IDBI plans life foray with ally

Industrial Development Bank of India Ltd (IDBI) has decided to launch a life insurance venture in collaboration with a foreign player.

The model and the partners are likely to be finalised in the next couple of months. IDBI has also decided to raise Rs 10,000 crore by way of bonds either from the domestic market or overseas this year.

IDBI has engaged insurance consultancy firm Watson and Wyatt, headed by former SBI Life chairman and managing director S Krishnamurthy, for readying the model and the selecting partner for the venture.

After finalising the model and the partners, IDBI would approach the central bank, Irda, and the government for approvals.

"S Krishnamurthy had earlier successfully set up SBI Life Insurance and, hence, we have provided him the mandate of developing the model for our insurance venture," said V P Shetty, chairman, while addressing a press conference in Kolkata today.

"Models such as induction of another domestic entity along with a foreign partner were models being looked into. IDBI would begin with a life insurance company which would be followed by our entry into general insurance," Shetty said.

Talking about funds requirement, Shetty said IDBI would have to shell out around Rs 8,500 crore on account of bonds that mature in the next seven to eight months.

"A portion of this fund requirement would be met through internal accruals and fresh borrowing of Rs 10,000 crore. The instrument, either ECB or domestic, would depend on the rate of interest prevailing at the time we decide to raise the fund," he said.

Shetty said, "The bank expects to grow at 25 per cent CAGR, while growth in the retail segment was pegged at 45 per cent. Rate of growth of corporate and wholesale lending, on the other hand, was expected to grow at 25 per cent each."

IDBI was also heavily concentrating on financing overseas corporate acquisitions.

About the bank's asset base, Shetty said, "We at IDBI intend to enhance the asset base to Rs 90,000 crore from Rs 81,365 crore as of March 2005. Total business, on the other hand, was expected to touch Rs 1.5 lakh crore by March 2006 against Rs 1.35 lakh crore."