Holding in insurance firms: What to pick? PSBs in a dilemma after merger

After mergers, banks will have to decide whether to reduce their stakes in insurance companies or exit them

Regulatory and operational hurdles, which may crop up in the process of the merger of 10 public sectors banks (PSBs) into four entities, are likely to present fresh challenges to the PSBs, as well as regulators and the government.

The insurance regulation doesn’t allow an entity to promote more than one insurance company. However, the proposed mergers have created a problem as many of these banks are promoters of different insurance companies. 

For instance, Union Bank of India has a 25.10 per cent stake in Star Union Dai-Chi Life Insurance, while Andhra Bank has a 30 per cent stake in IndiaFirst Life