IndusInd Bank may buy 3-5% in Aviva Life

Private sector lender IndusInd Bank is in talks with Aviva Life to acquire a minority stake in the company, said two people privy to the development. The Dabur Group, which holds 74 per cent stake in the life insurance company, would dilute three-five per cent stake if the deal works out.

"IndusInd Bank is interested in picking up a small stake in Aviva Life. Nothing has been finalised yet. The discussions are still on," said a source.

The sources, however, added the success of deal would depend on the final guidelines on bancassurance, which are expected to be released in the next two months. IndusInd Bank has a bancassurance tie-up with Aviva Life for selling the insurer's products through its branches.

Earlier this year, Axis Bank had acquired four per cent stake in Max New York Life for around Rs 75 crore.

While Aviva Life declined to comment for this story, IndusInd Bank said currently, it was not considering acquisition of stake in any insurance firm.

According to industry experts, many life insurers are looking to offer minority stake to banks to form long-term bancassurance partnerships. This also allows the domestic partner in the insurance firm to monetise a part of its investment. Under the bancassurance model, banks offer their branch network as a low-cost distribution channel for insurance companies to market their products.

Last week, a committee set up by the Insurance Regulatory and Development Authority had announced the draft guidelines on bancassurance. According to the guidelines, a bank could have a tie-up with a life insurer in one state. The current guidelines restrict banks from partnering more than one life insurer across the country for bancassurance businesses.

Aviva Life is a joint venture between fast-moving consumer goods major, the Dabur Group, and UK-based insurance company Aviva, which holds 26 per cent stake in the venture.