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IDBI charts out plan to bring banking, insurance services at one platform

twitter-logo PTI        Last Updated: March 10, 2019  | 18:52 IST

New Delhi, Mar 10 (PTI) IDBI Bank on Sunday said it is strategising to be a 'one-of-its-kind' financial conglomerate and plans to bring banking and insurance services under a single platform. The country's largest and the only state-owned life insurer LIC now holds a majority stake in IDBI Bank. Also, the change in ownership of IDBI Bank from a government-owned to LIC-owned has led to the lender becoming a private sector entity. "IDBI Bank is putting in place necessary business enablers to bring the convenience of banking and insurance services at one stop for all of its customers. IDBI Bank and LIC, through its collective network of branches, offices and workforce, have started leveraging their mutual business synergies," the bank said in a release. The bank said these strategic initiatives will pave the way for improved operations and better financing which in turn would lead to wealth maximisation for all of its stakeholders, including LIC and the government. This strategic plan would enable IDBI bank as well as LIC to realise the full potential arising out of business synergies, the bank said. The major areas identified are pertaining to selling of LIC policies through IDBI branches, management of cash and other premium receipts of LIC, enabling the technical wherewithal for offering digital solutions to both the policy holders of LIC as well as IDBI customers. "Towards this end, bank's board has approved appointment of LIC as a corporate agent under bancassurance," the release said. As part of this initiative, the chairman of LIC has been appointed as the non-executive chairman of the bank. "The bank is considering the name of Rakesh Sharma, the current MD of the bank, for appointment for a further period of three years as MD and CEO of IDBI Bank," it said. The new board will be entrusted with the responsibility of charting out a fresh growth strategy for the bank and also revamping the corporate governance structure to ensure best-in-class business practices, it added. The new board has also inducted two independent directors (a professor from Indian School of Business and a retired Executive Director of Reserve Bank of India). The lender said it has also started reviewing all its policies including credit, investment and its internal processes, risk management practises etc with the help of consultants. The bank has already started the process of appointing two new deputy managing directors for the bank, which will be through open competition from the market. The bank said common investment strategy, use of other resources like real estate, commercial and residential space, IDBI Bank branches, premises and ATMs, digital marketing, rationalisation of common subsidiaries in mutual funds, life insurance are among the key factors for the strategic alliance. "With this strategic alliance, the bank stands to gain immensely as it will be able to augment its retail business, thereby de-risking its business portfolio and ensuring increasing of other income or operating profit, NIM and substantial increase in CASA," it added. The bank has already recorded noticeable improvements in CASA ratio to 38 per cent as on December 31, 2018. A joint task force has been constituted, chaired by the senior management of IDBI Bank and LIC, to chart out the future roadmap, both for the bank as well also for the associate companies. Additionally, a working group, has been created to carry forward the initiatives identified for synergy and to effectively implement the decisions taken at the management level, the bank said. PTI KPM SHW SHW

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