Reliance Life has been approached by some banks for partnership based on equity-participation in the company and it was open to exploring such opportunities
Private sector insurer Reliance Life said it has been approached by some banks for partnership based on equity-participation in the company and it was open to exploring such opportunities.
In lieu of minority equity stake, such partnerships help insurers tap the bank's vast distribution network for sale of their life insurance products.
"Reliance Life has been approached by a few banks to explore 'equity participation' based partnership models," Reliance Life Insurance Company's President and Executive Director Malay Ghosh told reporters.
Reliance Life is one of the leading private sector insurer in the country and part of Reliance Capital , the financial services arm of Anil Ambani-led Reliance group.
"We are open to exploring innovative partnership structures, including equity partnership to leverage the Bancassurance opportunity," Ghosh said.
He said that Reliance Life's partner Nippon Life Insurance was also in agreement with this strategy.
Earlier this year, Reliance Life announced sale of 26% stake to Japan's Nippon Life for Rs3,062 crore in the country's largest ever FDI in insurance sector. The deal, which valued Reliance Life at about Rs11,700 crore, is currently awaiting approval from various authorities.
Ghosh said that Reliance Life soon expects the approval for the deal.
While he declined to disclose the name of the banks that have approached it for equity participation, Ghosh said that "if any third party is interested in stake purchase, then that company would buy from the 74% stake remaining with Reliance Capital."
When asked about any IPO plan in the near future, he said there was no such plan as of now.
Bancassurance has emerged as a major distribution channel for life insurance industry, which is a highly distribution driven business.
Besides, those bancassurance partnerships where the bank has a stake in the insurance company tend to work better.
Insurance products are generally sold and not bought and therefore role of intermediaries is of utmost importance in the life insurance business.
Banks with their wide branch networks, trained staff, large customer base and high number of customer walk-ins are among the ideal distributors.
Over the last decade, banks have started contributing to 20-30% of the life insurance business for private insurers, while it is as high as 60% for some companies.
The five RRBs have 1,000 branch offices across 40 districts
IndiaFirst Life Insurance said it has partnered with five Regional Rural Banks (RRBs) to sell its products to customers in the hinterland.
The insurer has tied up with Bank of Baroda -sponsored RRBs: Baroda Uttar Pradesh Gramin Bank, Baroda Rajasthan Gramin Bank and Baroda Gujarat Gramin Bank, besides Nainital-Almora Kshetriya Gramin Bank and Jhabua-Dhar Kshetriya Gramin Bank, a statement issued here said.
The company's initial plan is to tie up with the RRBs of its partner bank and later expand to RRBs of other nationalised banks and cooperative banks, it said.
The five RRBs have 1,000 branch offices across 40 districts. Some of them have had experience in distributing life insurance products thereby providing a ready platform to IndiaFirst Life for launching and rapidly scaling up operations, it added.
"This new tie-up will help us serve our customers in rural areas in a better and effective way. There is an urgent need in the country to not only taking financial services to the rural populace but also to make them financially literate for true development to take place," IndiaFirst Life Insurance Managing Director and CEO, P Nandagopal, said.
The insurance company is a joint venture between Bank of Baroda, Andhra Bank and UK's leading risk, wealth and investment company Legal and General. Bank of Baroda holds a 44% stake in the firm, while Andhra Bank and Legal and General 30% and 26% respectively.
The realty major has withdrawn its projects in different sectors like handicrafts, gems and jewellery, food processing and automobile components. These projects were to come up in Uttar Pradesh, Rajasthan, Haryana, Tamil Nadu and Maharashtra
New Delhi: The government today allowed realty major Parsvnath Group to withdraw its six special economic zone (SEZ) projects in different states, as a fall out of imposition of Minimum Alternate Tax (MAT) and uncertainty over continuation of tax sops to SEZs, reports PTI.
The clearance for the Parsvnath SEZ (PSL) pull-out of its projects was given by the inter-ministerial Board of Approval (BoA), which met here under the chairmanship of commerce secretary Rahul Khullar.
Besides, the BoA permitted extension of time to 45 developers, including those of the Rahejas, Mukesh Ambani-promoted Navi Mumbai and GP Realtors to implement their projects.
Several of the SEZ notified projects are grappling with the problems of land acquisition even as they face uncertainty over the tax regime, sources said.
The Parsvnath Group has withdrawn its projects in different sectors like handicrafts, gems and jewellery, food processing and automobile components. These projects were to come up in Uttar Pradesh, Rajasthan, Haryana, Tamil Nadu and Maharashtra.
The SEZs which were touted as major vehicles for investment and export promotion were allowed a host of tax exemptions under a special SEZ Act of 2005.
The initial phase saw developers lining up in big numbers for the projects. It was also seen as a real estate opportunity. However, following concerns about loss of tax revenue, by the finance ministry, the government has proposed phasing out of the tax sops for the units commencing operations after 2014.
Moreover, farmers' protests against land acquisition have become a major problem.
The industry has also expressed concern over the imposition of MAT of 18.5% on the book profits of SEZ developers and units therein.
Under the law, incentives for SEZ units include 100% income tax exemption on export profits earned for the first five years, a 50% for the next five years and another 50% exemption on re-invested profits in the following five years.