Buoyant life insurance sector attracts banks

N Rao
25 August 2006

Mumbai: The buoyant life insurance sector continues to attract the attention of banks, wanting to make an entry into the industry. The latest to show such an inclination is Kolkata-based public sector, UCO Bank.

According to V Sridhar, chairman and managing director, UCO Bank, it was keen on venturing into the life insurance sector. "The plan is at a very nascent stage," said Sridhar. "A decision will be taken by February 2007." UCO Bank, which is also mulling a foray into the mutual fund business, aspires to be "a financial supermarket," he adds.

UCO Bank is among several banks aspiring to enter the life insurance business. There are 16 life insurers in India at present, and the industry - which was thrown open to the private sector in 2000 – has grown by a record 170 per cent in six years.

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.

Other public sector banks that are keen to enter the life insurance business include Bank of Baroda, Bank of India, Canara Bank and Oriental Bank of Commerce. Most of them will be tying up with international partners for the insurance forays.

One reason why banks are looking at the business is the success of 'bancassurance' in India. SBI Life – a joint venture between State Bank of India and Cardiff of France – has made a huge success of the 'bancassurance' model, selling its policies through the wide branch network of SBI, and also targeting the bank's clients.