Talking to The Financial Express, BoI CMD, S Rajagopal said,"We are just waiting for a green signal from the central bank. The moment RBI allows banks to enter into the insurance sector, we will plunge into it."

He said that the bank is currently looking at a few institutions which have shown interest in joining hands with the bank.

"Insurance business for a bank is a viable option as they can ultilise their branches for the distribution and servicing of insurance products," he said.

The State Bank of India (SBI) has also announced its entry into the insurance sector as and when the sector opens up. The bank has also roped in three consultants to prepare a feasibility report on insurance sector.

Bankers are of the view that they will have an edge over the two premier insuranceinstitutes-Life Insurance Corporation (LIC) and General Insurance Corporation (GIC) owing to their huge networking within the country. "Most of these nationalised banks have large branch network which will help them to sell insurance products across the country," sources said.

According to industry sources, for the distribution and marketing of products, banks will have to rope in independent agents. Currently India's premier life insurance corporation-LIC's distribution channel comprises of over 5.9 lakh active agents and over 18,800 development officers which is supported by 2048 servicing branches.

LIC has over 2,000 branches and 100 divisional offices spread all over the country. So far LIC has covered around 63.8 million lives under individual insurance, 18.8 million lives under ordinary group schemes and 30 million lives under the social security group insurance schemes.

According to industry observers, the total insurable population in the country is pegged at 302 million out of which LIC's totalcoverage of insurable population is around 37.28 per cent. LIC also enjoys a monopoly in annuity business.

Presently British and Japanese insurance firms are searcing for partners among Indian banks and financial institutions. ING Insurance which has tied up with the Bangalore-based Vaysya Bank is also looking forthe second partner to undertake local insurance activities.

Insurance major's Royal & Sunalliance has decided to make a foray into non life insurance including health insurance. The institution is also scouting for partners.

Discounting the possible threat for the existing public sector units, industry sources are of the view that the market is set for expansion. According to sources, most insurance firms planning to set up shop in India are currently looking for a strategic alliance with banks to distribute insurance product in the market.