Leading public sector lender, Bank of India (BoI), is set to enter the mutual funds business and is mulling setting up a separate subsidiary for the business.
The bank would hold a majority stake in the proposed subsidiary and has appointed Ernst & Young as consultant to facilitate the process, a senior BOI official said.
The mutual funds partner is expected to be finalised from a clutch of leading global players by October, the official said.
"We will shortlist around nine to ten players from a list of around 20 leading players to establish a JV partnership. This process would be completed within the next 10-15 days and the final partner chosen in about two months," the official told PTI here.
Last month, BoI had invited Expressions of Interest (EoIs) from consultants for its MF business and has now zeroed in on Ernst & Young from among four to five aspirants, the official said.
The consultant would assist the bank in formulating its business strategies including identifying a 'suitable' partner, the official said.
Though the official declined to divulge the names of the foreign players BoI is in talks with, Spanish mutual funds major, BBVA is understood to be in talks with the bank.
Officials from BBVA declined to comment on the matter.
After finalising its partner, BoI would approach the Reserve Bank of India for the necessary regulatory approvals, the official said.
Meanwhile, the life insurance joint venture of Bank of India, Union Bank of India and Japanese firm Dai-ichi, in which BoI holds a 51 per cent stake, is expected to get operational by Q3 FY 09, officials from the banks said.
The JV--Star Union Dai-ichi Life Insurance--will use its combined branch strength of nearly 5,000 for the distribution of insurance products. The JV will also utilise its trained staff to sell the insurance products.
Several state-owned lenders including State Bank and Bank of Baroda are already active in the mutual funds space, either through their wholly owned subsidiaries or joint venture tie-ups with foreign companies.
State Bank has tied-up with French major, Societe Generale Asset Management, which manages over USD 500 billion assets worldwide.
Similarly, Canara Bank has entered into a JV with Netherlands-based Robeco Groep NV. Robeco had acquired a 49 per cent stake in Canbank Investment Management Services last year.
As on July 31, the JV has total assets under management of Rs 4,532.6 crore.
Union Bank of India is also readying itself to rollout mutual funds in the next three to six months. The bank recently entered into an agreement with Belgium-based KBC Asset Management NV.
UBI holds a 51 per cent stake in the company while KBC the balance 49 per cent.