| Indian Overseas Bank (IOB) has postponed its plans to set up its financial services subsidiary during the current financial year.
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| T S Narayanasami, chairman and managing director, IOB, told Business Standard, "We are not actively pursuing the financial services subsidiary at present as we will need to gain expertise in the domain of marketing and will decide about it at a later date."
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| IOB's board of directors had approved the formation of a financial services subsidiary in January 2005, when S C Gupta was the chairman and managing director of the bank.
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| Then, Gupta said that the subsidiary will focus on stock broking and in due course extend its activities to sell insurance and mutual fund products. The capital structure of the subsidiary was not decided.
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| Narayanasami said that the bank will earn about Rs 60 crore to Rs 70 crore from fee based during the current fiscal through its tie up with other financial services companies.
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| The bank had entered into an agreement with Life Insurance Corporation for distributing life insurance policies and National Insurance Corporation for general insurance policies' distribution.
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| The bank recently tied-up with three mutual fund companies to distribute their products.
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| When asked if the setting up of a financial services subsidiary will bring in focus for the bank to increase its fee-based income,
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| Narayanasami said that the first objective is revenue generation and the bank did not want to waste time and recruit people in this regard.
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| He pointed out that the investment required for launching a subsidiary will be small and was not the determining factor for postponement. |
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