The Hindu Business Line : Canara Bank proposes foray into life insurance

Canara Bank has proposed to foray into life insurance in collaboration with partners, one of which may be a foreign institution. No formal decision has been taken in this regard.

The bank, which intends to hold the majority stake, is mooting a three-way joint venture for entering into the insurance business. The latter, it admits, is steadily attracting newer players; in fact, a number of banks have lately evinced interest in the sector.

Canara Bank, said Mr M.B.N. Rao, Chairman and Managing Director, is actively exploring the possibility of investing in an insurance venture. He, however, did not reveal the names of the companies with which talks have been held. At the moment, it distributes Aviva's products.

The bank is also keen to expand operations in South-East Asia, a region that is seen as quite promising. Its presence here is now restricted to centres such as Shanghai and more is expected to be done on this front.

At another level, the bank has set a business target of Rs 2.33 lakh crore for 2006-07, with a growth rate of about 18 per cent, comprising Rs 1.38 lakh crore under deposits and Rs 95,000 crore under advances.

The bank, which sees agriculture, SMEs and infrastructure as among its major growth drivers, hopes to speed up its CBS (core banking solution) implementation in the coming months and has targeted 1,500 branches under CBS coverage by March next year.

Canara Bank, according to Mr Rao, is pursuing a significant `financial inclusion' strategy, aimed at about 1,400 villages across the country for 100 per cent inclusion. Apart from launching `Cansaral', a no-frill deposits scheme, the bank has recently launched CAN-NE, a savings account scheme with overdraft facility for the under-banked north-eastern region. He was addressing a meeting organised by FICCI on Wednesday.

Financial supermarket

Given its nine subsidiaries and sponsored outfits, Canara Bank is now on its way to become a bigger financial supermarket. The bank, which has recorded a global business of Rs 1.96 lakh crore in 2005-06 (a 24 per cent increase), saw its aggregate deposits rise by 20 per cent and advances by 31 per cent or so in the last fiscal. Its net profit stood at over Rs 1,300 crore.

Subsidiaries in focus

Canara Bank hopes to shore up its subsidiaries, especially those involved in asset management and primary dealership, Mr Rao indicated.

Canbank Investment Management Services (read: Canbank MF), is likely to be made stronger, which will be a significant step in the context of increasing competition in the asset management industry. The fund posted a profit after tax of Rs 3.94 crore in 2005-06.

Gilt Securities Trading Corporation, which handles the PD (primary dealers) business, may pursue options that have been allowed recently by the regulator, it is stated. The PD company, which recorded a profit of Rs 48 lakh, has seen a rise in yield and provision for depreciation on stock of securities held.

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