AllBank eyes three foreign firms for general risk foray

Allahabad Bank has zeroed in on three foreign insurance companies as potential partners for its general insurance foray.

The shortlisted companies are Sampo of Japan, AXA of France and Insurance Australia group (IAG), said O N Singh, chairman and managing director, Allahabad Bank The deadline for finalising name of foreign partner would be completed by February 28, he added.

"We have to finalise the name of the foreign partner by February end. After than we will make application to Insurance Regulatory and Development Authority (Irda) for clearance which might take around three months," Singh said.

Allahabad bank would be holding 30 per cent in the venture whereas another public sector bank, Indian Overseas Bank, would be holding 19 per cent stake in the insurance company. Karnataka Bank would be holding 15 per cent stake whereas Dabur would be holding 10 per cent, Singh said.

Bank of Rajasthan (BoR) was another contender for being a partner in the venture but was finally dropped.

"We had signed an memorandum of understanding with BoR regarding to the insurance foray. The stake offered to them were too small, so the consortium decided to drop BoR," he explained. The insurance company will be floated by June 2006, he confirmed.

The authorised capital will be Rs 200 crore against a minimum requirement of Rs 100 crore, though the paid-up capital would be anywhere between Rs 100 crore and Rs 200 crore. The bank will also be raising Rs 500 crore Tier II capital shortly.

"The bank shall be raising Rs 500 crore Tier II capital within next fifteen days," said Singh. The bank would aim to extend Rs 3,200 crore worth of credit to small and medium enterprise (SME) segment by March 2006.