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| SBI to inject funds into insurance arm |
| Press Trust of India / Kolkata Dec 25, 2008, 16:22 IST |
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The country's largest public sector lender, State Bank of India, is planning to inject fresh capital into its insurance arm, SBI Life, which is awaiting the right market conditions to raise funds through an initial public offering (IPO).
The company's Managing Director and Chief Executive Officer, Uday Sankar Roy, however, refused to divulge the amount SBI LIfe Insurance intended to bring in as fresh capital.
"It is difficult to say now. It will all depend upon the business requirement," he told PTI.
Commenting on the IPO, he said, "We are progressing on the IPO. But, in the current market scenario, it is difficult to say at this point of time when it will hit the market."
SBI Chairman O P Bhat had earlier said SBI Life Insurance, in which the banking major has a majority 76% stake, would hit the capital market by the end of 2009.
BNP Paribas Assurance holds the remaining 24% in the life insurance firm.
Apart from the volatility of the capital market, which, according to Roy, has more to do with western disturbances some impending regulatory changes domestically, including increasing higher Foreign Direct Investment, might be thought upon before going for the IPO.
The government has already tabled the Insurance Bill in Parliament aiming to increase the FDI cap in the sector to 49% from 26% now.
"As on September end, our solvency ratio was 2.6% as compared with the regulatory requirement of 1.5%," Roy said.
SBI Life Insurance has a paid-up capital of Rs 1,000 crore and an authorised capital of Rs 2,000 crore. The company's market share rose to 14% in the first seven months of the current fiscal from 12% at the end of the last fiscal.
Meanwhile, Roy expects the new business premium income from the last quarter could grow by just 30% as compared to the corresponding quarter of the last fiscal.
"Up to October-end of the current fiscal, our new business premium income grew by 100%. Traditionally, the last quarter yields almost half of the business for the entire year. But, this year it will fall sharply and the overall growth from the new business would be around 80%," Roy said.
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