The Hindu Business Line : United India products at Syndicate Bank branches

Mr Michael Bastian, CMD, Syndicate Bank (left), and Mr V Jagannathan, CMD, United India Insurance, exchanging the bancassurance MoU in Bangalore on Tuesday. - - G. R. N. Somashekar

Bangalore , May 4

THE public sector unit, United India Insurance Company Ltd (UIICL), proposes to rationalise its offices after its bancassurance arrangements with Syndicate Bank.

Briefing reporters after signing the bancassurance agreement here today, Mr Michael Bastian, Chairman and Managing Director of Syndicate Bank, and Mr V. Jagannathan, Chairman and Managing Director of UIICL, said ``The bancassurance arrangement will be mutually beneficial.'' The bancassurance will allow Syndicate Bank to sell UIICL's non-life insurance products through its counters.

Through the agreement, Syndicate Bank expects to reduce its reliance on interest income. Being a corporate agent of the UIIL, Syndicate Bank is entitled for a commission of 5 per cent in line with the current regulations of the insurance regulator.

For UIIL, the arrangement will help expand its premium income leveraging on Syndicate Bank's network of 2,000 branches. It will also give UIIL access to the rural regions of the country. Mr Bastian said the rural business potential of the bank was estimated at Rs 150,000 crore over the next three years. Mr Jagannathan said that the agreement would eventually pave the way for rationalising UIICL's large branch network of 1,300 branches around the country. This will also pave the way for rationalising the workforce in the two organisations.

However, Mr Bastian said the expansion in business growth would increase the need for manpower in both the organisations. As a result, rationalisation did not necessarily imply voluntary separation. Instead, it would lead to more effective deployment of the workforce in the two organisations, he said.

In the first year, Syndicate Bank is expected to sell at least Rs 100 crore of insurance policies of the Rs 3,450 crore to be collected this year. Along with the premium collection, Syndicate Bank will also be expected settle some small claims. A mechanism for the purpose was being worked out. Based on the progress during the first year, the business targets would be doubled, Mr Bastian said.

UIIL this year would earn net profits in excess of Rs 300 crore this year, Mr Jagannathan said, despite slippage in business growth to three per cent as against the industry average of six per cent. This year however, it intended to focus on top line and bottom line growth.

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