The Hindu Business Line : Vijaya Bank may float insurance companies

Vijaya Bank had 19- per cent stake in the joint venture broking arrangement and was also the corporate agent for National Insurance Company. The bank is pulling out of the venture following objections from IRDA.

Mr Prakash P. Mallya

Somasroy Chakraborty

Kolkata, Aug 17

Vijaya Bank is mulling to float life and non-life insurance companies following the bank’s decision to pull out of its insurance joint venture – PNB Principal Insurance Advisory Company Private Ltd – with the Punjab National Bank (PNB) and the Principal Financial Group of the US.

The bank is likely to take a decision in the next three to four months on the modalities of its proposed insurance foray.

“We have decided to come out of the joint venture, but at the same time we want to do it gracefully. Setting up an insurance company is definitely one of the options and we will take a decision once we exit the joint venture formally in a couple of months,” Mr Prakash P. Mallya told Business Line.

Decision

“Insurance business, both life and non-life, in India is very remunerative. We have plans for insurance companies both in life and non-life segments. We will take a decision in the next three to four months,” Mr T. Valliapan, Executive Director, Vijaya Bank, said.

Vijaya Bank had 19-per cent stake in the joint venture broking arrangement and was also the corporate agent for National Insurance Company. However, the Insurance Regulatory and Development Authority (IRDA) had raised objection to the bank’s dual presence in the insurance sector following which the bank decided to pull out of the joint venture.

Another joint venture

It may be recalled that another south India-based bank, Canara Bank, has recently floated a life insurance company in joint venture with the Oriental Bank of Commerce and HSBC Insurance (Asia Pacific) Holdings Ltd.

According to Mr Valliapan, the bank could either form a similar joint venture or churn out a subsidiary company for its proposed insurance business.

“It’s a bit early to comment. Both the subsidiary and the joint venture format have pros and cons. However, I feel that a tie-up will be easier as forming a subsidiary will require lot of regulatory approvals,” Mr Valliapan said.

The bank plans to raise about Rs 300 crore capital by the end of this fiscal to fund its expansion plans.

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