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Federal Bank is not looking to completely exit from its life insurance joint venture with IDBI Federal Life Insurance, said Manging Director and CEO Shyam Srinivasan.
The SME and mid-market focused private sector bank is however “conceptually open” to dilute its shareholding in the nearly eight-year-old profit making life insurer.
While IDBI Bank has a 48 per cent stake, Federal Bank and Belgian multinational Insurance company Ageas hold 26 per cent each in IDBI Federal Life Insurance.
“Life Insurance in India will continue to be a remarkably high growth space for many years to come. So, we would not want to vacate it. The level to which we would remain invested will be a matter of how pricing emerges,” Srinivasan told BusinessLine here. He also said that Federal Bank’s foreign partner – Ageas – in the life insurance JV was interested in raising it’s stake to 49 per cent.
Credit growth“There are lot of talks going on. Price discovery has to happen. Each player have their own compulsions,” he said, adding that something should happen over the next 12 months. Meanwhile, in this fiscal Federal Bank is hopeful of surpassing the 14 per cent growth in advances recorded during the last fiscal year.
The recent June quarter saw advances recording 19 per cent growth on a year-on-year basis.
Its current focus areas of SME, mid-market and retail clients is expected to help achieve “mid-to-high teen” growth rate in advances this fiscal, added Srinivasan .
In the case of corporates, he noted that there is a slack (credit demand) at the aggregate level. Also, large investment led demand is yet to catch up, he said.
Capital mop-upSrinivasan also made it clear that the Federal Bank was not looking to raise capital in the near future.
“At the current course and speed, we are not visualising any capital raising for the next 12-18 months,” he added.
Federal Bank has only Tier 1 capital and there is no Tier 2 capital as on date.
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