LIC to hike stake in Corporation Bank

By Our Special Correspondent

MUMBAI, JUNE 6. Corporation Bank has offered Life Insurance Corporation of India additional equity on a private placement basis to raise its stake in the bank up to 27 per cent of the issued share capital from the present holding of 12.32 per cent.

The bank has entered into a strategic alliance with LIC and to this end a memorandum of understanding (MOU) was signed here today by Mr. Cherian Varghese, CMD, Corporation Bank, and Mr. G. N. Bajpai, Chairman, LIC. As per the MOU, LIC proposes to pick up the equity stake in the bank's subsidiary Corpbank Securities Ltd., to the extent of Rs. 50 crores or any other mutually agreed amount, subject to approvals from the regulatory authorities.

LIC should consider the proposal of the bank to actively bid through Corpbank Securities, within the regulatory framework of the Reserve Bank of India. The bank will distribute insurance products of LIC, as a corporate agent, subject to the provisions of the Insurance Act,1938, the IRDA Act, 1999, and other regulatory approvals. Corporation Bank will consider picking up equity in the proposed joint venture that LIC may set up for information technology related activities.

LIC will also provide space to the bank to open extension counters, ATMs, branches in their premises on mutually agreed terms. It will also consider utilising the draft printing facilities of the bank to print annuity, pension, claims payment. At places where no branches of LIC exist, Corporation Bank along with other authorised banks will collect premia as collecting bankers at usual terms. Corporation Bank will plan and implement an effective cashflow management system for LIC.

LIC will consider utilising the facilities of the bank for collection of interest and dividends of securities and shares. Both parties agree to share technical expertise and knowhow to work in co-ordination with each other in respect of investments on a private placement basis so as to improve yield on such investments. Both LIC and Corporation Bank agree to constitute co-ordination committees consisting of senior officials nominated by them for discussion and implementation and review of operational issues at various offices of both the parties.

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Section  : Business
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