IDBI-Fortis in truck for life insurance venture

Industrial Development Bank of India (IDBI) today signed a memorandum of understanding with Brussels-based banking and insurance firm, Fortis, for setting up a life insurance joint venture.

IDBI and Fortis will now jointly decide on the third partner for the life insurance joint venture, as the Reserve Bank of India (RBI) is against a single bank holding a 74 per cent stake in a life insurance venture.

IDBI and Fortis will also explore possibilities of joining hands for venturing into non-life insurance, asset management and pension funds.

IDBI plans to be in all these businesses to complement the range of financial products and services it now offers to its clients in consonance with its vision statement to be a financial conglomerate.

IDBI's chairman and managing director, V P Shetty, said "IDBI and Fortis will jointly approach the regulators for obtaining necessary statutory and regulatory approvals.

Possibilities of synergistic and deepening business relationship with Fortis in other areas, including non-life insurance, asset-management, pension as also correspondent banking could be explored at an appropriate time in future."

Fortis considers the MoU as the first but important step to enter the Indian market. The Belgian financial group also feels it will have the opportunity to profit from expected high growth in life insurance and possibly other related products and services such as non-life, pensions and asset management.

The high savings culture and low insurance penetration rates in India has attracted Fortis to India as it sees these factors as the reason for the fast growing insurance market.