Money & Banking

More capital into insurance arm likely

K. R. Srivats New Delhi | Updated on March 03, 2011

naina lal

HSBC will look at bringing more capital into its life insurance joint venture in India as business expands here, Ms Naina Lal Kidwai, Group General Manager and Country Head, HSBC India, has said.

“We will continue to bring capital. As growth continues, we will look at bringing more money in,” Ms Kidwai said here on Wednesday.

As HSBC is a shareholder with a 26 per cent stake, she noted that it was also important that the other two partners — Canara Bank and Oriental Bank of Commerce — move together.

Currently, HSBC Insurance (Asia Pacific) Holdings Ltd, the Asian insurance arm of HSBC, has a 26 per cent stake in Canara HSBC Oriental Life Insurance, a three-way joint venture company launched in June 2008.

The capital base of the joint venture currently stood at Rs 825 crore.

While Canara Bank holds 51 per cent stake, Oriental Bank has 23 per cent stake in the joint venture life insurance company.

Raising the stake?

On whether HSBC would look at enhancing its stake to 49 per cent if the regulations were to allow it to do so later this year, Ms Kidwai said that the shareholder agreement does provide for it to increase stake in the joint venture company.

“We will explore it at the point of time when the regulation happens. It is dependent on price and many other issues. It is a wide open area,” she said.

The Government is looking to amend the current insurance law to allow foreign investors to hold up to 49 per cent stake in insurance companies here. A Bill to this effect is before the Standing Committee on Finance.

Mr R. Gopalan, Secretary, Economic Affairs in Finance Ministry, said at an event on Wednesday that the Standing Committee on Finance is expected to soon give its recommendations on the insurance laws (amendment) Bill.

These recommendations will then go to the Cabinet for approval, he said.

Published on March 03, 2011

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