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Our Bureau

New Delhi , July 18

AT a time when a section of the existing life insurance players prepare to exit from the intensely competitive market, new and strong players are warming up to take on the challenge.

Among the first of the new set of entrants could well be Punjab National Bank (PNB).

The RBI has given its go-ahead for the bank's proposed foray into the life insurance business. The new company would aim to be a niche player with a predominant focus on the group life insurance segment.

The life venture would be floated jointly with the Principal Financial Group, US, and Bangalore-based Vijaya Bank. There is also a possibility that Berger Paints might participate in the equity of the life insurance company that is to be christened Principal PNB Life Insurance Co. Confirming the development, Mr Ranjan Dhawan, General Manager, PNB, said that the new company would soon be moving the Insurance Regulatory and Development Authority (IRDA) for the final approvals before taking a plunge into the market.

"We have just received RBI's approval to participate in the venture. Our plans are to commence operations within this year after we acquire the IRDA's regulatory approval," Mr Dhawan told Business Line.

The life company is expected to commence business with a paid up capital of Rs 110 crore, a shade above the minimum capital requirement of Rs 100 crore. PNB would be holding 30 per cent equity in the company (the maximum permitted for bank entering insurance) while the remaining shareholding would be split between Principal Financial, Vijaya Bank and Berger Paints.

PNB already has ongoing ventures with Principal Group, Vijaya Bank and Berger Paints. Its existing ventures that have holdings by these partners in varying degrees are Principal PNB Asset Management Co, Principal PNB Insurance Broking and Principal PNB Financial Planner (for distribution of mutual funds).

Mr Dhawan said that floating a life insurance arm would be another step in PNB becoming a one-stop-shop for all financial products.

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