The Central Government has stated that it does not have any objection to public sector banks venturing into non-banking segments.
Financial Services Secretary, R. Gopalan said, “There is no issue at all. We have never asked and there is no thinking in the ministry. The banks have to expand in various financial product activities so you cannot prevent them from getting into it.”
The field of insurance and mutual funds has always attracted public sector banks. A no objection certificate from the government has helped them increase their scope. SBI is planning to go into the General Insurance field while Union Bank of India and IDBI Bank are looking at mutual funds. The banks plan to commence with their new ventures during the first quarter of the next fiscal.
SBI would be going into the insurance business in association with Insurance Australia Group. The new company would be called SBI General Insurance. The insurance business would be increasing the bank’s fee income.
IDBI is planning to launch its mutual fund business during the first quarter of next fiscal. Union Bank of India is introducing its Asset Management Company (AMC) in association with Belgium-based KBC group.
Bank of Baroda, Andhra Bank and Canara Bank have recently entered the insurance business.