Indian Bank, a public sector lender, has shelved plans to float a separate subsidiary for taking up life insurance business. Instead, the bank will focus on building a multiple-agency relationship system to augment business, its Chairman and Managing Director, Mr T. M. Bhasin, said.
It would also go in for white-labelling of products so that Indian Bank's name appears on products being offered by various agency partners, Mr Bhasin said.
The move to abandon plans for setting up a separate life insurance venture comes in the wake of the bank's decision to conserve capital and use it more propitiously for its core business.
Capital intensive sector
“Nowadays capital is scarce. Life insurance is a capital-intensive industry. We don't want to stiffen our capital. Earlier, we were thinking of a separate subsidiary.
“We had even gone in for Requests for Proposals. But now we have decided against a separate life insurance venture”, Mr Bhasin said.
He said the Insurance Regulatory and Development Authority (IRDA) was looking into the aspect of allowing multiple agency relationships.
“We will be working on multiple tie-ups to augment business so that competition increases,” Mr Bhasin said.
Indian Bank was earlier looking to enter into an ownership alliance with an existing life insurance player by leveraging its branch network.
The model involved use of the branch network as contribution to capital. Currently, Indian Bank is only a bancassurance partner to a private sector life insurance company.
Both insurance players and banks are eagerly awaiting IRDA's nod for allowing an open architecture for bancassurance.