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AV Birla group eyes strategic ties with banks

BS Bureau

The A V Birla group is looking at establishing a close relationship with banks to serve its interests in the financial services business.

Much of the group's interest in banking has to do with its array of financial services products under the umbrella of four separate companies of Birla Sun Life. These include the asset management company, advisory and distribution company, securities arm and the life insurance company.

S K Mitra, director of financial services in the group, said: "It will be more in the nature of the relationship which the Life Insurance Corporation has with Corporation Bank."

He, however, clarified that it was just an idea at the moment and nothing specific has been initiated. "But we are looking at some prospective banks," he added.

Earlier the A V Birla group was keen to get into banking but the interest waned when the Reserve Bank of India set out stringent regulations for corporates. Corporates are not allowed to have more than a 10 per cent in a bank. "We cannot do much with 10 per cent," Mitra said.

Meanwhile, Birla Sun Life Insurance, which celebrated its first year of operations on Tuesday, reported a business of Rs 16 billion in sum assured for 2001-02. It is also looking at tripling its business in the current fiscal, for which it expects to pump in additional capital.

It had already earlier this month infused Rs 300 million additional capital into the venture.

Though the joint venture partners, AV Birla group and the Canadian-based Sun Life, are secretive over the actual performance of the venture, the foreign insurance company's president and chief executive officer, C James Prieur said: "India's sales (in terms of the number of policies) has exceeded the number of policies sold in Hong Kong and Indonesia put together. And we have been in the Hong Kong market for the last 100 years!"

Prieur said: "The annualised premium income for the year was 30 per cent higher than what we had expected. This is largely attributed to the number of branches we have set up this year". Birla Sun Life has 12 branches across nine cities, which it hopes to increase to 22 branches in 14 cities by June.

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