Kotak Mahindra Bank became first bank in India to fully own an insurance business
Kotak General Insurance will be the 29th non-life company in the country and the CEO of the new entity will be Mahesh Balasubramanian.
Kotak Mahindra Bank on 25 November 2014 became first bank in India to fully own an insurance business after Reserve Bank of India (RBI) gave permission to set up a wholly-owned non-life insurance company called Kotak General Insurance.
Kotak General Insurance will be the 29th non-life company in the country and the CEO of the new entity will be Mahesh Balasubramanian, executive vice-president and co-head (branch banking) of Kotak Mahindra Bank.
The bank is already the promoter of a life insurance company in partnership with Old Mutual of South Africa. At present, Kotak Mahindra Bank is a corporate agent for Tata AIG General Insurance. Kotak Bank generates close to 100 crore rupees of premium selling non-life products. This business is likely to go to its non-life subsidiary in future.
The last non-life insurer to get permission from the regulator was Cigna TTK, a health insurance company. The last company to set up a full-fledged general insurance business was Liberty Videocon General Insurance.
RBI guidelines allow a bank to hold a maximum 50 percent in an insurance joint venture. However, RBI had allowed some exceptions to this rule, which include State Bank of India and ICICI Bank. In both these partnerships, the banks hold 74% while the balance 26% is held by a foreign partner.
Insurance Regulatory and Development Authority (IRDA) norms require a non-life company to commence operations with a start-up capital of 100 crore rupees.