The insurance sector is booming high with the entry of new players in it. Recently, a new joint venture deal has been signed among the two public sector banks ie. Canara Bank and Oriental Bank of Commerce (OBC).

The HSBC Insurance (Asia-Pacific) Holdings Limited is the third partner in the proposed joint venture. The officials of all the three banks signed a non-binding Memorandum of Understanding to jointly set up a new life insurance company in India.

After the signing of the deal, the officials issued a joint statement. It says as;

The new company will have exclusive access to the customer bases of both the state-owned banks Canara Bank and OBC, and of HSBC in India.

The new insurance company will have some 3,600 branches all over India. According to the joint statement, the company to make itself a noteworthy player in India’s speedily expanding life insurance industry will use the terrifying distribution capability of the joint venture.

According to the signed MoU among the three banks, Canara Bank will have a controlling seat with 51 percent stake in the new company. On the other hand, HSBC will have 26 percent stake and OBC will get the remaining 23 percent stake.

A report says that the new company will have the capital support of Rs.3.2 billion. The HSBC will be the larger investors with the contribution of Rs.1.7 million in the joint venture. The Canara Bank will contribute Rs.1 million and OBC Rs.460 million in the proposed venture to make an entry in India’s insurance sector.

Further, the terms of the MoU say that HSBC will be responsible to provide the management services including providing executives for senior roles in the company.

The data says that the insurance sector in India has grown with greater speed in last six years. The Life insurance premiums in India have gone up at the rate of 21 percent per year in the six years. The government has opened this sector for private players. From 1999 till 2006, the premiums exceeded $20 billion mark

Moreover, a report of India’s Insurance Regulatory and Development Authority said that in short duration of eight months from April to November 2006, new life insurance premiums has seen a growth rate of 155 percent.

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