BNP Paribas may increase stake in SBI Life JV to 49%

MUMBAI: BNP Paribas Assurance, the joint venture partner in SBI Life Insurance, may raise its stake to 49% in the JV at market value as and when regulations allow.

Foreign partners can now hold up to 26% stake in an insurance company. A proposal to increase FDI to 49% is lying with the parliamentary standing committee.

Meanwhile, the Insurance Regulatory and Development Authority (Irda) is working on the IPO guidelines as the companies complete 10 years. Three companies, ICICI Prudential , HDFC Life and SBI Life, have completed 10 years of operation. As per the current norms, companies can tap the public market only after completing 10 years of operations.

SBI Life is not in a hurry to tap the public market. "We don't need capital at the moment. We have not taken any capital from the promoters in the last three years so here is no hurry to go public," said SBI Life MD and CEO MN Rao.

"We also need to see what are the options available if we list, whether the public is holding 25% or 10%. In case of 10%, we may reduce our stake and so BNP Paribas will have its veto power. But if it is 25% public shareholding, then we don't know who will reduce it."

The company reported 33% increase in net profit to Rs 384 crore during the fiscal year 2010-11 from a year-ago period. New business premium income of the company grew by 7% to Rs 7,572 crore. SBI Life's total premium income went up by 28% to Rs 12,912 crore.

Its renewal premium recorded a growth of 74%, thus the persistency increased by 69% against 58% a year ago. It aims to raise its new business premium growth by 35% and its total premium collection by 32% during this fiscal.

Source: EconomicTimes