IRDAI permits Union Bank to continue with IndiaFirst stake
- Insurance Regulatory and Development Authority of India (IRDAI) has approved Union Bank of India’s proposal to continue with its 30% holding in IndiaFirst Life Insurance with the caveat that the lender will exercise no control in the management of the insurer.
- The bank was earlier expected to divest either the entire stake in IndiaFirst Life Insurance, or a sizable part of it, as IRDAI guidelines prohibit a lender to own more than 10% stake in two insurance companies.
- The public sector lender in addition to its 25.1% stake in Star Union Dai-Chi Life, also received a promoter stake in IndiaFirst Life Insurance in April previously held by Andhra Bank following its ‘mega’ consolidation on April 1 with Andhra Bank and Corporation Bank.
- IRDAI approval, the state owned lender has now been allowed to carry on with its promoter holding in the two insurers at least in FY21 under the condition that “arrangements are made to remove conflict of interest.”
- This can be achieved by the Union Bank exercising no management control in IndiaFirst Life Insurance as well as appointing separate directors to be on the board or IndiaFirst and Star Union Dai-Chi, as per a letter sent by IRDAI to a top official at the bank.
- “The authority (IRDAI) has no objection…(for UBI) to hold existing shares of the erstwhile Andhra Bank in IndiaFirst Life Insurance for a period of 12 months following the merger,” according to the letter.
- “As the present situation has arisen from the merger of three banks, the Authority would permit UBI and insurers promoted by it a period of one year to reorganize the arrangements to remove conflict of interest issues which have arisen from the merger.”
Bank of Baroda is the biggest shareholder in India First Life Insurance with 44% stake. Camel Point Investments, a Mauritius based company owned by private equity investor Warburg Pincus has the remaining 26% share.
- The Insurance Regulatory and Development Authority of India is an autonomous, statutory body tasked with regulating and promoting the insurance and re-insurance industries in India.
- Founded – 1999
- Headquarters – Hyderabad
- Chairman – Subhash Chnadra Khuntia
About IndiaFirst Life Insurance-
- IndiaFirst Life Insurance Company is a life insurance company in India. It started as a joint venture between two of India’s public sector banks – Bank of Baroda and Andhra Bank, and UK’s financial and investment company Legal & General.
- Founded – November 2009
- Headquarters – Mumbai
- MD & CEO– RM Vishakha
- Union Bank of India (UBI) is one of the largest government-owned banks of India. After the amalgamation with Corporation Bank and Andhra Bank, which came into effect on 1 April 2020, the amalgamated entity becomes the fourth largest bank in terms of branch network and fifth largest in terms of business.
- Founded – 11 November 1919
- Headquarters – Mumbai
- Chairman & Part time Non-Official Director– Kewal Handa
- Managing Director(MD) & Chief Executive Officer(CEO)– Rajkiran Rai G.