Indian Overseas Bank (IOB) and Central Bank of India are planning to foray into insurance sector through a banc assurance tie-up. These banks will offer their branch network as a low-cost distribution channel to existing insurance companies. In return, banks would seek a strategic stake holding.
Among other PSBs planning a foray into insurance, Syndicate Bank has already issued a Request for Information to private insurers, while Indian Bank is currently selecting a consultant that would help it choose the right model for the insurance business.
Central Bank would find it easy to leverage its large network of 3,650 plus branches, though a smaller bank like IOB may find it harder to attract large insurance companies. Banks could also consider partnering with other banks in a tripartite joint venture with an insurance company, which would give access to a larger network.
