Gets RBI Approval To Set Up Non-Life Co
Kotak Mahindra Bank on Tuesday became the first bank to get the Reserve Bank of India’s (RBI’s) permission to set up a wholly-owned non-life insurance company. The bank is already the promoter of a life insurance company in partnership with Old Mutual of South Africa.
The terms of RBI guidelines allow a bank to hold a maximum 50% in an insurance joint venture. However, the central bank had allowed some exceptions to this rule, which include State Bank of India and ICICI Bank. In both these partnerships, the banks hold 74% while the balance 26% is held by a foreign partner.
Kotak General Insurance will be the 29th non-life company in the country .The last non-life insurer to get permission from the regulator was Cigna TTK -a health insurance company . The last company to set up a full-fledged general insurance business was Liberty Videocon General Insurance Company .
“The general insurance business in India is currently a Rs 77,000-crore premium per annum industry and is growing at a healthy rate of 17%. It provides a cover of close to Rs 1,000 lakh crore,“ said Gaurang Shah, president (asset management, insurance and international business), Kotak group.
He added that the bank aimed to start the general insurance business by itself as it had the distribution potential and brand value, but it was not ruling out any joint ventures in future.
At present, Kotak Mahindra Bank is a corporate agent for Tata AIG General Insurance. According to sources, Kotak Bank generates close to Rs 100 crore of premium selling non-life products. This business is likely to go to its non-life subsidiary in future. The bank has nominated Mahesh Balasubramanian, executive vice-president and co-head (branch banking) as the CEO of the proposed non-life firm.
According to Balasubramanian, the company will definitely be present in motor and health insurance -the fastest growing segments in the non-life business. “Being a new entrant, we will have opportunities to embrace new technologies and developments in the digital world to provide innovative products and solutions, which will deliver superior customer experience,“ he said. Insurance Regulatory and Development Authority (IRDA) norms require a non-life company to commence operations with a start-up capital of Rs 100 crore.
Notifying the exchanges of the RBI clearance, Kotak Mahindra Bank said that the bank had earlier received an in-principle approval from IRDA for incorporation of a general insurance company.
Source: The Times of India (Mumbai)
Date: 26th November,2014