake, while a state-owned bank can contribute up to 50%. For the Shriram group, this will be the second venture with the South Africa-based Sanlam Group. It already has a tie-up with this group in the life segment: Shriram Life was launched in 2006. Besides life insurance, the Sanlam group operates in areas of group schemes, retirement funds, asset management and other financial services. At the end of December 2006, it had over $60 billion assets under management. Currently, BoM only has bancassurance tie-up with United India Insurance for distributing general insurance products. The proposed non-life joint venture with the Shriram group is expected to provide a good opportunity to the bank to cross sell insurance along with the traditional banking products. If the proposal is cleared by the regulator, BoM will be the second public sector bank after Allahabad Bank to foray into the non-life segment. IRDA has cleared the R1 application for Allahabad Bank, which has partnered with Sompo Japan Life Insurance, Indian Overseas Bank, Karnataka Bank and Dabur Investment Corporation. BoM is targeting a 25% growth in the total business in FY08, comprising of a 23% growth in deposits and 28% growth in advances. In absolute terms, it is projecting a total business of around Rs 77,000 crore for this fiscal.
Source: Hema Ramakrishnan & Chandra Rangnathan, Times News Network
No comments:
Post a Comment