Punjab National Bank (PNB), the country’s second largest public sector bank, has decided to “rethink” its decision to divest holding in its associate company Canara HSBC Life Insurance, a top official said on Monday.
“Earlier we were thinking to shed our holding in Canara HSBC Life. Now we are going to immediately do a rethink. There is also a change in guidelines by insurance regulator IRDAI”, Atul Kumar Goel told businessline.
IRDAI norm
Goel pointed out that IRDAI has now permitted a bank to move from promoter category to investment category even if the holding is upto 25 per cent. He highlighted that PNB currently has equity stake of 23 per cent in Canara HSBC Life Insurance and can if it decides move its holding to investment category without having to divest its stake.
“Earlier, IRDAI norm required us to bring down holding in one of our insurance companies to 10 percent. It was earlier stipulated that a bank cannot be a promoter of two life insurers and should bring holding to 10 percent in one of them. Now this has changed and so we will go back to our Board to discuss the new situation”, Goel explained.
“Change in guidelines of IRDAI is prompting us to rethink. We will further take a stance as to whether we should move to investment category or stick to our earlier plan of exit”, he said.
Besides Canara HSBC Life Insurance, PNB has a 30 per cent equity stake in another life insurer — PNB MetLife India Insurance Company . Goel made it clear that PNB has no immediate plans to shed its promoter tag or dilute holding in PNB MetLife.
Rebranded and renamed
It may be recalled that Canara HSBC OBC Life Insurance was rebranded and renamed as Canara HSBC Life Insurance in June last year.
Canara Bank has a 51 per cent stake in Canara HSBC Life Insurance, and HSBC has a 26 per cent stake, while the remaining 23 per cent is with PNB, which had few years back subsumed Oriental Bank of Commerce under a three-way amalgamation.
Earlier, HSBC Insurance (Asia Pacific) Holdings (INAH), one of the shareholders in Canara HSBC Life Insurance had expressed its intention to acquire Punjab National Bank’s stake in the life insurance company.