IndusInd Bank managing director Bhaskar Ghose in Calcutta on Monday. Picture by Kishor Roy Chowdhury

Calcutta, April 24: IndusInd Bank will soon float a subsidiary to undertake insurance broking business and a joint venture to provide the entire range of portfolio and investment management services.

Managing director Bhaskar Ghose told reporters here today that the bank has sought the Reserve Bank’s approval for the insurance broking arm. “We will set it up as a wholly-owned subsidiary of IndusInd Bank.”

IndusInd Bank will have to set up the subsidiary, as banks are not permitted to become insurance brokers.

The private bank currently sells general insurance products of Cholamandalam General Insurance Co and life insurance products of LIC through bancassurance arrangements.

“After taking over Ashok Leyland Finance’s auto financing business, which forms the largest chunk of our retail lending, we can now generate a captive business of vehicle insurance. However, our aim is the life insurance segment. We have many NRI and high net worth clients for whom we are planning wealth/portfolio management services. But we can’t do this by offering only one insurance company’s products. Hence, we want to get into insurance broking whereby we can offer products of almost all insurers in the country,” he said.

The bank will also float a joint venture with a multinational asset management company to offer private investment services, such as portfolio and wealth management services. “We may hold a 50 per cent stake in the joint venture with the foreign partner holding the rest and each may bring in $10 million capital to start with,” Ghose said.

The Hinduja group-promoted bank is also on the prowl to acquire a non-banking finance company.

“We are currently talking to 2-3 entities, but these are at a preliminary stage,” Ghose said and added that a auto finance company would be a logical takeover given the bank’s strong presence in the segment. “The acquisition of an auto finance company will increase our market share.”

IndusInd Bank, which mopped up about Rs 100 crore through upper tier II bonds (with a maturity of 15 years) in March, may tap the overseas market with a global depository receipt issue to raise Rs 150 crore tier I capital.

The bank’s capital adequacy will suffer under the new securitisation regime.