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Our Bureau

Mr Ananthakrishna

Bangalore , Dec. 2

THE private sector Karnataka Bank has indicated its willingness to pick up an equity stake in the general insurance venture proposed by the public sector Allahabad Bank.

The proposed non-life insurance venture is still in the incipient stage. Under the current regulations of the Insurance Regulatory and Development Authority (IRDA), the paid-up equity of a general insurance company is fixed at Rs 100 crore. However, the Chairman and CEO of Karnataka Bank, Mr Ananthakrishna, said, "We have sent our consent to participate in the equity and individual stakes will be decided only later."

Allahabad Bank's proposal for general insurance venture has drawn enquiries from a clutch of unnamed foreign insurance companies for setting up a joint venture. The proposal is awaiting IRDA clearance.

Industry sources said that in any general insurance venture, capitalisation would be within the IRDA's mandate of domestic partner's share being 74 per cent and the foreign stakeholders' 26 per cent.

However, there is anticipation the domestic partner's share would be pared to 51 per cent when the guidelines are relaxed. This is because many of the private sector insurers have sought higher foreign capital limits to allow for business growth and meet the tight solvency guidelines prescribed. The solvency ratio prescribed is 150 per cent of the insured liabilities.

Despite this foray, Karnataka Bank has indicated that there would be no exit from its existing bancassurance arrangements. It is already a corporate agent for Bajaj Allianz General Insurance Company Ltd for the distribution of non-life products through its 381 branches in the country.

Mr Ananthakrishna said, "The existing arrangements will continue. We will look at it only after the proposed general insurance venture becomes a reality."

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