GIC wants to enter banking

GIC wants to enter banking
PRESS TRUST OF INDIA

NEW DELHI, JAN 2: The state-owned General Insurance Corporation (GIC) has asked the government to allow it to venture into banking sector to effectively compete with banks and financial institutions in the wake of opening up of the insurance sector for private participation.

GIC chairman and managing director D Sengupta said the corporation had asked the government to amend the Insurance Act to enable public sector insurance companies to start banking ventures. Presently the public sector insurance companies are allowed to hold just up to two per cent stake in a bank, he said adding that GIC and its subsidiaries would want to start banking business with controlling stake

. "GIC would like to set-up a bank in order to compete with public sector banks which are allowed to enter the insurance business," Sengupta said.The four subsidiaries of GIC are - Oriental Insurance, New India Assurance, United India Insurance and national Insurance. "Public sector banks and insurance companies should be given a levelplaying field," he said adding that the government should allow the entry of PSU insurance companies into the banking sector.

Sengupta said, "after getting the government's approval, GIC would take up the issue of entering into banking business with its board." He said the corporation has surplus funds along with good network across the country to start-up banking operations.

Number of public sector banks like State Bank of India, Bank of Baroda, Oriental Bank, Corporation Bank and others have announced their plans to venture into the insurance business when the sector is privatised..

"If these banks can compete with us in insurance business, GIC would like to compete with them in the banking sector," Sengupta said.Elaborating on the GIC plans following the opening of the insurance sector he said, the corporation has recently appointed global consultancy firm Pricewaterhouse Coopers (PWC) and chartered accountancy firm M P Chitale and Co. for financial and structural restructuring of thecorporation.

The restructuring involves change in the organisational structure and the various structural procedures involved in the insurance business with overall focus on customer satisfaction. General Insurance Corporation is also considering the restructuring the various insurance schemes by creating a niche market for its products, Sengupta said.

As part of its plans, the corporation is gearing up to create niche markets in health insurance, return-linked insurance products and crop insurance.