State Bank of India country’s largest lender is venturing into general insurance business. Almost all the formalities have been fulfilled and by the next month the bank will be finalizing the terms for joint venture with Insurance Australia Group (IAG).
a senior SBI official informed, "We are currently working on the structure of the joint venture agreement. We expect to finalize the operating structure by September. Once a mutual agreement is reached, the new company is expected to get operational in the next three to six months".
An agreement was signed between SBI and IAG in May this year to form a new company for the planned insurance business. According to the agreement, State Bank will be holding a 74 per cent stake in the entity and the rest 26 per cent will be of Australian partner. However State Bank officials, refused to give the details of the financial terms and management structure of the proposed joint venture company.
It is being expected the SBI's entry into general insurance will increase competition amongst the existing players. At present public sector United India Insurance, New India Assurance, Oriental Insurance and National Insurance are the major share holders of the business. While in the private sector leading players are Bajaj Allianz, ICICI Lombard, IFFCO-Tokio General Insurance and Reliance General Insurance.
Government-run State Bank is making aggressive plans for the expansion of the business on various fronts, including custodial business. Although the bank wanted to form a JV with French financial-services Major Societe Generale, a Finance Ministry official informed that the Government was not in favor of the deal.
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