Pnb May Opt For Stake In Bob Insurance Jv

BoB will hold 51 per cent stake in the venture while the balance 26 per cent will be held by an overseas partner to be identified by DSP Merrill Lynch, who have recently appointed DSP Merrill Lynch as its consultant to scout for a foreign insurance partner. The consultant will also advise the bank on the modalities of setting up the outfit and formulating the business plan.

"PNB has made a proposal to us. Both the banks are now working on the nitty-gritty of the plan like board representation, and structure," source said. However, BoB is expected to take a final view on the tie-up proposal only after the consultant identifies the overseas partner.

 

The subsidiary will be focused only on life insurance business, said the sources. For general insurance, BoB is planning to market products of other insurance companies through its large network of branches.

The other public sector banks eyeing the insurance sector include State Bank of India and Corporation Bank. Earlier four banks- Vijaya Bank, Allahabad Bank, Bank of India and Punjab National Bank had decided to go for a four way tie-up to float an insurance subsidiary besides Corporation Bank is also planning to go for a three way tie-up for insurance sector.

The Reserve Bank of India (RBI) has stipulated stringent norms for the entry of banks into the insurance sector. The entrant banks are required to have a minimum networth of Rs 500 crore and a capital to risk- weighted assets ratio (CRAR) of not less than 10 per cent as eligibility criteria besides a net profit for continuos three previous years.