Canara Bank, HSBC Insurance Holdings and Oriental Bank of Commerce (OBC) on Monday signed a formal agreement to establish a life insurance company in India.
MUMBAI: Canara Bank, HSBC Insurance (Asia-Pacific) Holdings and Oriental Bank of Commerce (OBC) on Monday signed a formal agreement to establish a life insurance company in India.
“We signed the shareholders’ agreement last week and are in the process of filing an agreement with IRDA. We hope to get a clearance by December 2007. We expect the insurance company to kick off operations by early 2008,” said Allen Pereira, executive director, OBC.
The partners had signed the memorandum of understanding (MOU) in March, this year.
Under the proposed agreement, Canara Bank will hold 51% in the life insurance company, while OBC and HSBC will hold 23% and 26% interest, respectively.
David Fried, regional head, HSBC Insurance Asia Pacific, had told DNA Money in March that about Rs 325 crore would be spent in opening the insurance company, of which Rs 164 crore would be contributed by HSBC alone.
HSBC has decided to contribute Rs 178 crore to this insurance company. Canara Bank will invest Rs 102.5 crore while OBC will bring in Rs 45.1 crore.
Currently, there are currently 16 life insurance companies including state-owned Life Insurance Corporation of India.
The new company, Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd, will cater to over 40 million customers with a distribution network of 3,600 branches all over India.
The new insurance company is aimed at bringing in variety of insurance products and services to all the sections of population namely SMEs, farmers and high net worth individuals. They will also come up with micro insurance products for the rural and semi-urban masses.
“With the rapid growth of middle class population in the country, there is a greater need for insurance products. There is a greater need to improve the insurance penetration in the country, which is presently low, in the range of 4.8% of GDP,” said M B N Rao, chairman and managing director, Canara Bank
Both public sector banks, Canara Bank and OBC have a huge network of branches spread throughout the country. While Canara Bank has a strong presence in the southern parts of the country, OBC is focused on the rural and semi-urban parts of India.
“We will be able to cater to 90 lakh customers of our bank with this insurance company,” Pereira said adding that the insurance company will benefit out of the expertise and knowledge of the foreign entity.
Under the terms of the agreement, HSBC will provide a range of management services, including nominating executives for certain senior roles.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}