SBI readies general insurance foray
The State Bank of India is opening a holding company worth $5-7 bn in the next 2-3 months, reports Jaidev Majumdar.india Updated: Aug 02, 2007 19:26 IST
State Bank of India (SBI), the country’s biggest lender, will shortly form a holding company for its foray into the general insurance space. The new entity, whose name is yet to be decided, will be listed in the stock exchanges and is valued at $5-7 billion, as per estimates made by investment and merchant bankers.
According to SBI chairman OP Bhatt, the holding company is expected to be formed within the next 2-3 months and will also be the holding company for SBI Life and SBI MF—the bank’s life insurance and mutual fund entities respectively. The general insurance company, however, will be up and running later this year with a foreign partner holding a maximum of 26 per cent of the company’s equity.
Speaking to reporters at the “Banking Conclave,” organized by the Federation of Indian Chambers of Commerce and Industry (FICCI) eastern regional council, Bhatt said that both SBI Life and SBI MF caters to retail customers, which will now add synergy in the general insurance business.
SBI has so far shortlisted 3-4 overseas partners and a final decision will be made during the year. SBI currently holds majority stakes in a life insurance venture with Cardiff of France and an asset management company with Societe Generale. SBI is expecting a 25 and 20 per cent growth in credit and deposit respectively during the year.
Earlier, Bhatt said that the Indian banking system is not in a position to finance the entire amount needed for the development of the country's infrastructure sector, estimated at $300-400 billion. According to him, there is a possibility that the country's booming economy might faulter due to inadequate growth in the infrastructure sector.
Bhatt said that the issue of restrictions of government holding in PSBs would have to be debated, adding that there is potential to do away with it. "This has to be made to happen, and there is a potential to make it happen," he said.