India's government-run bank, the Bank of India is planning to pull-out of its life insurance joint venture with Japanese conglomerate Dai-ichi Life Insurance Company and fellow Indian banking company, the Union Bank of India.
By pulling out of the joint venture, called Star Union Dai-Ichi Life Insurance, the Bank of India is expecting to raise Rs 12 billion (around $17 million) by pulling out of the joint venture. In total, Bank of India has 28.96% stake in the company.
The company's interest to sell its stake is because it is under the Indian central bank, the Reserve Bank of India's (RBI) monitoring for bettering the position of its capital. "The bank wants to completely exit from this life insurance joint venture.
It is looking to raise Rs 1,000-1,200 crore through the process," the Indian news agency Press Trust of India reported. In addition to its interest in exiting the joint venture, Bank of India has also asked if Dai-ichi Life Insurance Company would be interested in increasing its stake in the life insurance company.
Currently, the Japanse company is the largest stakeholder with 45.94% shares, while the Union Bank of India holds 25.10% stake. If, Dai-ichi Life Insurance Company, were to increase its stake, it would be allowed to control up to 49% of the company shares, as permitted by the Indian business guidelines for Foreign Direct Investment (FDI).
The joint venture was agreed upon in 2009, although the life insurance company is not among the top-24 life insurance cover providers in India. Earlier, in 2016, the Bank of India had sold 18% stake to Dai-ichi Life Insurance Company for Rs 54 billion (around $76 million).