KOLKATA: The domestic general insurance space may see the entry of another public sector bank. Pune-based Bank of Maharashtra (BoM) plans to float a general insurance company jointly with Chennai-based Shriram Financial Services Holdings. An overseas financial services company is also tipped to acquire a stake in the proposed company.
Talks are believed to be at an advanced stage. BoM chairman and managing director MD Mallya said here on Friday: a??We are talking to Shriram Financial Services Holdings. There will be a foreign partner as well.a??
Mr Mallya was in Kolkata to address the banking conclave organised by the Federation of Indian Chambers of Commerce & Industry. He, however, refused to share details.
In December 2006, BoM had informed BSE that it planned to pick up a 15% stake in the proposed venture. It had also informed that South Africaa??s Sanlam a?? a leading financial services group with its head office in Bellville in the Western Cape a?? would be the foreign partner.
According to present stipulated norms, a foreign entity can hold a maximum of 26% in a domestic general insurance company.
If the three-way venture materialises, it will be the second such company with major equity participation from public sector banks. Recently, Allahabad Bank along with Indian Overseas Bank, private sector Karnataka Bank, Dabur and Sompo Japan Insurance has floated a general insurance company a?? Universal Sompo General Insurance.
Meanwhile, BoM has decided to raise up to Rs 650 crore this fiscal to fund its business growth. a??We will mobilise the resources by selling a combination of bond instruments like lower tier-2 bonds, upper tier-2 bonds and perpetual bonds,a?? Mr Mallya said.
The bank has a business mix of over Rs 57,400 crore. Out of this, deposits stood at around Rs 33,000 crore while advances stood at around Rs 24,000 crore. The Centre hold 77% stake in the bank.
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