KOLKATA: Even as most big public sector banks are planning to float individual life insurance ventures, it may take a while for Corporation Bank to start off with a foreign ally.
The reason: The Life Insurance Corporation’s (LIC) 27% stake in the bank. The bank may have to remain LIC’s largest bancassurance partner until it gets the government’s nod for a separate venture.
The reason: The Life Insurance Corporation’s (LIC) 27% stake in the bank. The bank may have to remain LIC’s largest bancassurance partner until it gets the government’s nod for a separate venture.
Whether Corporation Bank would choose to remain a principal distributor for LIC or have its own insurance venture is difficult to guess.
When asked, B Sambamurthy, chairman and managing director, Corporation Bank, told DNA Money: “We are not interested in the general insurance business as there is a lot of competition. As far as life insurance is concerned, we are not looking into it as of now. What will happen later, no one can say”.
Industry analysts say that it’s a tricky situation as LIC’s strategic stake in the bank is unlike its investments in other banks such as UTI Bank or Oriental Bank of Commerce.
While the government’s say is the last word in case Corporation Bank wants to pursue its own venture, LIC has voting rights and an amicable consensus will be in the best interest of both institutions.
Sambamurthy was in the city to speak on financial inclusion organized by the FICCI on Tuesday. He said that the bank was interested in new areas like mobile payment systems and wealth management in the current year.
Without disclosing details, Sambamurthy said: “We are examining the mobile payment system and will conduct a pilot project in Delhi. This initiative will shape the future of banking in the country”.
The bank has no plans to come up with a follow-on public offer, but may raise Tier 2 capital sometimes this fiscal. “We have a capital adequacy ratio of 12.5% and may raise some capital if the need arises. The bank has a headroom of Rs 4000 crore for Tier 2 at present”, he added.
When asked, B Sambamurthy, chairman and managing director, Corporation Bank, told DNA Money: “We are not interested in the general insurance business as there is a lot of competition. As far as life insurance is concerned, we are not looking into it as of now. What will happen later, no one can say”.
Industry analysts say that it’s a tricky situation as LIC’s strategic stake in the bank is unlike its investments in other banks such as UTI Bank or Oriental Bank of Commerce.
While the government’s say is the last word in case Corporation Bank wants to pursue its own venture, LIC has voting rights and an amicable consensus will be in the best interest of both institutions.
Sambamurthy was in the city to speak on financial inclusion organized by the FICCI on Tuesday. He said that the bank was interested in new areas like mobile payment systems and wealth management in the current year.
Without disclosing details, Sambamurthy said: “We are examining the mobile payment system and will conduct a pilot project in Delhi. This initiative will shape the future of banking in the country”.
The bank has no plans to come up with a follow-on public offer, but may raise Tier 2 capital sometimes this fiscal. “We have a capital adequacy ratio of 12.5% and may raise some capital if the need arises. The bank has a headroom of Rs 4000 crore for Tier 2 at present”, he added.
Source: DNA
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