Kotak Mahindra Bank, promoted by Uday Kotak became the first bank in India to wholly own non-life insurance company, after Reserve Bank of India (RBI)’s approval on 25 th November 2014. The emergence of Kotak General Insurance will be the 29 th non-life insurance company in the country.
The RBI approval follows the in-principle approval the bank has already received from the Insurance Regulatory and Development Authority (IRDA). Kotak will have to apply for the complete registration of the new company with IRDA.
The wholly owned subsidiary will have a paid-up capital of 100 crores and will be headed as CEO of general insurance by Mahesh Balasubramanian, who is currently the executive vice-president and co-head of branch banking at Kotak Mahindra Bank.
Kotak is already in the life insurance business with Kotak Mahindra Old Mutual Life Insurance, which is a joint venture between Kotak Mahindra Bank and South Africa-based Old Mutual. Kotak Mahindra Bank is a corporate agent for Tata AIG General Insurance.
According to RBI guidelines, a bank is allowed to hold maximum 50% in an joint venture. However, RBI has left some exceptions like State Bank of India (SBI) and ICICI Bank. In both these exceptions, the banks are holding 74% and the foreign partner holds 26%.
The last non-life insurer to procure permission was Cigna TTK — a health insurance company. The last company to set up a full-fledged general insurance business was Liberty Videocon General Insurance.
Last week, Kotak Mahindra Bank announced that it is acquiring ING Vysya Bank Ltd in a $2.5 billion all-share deal, which is the largest banking acquisition and the first such deal in India in four years.