Mumbai, March 10 (IANS) The IDBI Bank on Sunday said it has started aligning its businesses with that of its new owner LIC, appointing the life insurer as a corporate agent under bancassurance besides setting up a joint task force to chart out their roadmap for the future.
Both the partners have identified major areas of synergy between them to gain from the full potential of such strengths, the bank said in a statement.
The Life Insurance Corporation (LIC), which had been looking to enter the banking space by acquiring a majority stake in the IDBI Bank, completed acquisition of 51 per cent stake in the bank in January. The deal is expected to provide business synergies to it despite the lender’s stressed balance sheet and high NPA.
“The major areas of synergy identified for the immediate short term are pertaining to selling of LIC policies through IDBI Bank branches, management of cash and other premium receipts of LIC through the bank’s branches, enabling the technical wherewithal available in both the bank and LIC for offering digital solutions to both policy holders of LIC and customers of IDBI Bank. Towards this end, Bank’s Board has approved appointment of LIC as a corporate agent under bancassurance,” the statement said.
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 both for the bank as also for the associate companies, it said.
For the present, the bank and LIC, through their collective network of branches, offices and workforce, have started leveraging their mutual business synergies. The long term strategy include common investment strategy, use of other resources like real estate, commercial and residential space, IDBI Bank branches, premises and ATMs, digital marketing, and rationalization of common subsidiaries in mutual funds and life insurance.
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/operating profit, NIM and substantial increase in CASA, the statement added.
The bank has already recorded noticeable improvements in CASA ratio to 38 per cent as on December 31, 2018, it said.