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The Allahabad Bank-led, five-party venture for a non-life insurance company is expected to start operations by April-May 2007. The business plan has been formulated and the board of the newly formed joint venture is expected to meet in the first week of January.
"We have already obtained the certificate of commencement from the Registrar of Companies and the application to the Insurance Regulatory and Development Authority will be filed by the second week of January," Allahabad Bank chairman and managing director A C Mahajan said.
"We hope to get the Irda approval by March and start business by April-May," Mahajan added. The joint venture company has been formed under the name of Universal Sompo Non-Life Insurance Co Ltd.
Japanese insurance major Sompo Japan Insurance Co (Asia) Pvt Ltd is the knowledge partner in the venture with a 26 per cent stake, while Allahabad Bank will have 30 per cent. The other partners in the venture are Indian Overseas Bank (19 per cent), Karnataka Bank (15 per cent) and Dabur (10 per cent), which is the only non-banking Indian shareholder in the JV.
The venture will start with an initial capital of Rs 231 crore (Rs 2.31 billion) and the Indian partners will appoint a chairman, while Sompo will appoint the chief executive officer, Mahajan said.
The chairman said no progress had been made so far regarding the formation of a JV for a subsidiary in Kazakhstan, where Punjab National Bank is likely to have a major role with a stake of 60 per cent. The Kolkata-based bank is expected to hold 40 per cent in the venture.
"We are waiting for the response of PNB in the project," he said.
Mahajan said the bank is targeting Rs 94,500 crore (Rs 945 billion) business in the current financial year.
The deposits are expected to be in the region of Rs 57,000 crore (Rs 570 billion), while the advances would be in the region of Rs 37,000 crore (Rs 370 billion).
The bank's net NPA is at 0.5 per cent, while the capital adequacy ratio is at 13 per cent.
"We do not need to raise capital, both in the tier-I and tier-II levels, now," he said.
He added that the bank will take the total number of branches to 2,100 by the end of the current financial year. Allahabad Bank has 2,020 branches at present.
Mahajan said the bank will bring 400 branches under the core banking system by the end of the current financial year. In all, 900 branches will come under the CBS by the end of the next year.
"We have earmarked Rs 50 crore (Rs 500 million) to Rs 60 crore (Rs 600 million) during the year for the CBS project," he said, adding, "We will start a branch in Hong Kong shortly after the one in Shenzen. We have already received the requisite approvals from the authorities."
He said the corporate sector, occupying 40 per cent of the lending portfolio, will be a major growth driver.
"Infrastructure, chemicals, engineering and real estate sectors comprise the corporate portfolio of the bank," Mahajan said.
The bank is also focusing on agriculture, retail and SME segments for growth. "Agriculture comprises 18 per cent, retail 17 per cent and SME 9 to 10 per cent of the retail portfolio of the bank," he added.
Mahajan said the bank is also planning to launch new schemes, such as reverse mortgage for the elderly persons.
"Persons above 60 years of age would be eligible for the loan under the reverse mortgage scheme. The scheme would provide liquidity to the elderly people and help them lead a peaceful retired life," Mahajan said.