The Hindu Business Line : OBC plans insurance foray

ROBUST RESULTS: Mr K. N. Prithviraj (right), CMD, Oriental Bank Of Commerce, and Mr Allen C.A. Pereira, Executive Director, addressing a press conference in the Capital on Friday. - Kamal Narang

New Delhi , Jul 28

Oriental Bank of Commerce (OBC) plans to foray into the life insurance business and is scouting for joint venture partners for this purpose, according to the Chairman and Managing Director, Mr K.N. Prithviraj.

"We are going to go for the partnership model. We will partner with a public sector bank and an MNC for setting up the joint venture company. Our plan is to take 23 per cent stake and allow the public sector bank to have majority holding of 51 per cent. As per the current legal framework, MNCs cannot anyway have more than 26 per cent," Mr Prithviraj told newspersons after announcing the first quarter results.

He added that the joint venture partners are likely to be identified before the end of the current fiscal.

Mr Prithviraj also said that the partnership model was in line with the model adopted by most of the public sector banks for their forays into life insurance.

For the quarter ended June, OBC reported net profit of Rs 94.02 crore, up 116 per cent over Rs 43.53 crore in the corresponding previous period. Total income rose to Rs 1,304.02 crore (Rs 1,083.10 crore). Mr Prithviraj said that the jump in net profit was driven by robust growth of credit and good level of recovery of bad debts."We recovered about Rs 202 crore, of which Rs 180 crore was in cash. This recovery directly goes to the profit and loss account and boosts our bottomline."

OBC is targeting 20 per cent growth in overall business for the current fiscal. "We hope to achieve the Rs 1,00,000-crore mark by March 31, 2007."