Looking forward

Mumbai, Aug. 28: The board of directors of Bank of India (BoI) has approved the bank’s foray into the life insurance business by forming a joint venture with Dai Ichi Mutual Life Insurance of Japan.

While the bank has also decided to take in a third partner, the name has not been disclosed in its notification sent to the Bombay Stock Exchange. However, according to reports, the third partner is likely to be the Hyderabad-based Andhra Bank.

According to regulations, an Indian bank is not allowed to hold more than 49 per cent in a life insurance venture, while the cap on foreign investment is 26 per cent.

Dai Ichi Mutual Life Insurance Company is the second largest life insurance company of Japan and sixth largest in the global life insurance industry on the basis of written premium.

Besides Dai Ichi, two other Japanese insurers are already doing business in India. They are Tokio Fire and Marines, which has a tie-up for non-life insurance with fertiliser manufacturer Iffco, and Mitsui-Sumitomo, which holds an equity stake in MS Cholamandalam General Insurance.

The buoyant life insurance sector in the country has caught the attention of several banks, which are waiting in the wings to make their foray into the sector.

IDBI Bank has tied up with Dutch insurer Fortis and Kochi-based Federal Bank for a new life insurance venture. Punjab National Bank and Vijaya Bank are joining hands with US-based Principal Financial group to start a new life insurance company, and are awaiting the regulator’s approval.

Rate hike

BoI has hiked its prime lending rate (PLR) from 11.25 per cent to 11.50 per cent.

It has also hiked its deposit rates for various tenures by 25 to 50 basis points. The interest rate on deposits of five years and above has been raised by 25 basis points from 7 per cent to 7.25 per cent.