Indian banks get insurance green light

BOMBAY - The Reserve Bank of India (RBI) said yesterday that Indian banks can carry out insurance business subject to certain conditions. It comes after India approved legislation to end the state monopoly and open the sector to private and domestic players. "Banks having a minimum net worth of Rs5bn and satisfying other criteria in regard to capital adequacy, profitability will be allowed to underwrite insurance business through a joint venture on risk participation basis," the RBI said. However, the RBI capped banks' equity in insurance joint venture at 50%. It also said the capital adequacy of banks should not be less than 10% as on March 31. Those who do not meet the criteria will be allowed on a "without risk participation" basis up to 10% of their net worth or Rs500m whichever is lower, as strategic investors, it said.