Idbi For Insurance Foray Via Pension Route

The Industrial Development Bank of India (IDBI) has changed its strategy and will foray into the insurance sector via the pension route.

Senior IDBI officials said it could venture into life insurance subsequent to its entry to the pension business.

"We can get into the life insurance later as there is synergy between the two businesses," said a senior IDBI official.

IDBI is preparing the blueprint for its entry into the pension sector. Officials said this would be ready by December when the report for the pension reform plan is finalised by the government.

IDBI has for the last one year been propagating its plans to foray into the insurance sector, where new players have mushroomed since privatisation.

 

The proposed pension reforms in the country has resulted in a change of plans for IDBI, especially since its foreign partner Principal Financial Group is one of the largest pension player in the US.

The Insurance Regulatory and Development Authority (Irda) submitted the draft report in early November to the seven-member committee, which includes representatives from the four ministries -- finance, labour, social welfare and law.

As per Irda's draft report only "integrated players", who can undertake mobilisation of funds, record keeping, management of investments and the final payout in terms of annuities, will be entertained.

Institutions such as ICICI, State Bank of India and HDFC are among the few eligible participants.

However, Irda is equally open to accept proposals from others such as a bank tying up with a life insurance company, or a mutual fund with proven capabilities signing up with an insurance company for the monthly payout of pension.

IDBI, though secretive about its exact gameplan, is expected to remain only an annuity player, even when it applies for a licence as a life player, said senior officials. A registered life company with Irda is also entitled to sell annuity products.