Gmr Will Not Cut Its Pie In Ing-Vysya Insurance Jv

GMR Group has no plans to decrease its stake in the insurance joint venture between ING and Vysya Bank following the group's decision to shed its stake in the bank in favour of BBL, a subsidiary of ING.

"We don't want to shed even one per cent stake in the insurance joint venture," GMR Group sources told Business Standard. Currently, Vysya Bank has 49 per cent stake in ING Vysya Life. ING has 26 per cent and GMR group has 25 per cent.

Sources said the joint venture is currently in talks with IRDA about the new equation which will emerge once BBL's stake increase in Vysya Bank is approved.

 

Once BBL's stake in Vysya bank is increased, BBL will hold around 44 per cent, and with IFC's 10 per cent stake, the bank will violate the 49 per cent cap on foreign direct investment in an Indian bank which will also violate IRDA norms for an insurance venture.

As per IRDA norms, foreign institutions cannot hold more than 26 per cent stake. With Vysya Bank's 49 per cent and ING's 26 per cent, the equity will increase to around 75 per cent.

Vysya Bank is in the midst of a major streamlining of its operations. This includes a voluntary retirement scheme, restructuring of its operations and a Rs 60 crore automation drive.

The bank is currently undergoing a restructuring exercise which is expected to lead to a much leaner and fitter organisation.