NEW DELHI: Canara Bank and Oriental Bank of Commerce (OBC) on Monday joined hands with the insurance arm of HSBC to set up a life insurance joint venture to offer innovative products that will suit all sections of the society.

Canara Bank will control the joint venture with 51 per cent stake, while OBC will hold 23 per cent stake and HSBC the balance 26 per cent, the maximum permissible limit for foreign partners under the present regulatory system. The name of the joint venture is yet to be decided.

Speaking on the occasion of formalisation of the tie-up, Finance Minister P. Chidambaram said, "Eighty per cent of Indians do not have any access to any insurance product — not home, not fire, not riot, not theft.. In fact, insurance products are unknown to millions of people in the country".

The new venture, with a paid-up capital of Rs. 325 crore, he observed, would go a long way in increasing the insurance penetration. It would secure regulatory approval in the next few months.

HSBC will contribute Rs. 170 crore, which includes premium for accessing the vast branch network of public sector banks. Canara Bank will invest Rs. 102 crore and OBC Rs. 46 crore.

Canara Bank Chairman and Managing Director M. B. N. Rao said the new company would have exclusive access to customer bases of Canara Bank, OBC and HSBC in India. This comprised more than 40 million people and a nation-wide network of 3,600 branches, he added.

HSBC Group Managing Director (Insurance) Clive Bannister said this was a unique opportunity to expand the HSBC's footprint in one of the major emerging markets. HSBC would provide a range of management services but this arrangement would not affect their distribution tie-up with Tata AIG in India, he added.

He said the name of the new entity would be finalised in the next two months, keeping in mind the heritages of the three entities, he said.

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