Psu Bank To Hold 23% In Bob Insurance Venture

Bank of Baroda will finalise the Indian partner for the proposed life insurance venture, which entails an investment of Rs 500 crore, on Monday, the bank's chairman and managing director P S Shenoy said. BoB has also decided to set up a venture capital fund. The Indian partner will be another public sector bank which will hold 23 per cent stake in the venture, he added. The bank will also select the consultant to prepare a business plan and select a foreign partner for the venture. Shenoy said the bank had received 37 applications from consultants and had narrowed down the list to eight. The prospective consultants has further been reduced to four and a final decision on the consultant will be taken at the board meeting scheduled for Monday. The business plan for the insurance venture will, however, be prepared only after a foreign partner is finalised and an agreement between the three partners is reached. The partners will invest Rs 100 crore initially with further infusions in subsequent years with the investment slated to increase to Rs 500 crore over a seven-year horizon. "The investment could, however, increase depending on the business that we attract," Shenoy added. Meanwhile, BoB has also decided to enter the venture capital business with an initial corpus of Rs 50 crore for the current financial year. The VC fund will finance projects in all areas and will not be limited only to information technology, Shenoy said. BoB has already decided to fund a financial portal and acquire 20 per cent stake. Though a formal agreement has not been signed, Shenoy said, the amount invested in the portal is to the tune of Rs 1.2 crore. He, however, ruled out the possibility of setting up a separate subsidiary for the VC business. The fund is to be operated from Mumbai through a department of the bank. On the target for reducing non-performing assets during the current financial year, Shenoy said the bank intends to reduce its NPA level from 6.9 per cent to below five per cent. The bank at present has net NPAs of about Rs 1,600 crore. Shenoy also said though BoB has not identified the amount of extra manpower in the organisation, the level would be less than the industry's average of 22 per cent. He said the bank will start the identification process once the government issues the guidelines for the voluntary retirement scheme.